Services sector activity data for July adds to evidence of a subdued economy.
The BNZ-Business NZ Performance of Services Index (PSI) for July, released today, is down 4.6 points from June to 50.5 – the lowest result since October last year.
A PSI
Services sector activity data for July adds to evidence of a subdued economy.
The BNZ-Business NZ Performance of Services Index (PSI) for July, released today, is down 4.6 points from June to 50.5 – the lowest result since October last year.
A PSI of above 50 indicates an expansion in services activity; a value below 50 indicates a decline.
The PSI result follows on from a drop in manufacturing activity reported last week and a worse-than-anticipated rise in unemployment earlier in the month – leading to predictions that the Reserve Bank will hold steady on the official cash rate until next year.
Business NZ chief executive Phil O’Reilly said that today’s result shows that smaller businesses are struggling the most compared with other business by size.
"Also, increasing negative sentiments by businesses highlight customers keeping their hands in their pockets, leading to cashflow issues and uncertainty about future development options.”
But Bank of New Zealand economist Craig Ebert cautioned that today's result doesn't necessarily spell the end of economy recovery.
“There are probably dangers in being led by specific pieces of news right now, when there are still reasons to believe the broader outlook remains reasonably positive, for both New Zealand and the international economy."
“The majority of the industry groups in the PSI maintained expansive positions in July, and while new orders slowed, they remained positive,” he said.
Mr Ebert also drew attention to relatively strong retailing results for June.
