The services sector appears to have continued to expand in June, despite turmoil in world markets.
The BNZ -- BusinessNZ performance of services index (PSI), published today, rose 2.2 points from May to a seasonally adjusted 55.7. It is the eighth consecutive month in expansion, which is indicated by a PSI reading above 50.
All five sub-indices expanded for the fourth consecutive month, with employment at 55.2 rising 4.5 points from May to record its highest level in three years. Activities/sales rose 2.6 points to 57.9, new orders/business was up 2.9 points to 59, while supplier deliveries recorded 51.7 and stocks/inventories was at 50.1.
BNZ senior economist Craig Ebert said that with the latest rise the PSI had consolidated in a good-growth zone, while a drop of similar size would have been a significant blow to recovery expectations.
A drop had seemed the more palpable risk, give the market turmoil of late, which had been reflected in a number of global PSIs and performance of manufacturing indices (PMIs) falling by the wayside, Mr Ebert said.
The relative robustness of the New Zealand PSI and PMI -- which rose 2.2 points to 56.2 for June -- was also significant because it ran counter to signs of sharp domestic slowdown suggested from recent anecdotal and sentiment surveys.
That might be indicating how overly optimistic general confidence had been, rather than signifying any material change of heart about businesses' expectations for their own activity.
"Through the year, confidence has come down from the heavens, while firms' reports and expectations for their own activity have actually improved to respectable levels," Mr Ebert said.
Among the industries within the service sector, where results are unadjusted, property and business services remained largely unchanged with strong growth at 60.1, transport and storage improved considerably to 58. In contrast retail trade fell back to 41.5 and accommodation, cafes and restaurants recorded 39.9.
Firms with 11 to 50 workers did best in June with 57.6, followed by firms of 51-100 workers with 56.9, those with 101 or more workers fell back into contraction at 49.1 after improvement last month, and firms with between one and 10 workers dipped further to show ongoing contraction with 47.7.