The Australian Industry Group (AiG) released its services purchasing managers' index (PMI) for Australia on the late Tuesday evening. The index slid to 48.9 in October from 52.3 in September.
A reading above 50 indicates expansion in the sector, while a reading below 50 indicates contraction in the sector.
Only two of the five activity sub-indexes were above 50 points in October.
Main contributor to the drop was the sales sub-index, which slid by 7.8 points.