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New Zealand services sector activity, which accounts for about two thirds of the economy, rebounded in March to reach 2007 levels, after a drop off in February.
The BNZ-BusinessNZ performance of services index rose to a seasonally adjusted 58.3 in March, from February's 53.1 and up from 55.2 a year earlier. A reading above 50 indicates expansion. Last month the PSI snapped nine consecutive months of growth in expansion as new orders had the biggest drop since the survey began in 2007.
"The expansion is not only deepening but widening too with growth being experienced across a number of sectors including construction, agriculture, manufacturing, tourism and retail," Doug Steel, Bank of New Zealand economist, said in a note. "While the very fast pace of service sector growth in March might partly be a bit of catch up from the moderate pace in February, the overarching point is that trend growth in the service sector is currently strong."
All five sub-indexes which make up the PSI were in expansion in March, led by new orders/business with a reading of 62.1, followed by activity/sales with a reading of 60.7. Stock/Inventories rose 6.5 points to 55.3. Employment rose 0.8 points to 54.3 and supplier deliveries advanced 5.3 points to a 55.5 reading.
"Buoyant new orders are positive for the future," Steel said. "This will be on factor giving firms in the service sector confidence and encouraging them to take on more staff."
The seasonally adjusted BNZ-Business NZ performance of composite index, which combines the PSI with the performance of manufacturing index and represents more than three quarters of the economy, increased 3.4 points from a year earlier to 58.3 on a GDP-weighted index, and 4.2 point to 58.2 on a free-weighted index.
Across New Zealand all regions were above 50, with Northern up 1.7 points to 59.4, Central falling 0.5 points to 59.2. Otago/Southland rose 5.4 points to 59.4 and Canterbury/Westland rebounded to 58.5 from 43.4