Services sector remains in doldrums

The services sector continues to struggle, with a leading private index showing it continued to contract last month.

The Australian Industry Group - Commonwealth Bank Performance of Services Index remained broadly unchanged at 42.8 in October, but a reading below 50 indicates the sector is contracting - the further below 50, the steeper the contraction.

Out of nine sub-sectors, only finance and insurance expanded last month.

Transport and storage weakened to be one of the weakest sub-indices, along with wholesale, retail and communications.

"Australia's services sector makes up around 75 per cent of our economy and much of it is clearly struggling with the October Australian PSI showing falls in sales, new orders and employment," noted the Ai Group's chief executive Innes Willox in the report.

"Business services dependent on activity in manufacturing and construction are sharing the burden facing these sectors while households are increasingly reluctant to spend on local goods and services."

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