Services sector activity rises to highest in more than 6 years

Craig Ebert, Bank of New Zealand economist

New Zealand services sector activity, which accounts for about two thirds of the economy, rose for a second month in April to reach the highest in more than six years, led by new orders and sales.

The BNZ-BusinessNZ performance of services index rose 0.4 points to a seasonally adjusted 58.9 in April from 58.3 in March and up from 55.4 a year earlier. A reading above 50 indicates expansion.

The PSI survey comes after its counterpart for manufacturing, the PMI, fell last month, which was attributed to the Easter and Anzac holiday breaks both occurring in April, and keeps overall activity "at very healthy levels, based on the composite index, or PCI. Economists had questioned the level of consumer demand after retail sales growth slowed in the first quarter.

The PSI has "presented a more consistent growth pulse," said Bank of New Zealand economist Craig Ebert. The PSI and PMI surveys were "consistent with annual GDP growth of around 4 percent," he said.

All five sub-indexes which make up the PSI were in expansion in April, led by new orders/business with a reading of 65.7, followed by activity/sales with a reading of 62.2. Stock/Inventories were at 55.6 and supplier deliveries advanced to a 55.8 reading.

The seasonally adjusted BNZ-Business NZ performance of composite index, which combines the PSI and PMI and represents more than three quarters of the economy, was little changed at 58.5 and slipped 0.9 points to 57.3 on a free-weighted index.

Across New Zealand all regions were above 50, with Northern slipping to 58.1 and Central rising to 60. Otago/Southland fell 3.1 points to 56.3 and Canterbury/Westland rose 1.8 points to 60.3.


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