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The services sector activity picked up in December for its eighth monthly expansion in the latest sign the economy is gathering momentum.
The BNZ-BusinessNZ performance of services index rose 1.1 points to 57.5 in December, and was up from 52.5 a year earlier. A reading of 50 or higher indicates the sector is in expansion, while a reading below 50 indicates a contraction.
The PSI was led by new orders/business at a reading of 62.4, up from 60.8 in November, followed by activity/sales which rose 1.5 points to 59.8. Stocks/inventories rose 3 points to 54.2 and supplier deliveries increased 2.4 points to 52.9. Employment was the only sub-index to drop, falling 1.8 points to a still expansionary 52.6.
"It suggests ongoing robust growth in the sector," BNZ economist Craig Ebert says in a note accompanying the release. "December's PSI harboured detail that suggested a pick-up in production is, in fact, gathering momentum."
The seasonally adjusted BNZ-BusinessNZ performance of composite index, which combines the PSI with the performance of manufacturing index, rose 1.7 points to 57.5 on a GDP-weighted basis and was up 0.2 points to 56.9 on a free-weighted basis.
Mr Ebert says the recent readings suggest a 4 percent annual pace of economic growth and is in line with the New Zealand Institute of Economic Research's quarterly survey of business opinion.
Today's PSI showed the Central region experienced the fastest expansion with a reading of 61, followed by 57.4 in the Northern region, 55.1 in Otago/Southland and Canterbury/Westland at 52.6.
Retail trade is the most positive sector at 74.5, with property & business services at 57.5, wholesale trade at 57.3 and health and community services at 54.7. Transport and storage services contracted with a reading of 46.4 in December.