Australia's service sector fell deeper into the red in April, in a further indication of a softening economy, survey data showed Friday.
The Australian Industry Group/Commonwealth Bank Australian Performance of Services Index fell by 5.5 points to 44.1 in April. The reading below 50 represents a contraction in activity with the distance from 50 indicative of the strength of the decrease.
The latest decrease reflects declines in sales, new orders and employment levels as businesses cut prices and costs in response to poor local demand.
The new orders sub-index fell by 5.2 points to 43.6 points, which has been below 50 points since June 2012. On a seasonally adjusted basis, employment contracted in April after expanding in both March and February, with the employment sub-index falling 4.1 points to 46.1.
"The impact of cutbacks in government spending seen in this month's Australian PSI, is a timely warning in the lead-up to the Federal Budget of the significant influence low public sector demand for services can have on the economy," Australian Industry Group Chief Executive, Innes Willox said.
In the face of general weakness across large sections of the domestic economy, it is not the time to cut back on aggregate spending and raising taxes, Willox added.
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