The seasonally adjusted Australian Industry Group (AI Group)-Commonwealth Bank Australian Performance of Services Index stayed below the critical 50-point level for the fourth consecutive month.

The AI Group report shows an August service index of 47.5 and pointed at the withdrawal of the fiscal stimulus and the uncertainty over the status of the Federal government as the principal influences.

Five sub-sectors, including retail trade, personal and recreational services, and health and community services have been noted to have less activities in August. The accommodation and cafes and restaurants sub-sector showed flat figures during the same period.

The communication services, finance and insurance, and wholesale trade sub-sectors enjoyed expansions in its activities, but employment in these areas was largely behind the growth. The sales of services rose 7.4 points to 51.8.

The employment sub-index for the month dropped to 47.0 as selling prices declined to 46.6. The selling figure marks the third straight month for decreasing prices.

According to Commonwealth Bank Senior Economist John Peters, “We think that households, buoyed by ongoing labour market strength, a falling unemployment rate, and gifted with real wage increases, and likely rising asset prices in the year ahead, will become more confident and relaxed about the future. They will thus become increasingly less jittery about balance sheet repair, and will boost their spending levels and the breadth of their purchases.”