Service sector still weak

Australia’s service industries are still weak, despite some improvement over recent weeks.

That’s largely because consumer spending is still soft.

The weakness shows up in the latest  performance of service index, produced by the Australian Industry Group and the Commonwealth Bank.

Although the seasonally adjusted index was 1.3 points higher in December at 49.0, it remained below the 50 point level.

This indicates a further contraction in activity.

A statement released with the index said “Professional business service sub-sectors appear to have stabilised over recent months with activity expanding in December in finance & insurance and property & business services.

“New orders across services were steady at 50.4.

But it said consumer related areas are still weak

The AIG’s Director of Public Policy, Peter Burn said: “This points to continued wariness on the part of households.”

He said that was partly due to the lack of progress in resolving the European sovereign debt issues.

However soft house prices had also contributed.

And there is little relief in sight.

“The bad news is that this pattern of growth is likely to persist in 2012,” Mr Burn  said.