Australian services sector improves slightly in Oct.

The Australian services sector was moving slightly closer to growth territory in October but weak consumer demand for local goods and services dampened progress, according to a survey released on Tuesday by the Australian Industry Group (Ai Group).

The Ai Group Australian Performance of Services Index (PSI) was up 0.8 points to 47.9 in October.

Readings below 50 indicate a contraction in activity, with the distance from 50 indicative of the strength of the decrease.

The survey showed both finance and insurance expanded in October, as did health and community services, for a fourth consecutive month.

But retail trade, wholesale trade, accommodation, cafes and restaurants, and personal and recreational services continued to reflect weak consumer demand for local goods and services in the lead-up to Christmas, the Ai Group said.

"October saw further signs of the services sector clawing back towards growth," Ai Group Chief Executive Innes Willox said in a statement.

"However, conditions remain fragile with slippage in both sales and new orders recorded after a promising recovery in September illustrating that weak consumer demand is holding back growth."