NZ service activity picks up in October as tourism boom continues
Activity in New Zealand's service sector, which accounts for about two-thirds of the economy, expanded last month as the country's tourism boom continues, adding to increased consumer spending from a swelling population.
The BusinessNZ-BNZ performance of services index rose 2.1 points to 56.3 in October, still above the long-term average of 54.1. All five sub-indices rose and remained above the level of 50 that separates expanding activity from contraction.
"Current spending indicators are unequivocally strong. In the PSI, retail was one industry that stood out in October," Bank of New Zealand economist Doug Steel said in his report. "An ongoing tourism boom is part of this. Indeed, the tourism-associated accommodation, cafes and restaurants industry in the PSI was even strong than retail itself with an unadjusted reading of 68.8."
The survey was to have come out ahead of Statistics New Zealand's September quarter retail trade survey, though this week's earthquake damaged the agency's building and delayed data releases for the time being.
The PSI's biggest increase was in employment, which gained 3.1 points to 54.7, though activity/sales activity at 58.4 expanded at the fastest pace. New orders/business rose 0.5 points to 56.3, while stocks/inventories was up 0.7 points to 54 and supplier deliveries rose 2.7 points to 54.6.
The survey's sister series, the performance of manufacturing index, last week showed industrial production slowed down in October while remaining ahead of its long-run average. Manufacturing has ridden the construction boom that's been in place since the Canterbury rebuild kicked off.
Mr Steel said the two surveys indicate economic growth will be above average in 2017, though "a touch slower than that achieved" this year.
The composite index, which marries the PSI and PMI, increased 1.6 points to 56.3 on a GDP-weighed basis and slipped 0.4 points to 55.4 on a free-weighted basis.