Australian Services Sector Flirting With Expansion
THE TAKEAWAY: Australia’s service industry remains contractionary, but appears to be growing > Expansion in services needed for economic growth and should influence RBA policy > AUD Outlook: Bullish
Australia’s AiG Performance of Services Index came in at 49.6 for March, surpassing February’s level of 48.5, albeit remaining at contractionary levels. The Aussie did not show significant recation to the report and remained relatively unchanged versus the dollar on the day.
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Although Australia’ service industry has now remained in a state of contraction for 14 straight months, consistent growth has been evident, with the AiG index having increased over three consecutive periods. As a result, Australia’s service sector now appears to be flirting with expansionary levels, not seen since January of 2012. Due to the fact that Australia’s service sector represents nearly 70% of the country’s GDP, the success of the industry may be indicative of the country’s economic progress and as result, the policy decisions of the RBA.
AUD/USD (1 Day Chart)
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