Service sector records highest level of February activity

BUSINESSDESK: New Zealand’s services sector expanded last month, recording its highest February result since the BNZ-BusinessNZ Performance of Services Index survey began in 2007.

The index rose 1.7 points to 55.5 in February from January. A reading above 50 marks indicates expansion.

“The improvement in the PSI comes off the back of further upwards momentum in both activity/sales and new orders/business,” said Phil O’Reilly, chief executive at BusinessNZ. “When taking into account the January result, the first two months of 2012 have showed more life than we have experienced for some time.”

All of the five major sub indexes expanded, with new orders/businesses on 60.5. This was followed by a 4.3 point increase in activity/sales on 58.1.

Employment dipped to 51.8 from January but remained in expansionary mode, while supplier deliveries increased to 52.3 points. Stocks/inventories moved back into expansion on 51.2.

BNZ senior economist Craig Ebert said, like its sister survey, the Performance of Manufacturing Index, the results provide encouraging signs for the whole economy.

“February’s PSI provided fuel to the fire of last week’s PMI,” Ebert said. They point to more than just ongoing economic recovery but, in all probability, a quickening pace of it.”

Last week’s PMI rose 6.9 points to 57.7 in February from a month earlier, with four of the five of the sub-indexes expanding. The gain was led by the manufacturing sector, which showed its highest level of activity in almost two years, while metal production and machinery recorded its highest level on-record.

Service sector results were almost all in expansion in February. Wholesale trade rose to 60.1 in as did property & business services on 57.2 points. Health and community services also built on January’s results rising to 54.9.

Retail trade slipped to 54.0 points after recording two strong months of expansion.

The Northern region recovered from a dip in January on 55.3 along with Central on 58.8 points.

The Canterbury/Westland region was largely unchanged on 64.1, while Otago/Southland eased to 57.7 points.