Australian PSI®: Services recovery dampened by supply issues and input costs in March

　　“Australia's services sector continued its positive run in March although the pace of growth slowed in the face of intensifying input price pressures, difficulties in finding staff and further wage pressures. Growth in the services sector was more narrowly based than in February with the business & property services and personal, recreational & other services groups contracting and the health & education sector broadly unchanged from its performance in the previous month. It was left to the strong-growing logistics and retail trade & hospitality sectors to pull the broader sector into overall expansion. For the services sector as a whole, sales and employment continued to rise. Sales growth pulled back from the very high levels reported in February. The strong lift in new orders reported in March will see the capacity of many businesses stretched over coming months while the availability of staff and the supply of inputs are expected to remain constrained,” Mr Willox said.

　　Australian PSI® – Key Findings for March 2022:

• 　　Three of the five sectors available in the Australian PSI® expanded in March. Business-oriented sectors reported mixed results, with business & property slipping into contraction (down 6.5 points to 47.9) while logistics maintained last month's strong expansion (up 0.1 point to 60.8). All consumer-focused sectors reported lower readings compared to February's strong results (see table below).

• 　　All five activity indices in the Australian PSI® expanded in March (see table below), with the new orders index rising again to its highest result since May 2021 (up 2.4 points to 63.5). The sales index fell 14.9 points to 53.7, offsetting February's strong result, while employment growth moderated slightly but remained positive (down 0.3 points to 54.4).

• 　　The input prices index rose substantially in March to reach a series high (up 11.5 points to 77.5), while the average wages index also recorded strong growth (up 11.8 points to 67.7). The selling prices index rose to its highest level since July 2021 (up 4.2 points to 64.5). Taken together, these results suggest inflationary pressures are increasing.

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