The slower pace of decline was a result of a stabilization in demand supported by a shallower fall in export business, said the Judo Bank in a news release on Monday.
Despite posting below the 50.0 no-change mark for a fourth straight month at the start of 2024, the latest reading signalled a marginal contraction in services activity.
Sentiment in the Australian service sector remained positive in January with the Future Output Index rising to 66.1 in January from 64.6 in December 2023.
Although the Future Output Index remains at historical lows, its improvement over the past three months "may suggest that businesses believe the worst of the slowdown has passed," said Matthew De Pasquale, an economist at Judo Bank.
Level of outstanding business for Australia's service sector fell for a nineteenth straight month in January due to service providers' higher employment supporting operations.
Incoming new business was broadly unchanged. Foreign demand continued to deteriorate due to reduced budgets and supply issues, although the rate of decline eased.
In January, the price pressures receded with both input cost and output price inflation rates descending for Australia's services providers. Higher cost in transport, fuel and wage were the main triggers for the input cost rise.
"With a recovery in key activity measures, a gradual decline in price indexes, and ongoing employment growth, the economy continues demonstrating resilience to the sharp rise in interest rates", said Matthew De Pasquale.
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