Australia’s services sector decline has eased in February but still remains in contraction.

The February results of the Australian Industry GroupCommonwealth Bank Performance of Services Index (PSI) lifted 3.2 points to 48.7, remaining below 50 points that is the cusp between contraction and growth.

Four of the nine service sub-sectors reported that activity expanded in February, up from three in January. This included retail trade, which saw a 20 point growth from 40 in January to 60 points.

“The activity index of the retail trade sub-sector increased strongly in the month, driven by strong sales growth,” the report said.

But while sales level in the services sectors increased, new order levels, employment and deliveries continued to decline.

Although, once again, the retail sector along with property and business services were the only two sub-sectors to increase new order levels during the month.

“Activity remains most subdued in Queensland following recent flooding and Cyclone Yasi, while Victoria performed relatively well despite recent flooding in some areas of the state,” the Australian PSI said.

The Australian Industry Group-Commonwealth Bank Australian PSI is a seasonally adjusted national composite index based on the diffusion indexes for sales, orders-new business, deliveries, inventories and employment with varying weights.