Australia’s services sector continued to contract in December even after the central bank lowered interest rates at the start of month, a performance gauge by an industry group published Friday showed.
The Australian Industry Group-Commonwealth Bank Performance of Services Index fell 3.9 points in December from a month earlier to 43.2 points–well below the 50-point level that separates contraction from expansion.
The contraction came in spite of the Reserve Bank of Australia lowering its cash-rate target in December by a quarter of a percentage point to 3%, in an effort to boost struggling sectors of the economy outside the dominant resources industry. The benchmark rate hasn’t been this low since the global financial crisis.
According to the survey, the hardest-hit sectors in December were linked to discretionary spending–such as in cafes, department stores and hotels.
“At the end of what was a tough year for the services sector, consumer caution, poor sentiment and the high Australian dollar all continued to weigh heavily on sales to households during the Christmas trading peak,” said Innes Willox, chief executive of the Australian Industry Group.Source: NASDAQ
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- Retail services expand ahead of Christmas (news.theage.com.au)
- Australian stocks surge to 19-month high as US fiscal cliff averted (craighill.net)