The finance and insurance sector has further weakened during September, according to the latest “performance of services” survey by the Australian Industry Group (AiG) and Commonwealth Bank.

It says any reading below 50 points shows an industry is contracting rather than growing.

The overall index fell 1.9 points during the month to 45.6, but the finance and insurance sub-sector showed strong contraction in activity, dropping to 38.7 points.

“The average contraction experienced in this sub-sector has been broadly in line with the experience of the whole services sector,” the report said.

“The contraction in the sub-index for finance and insurance… partly reflects the impact of the global financial crisis, including directly through less activity in the finance and insurance industry.”

Economists at AiG say results for the finance and insurance sector for the past two years indicate the rate of contraction is slowing, pointing to a period of growth ahead.

CEO Heather Ridout says September’s result indicates a continuation of the weakness that has been seen across the services sector for most of the year.

“A wide variety of factors appear to be contributing to this weakness including tentative consumers and businesses influenced by political uncertainty, volatility in the global economy, the prospect of higher domestic interest rates and the ongoing withdrawal of fiscal stimulus,” she said.

“The pressures on businesses across the services sector would intensify if interest rates were to rise when sales are sluggish and employment in the sector is waning.”