Services industry shows signs of life

The cash handouts from the Federal Government appear to have helped Australia's services industry, with activity expanding for the first time in more than a year.

The Performance of Services Index by the Australian Industry Group and the Commonwealth Bank rose 10.3 points last month to 50.2 points.

It has been 14 months since the index registered above the key 50 point level, which indicates expansion.

Australian Industry Group chief economist Tony Pensabene says job cuts remain the biggest risk to a further growth.

"The stimulus has provided a boost and the tax cuts that will come through in July will also add some momentum going forward," he said.

"But I think there is an issue about how this will be sustained right through until the end of the year and into 2010.

"We need to make sure that consumer confidence remains firm and it's not unduly affected by what's likely to be some rising unemployment over the next six months."

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Fri 3rd July 2009 - 11:16am