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Services sector bounces back

The latest monthly BNZ-Business NZ Performance of Services Index (PSI) has continued to bounce back after a slump in the middle of this year.The PSI for September, released today, is up 2.9 points to a seasonally adjusted 54.8, the highest level of a

Nina Fowler
Mon, 18 Oct 2010

The latest monthly BNZ-Business NZ Performance of Services Index (PSI) has continued to bounce back after a slump in the middle of this year.

The PSI for September, released today, is up 2.9 points to a seasonally adjusted 54.8, the highest level of activity since June. A PSI of above 50 indicates an expansion in services activity; a value below 50 indicates contraction.

BNZ economist Doug Steel said that the general tenor of the PSI is encouraging after a string of generally weak and disappointing economic indicators.

“The PMI [BNZ-Business NZ Performance of Manufacturing Index] has been flat and your housing consents and non-residential building consents, accommodations, retail sales... have all been generally flat or negative.”

The latest PSI, while not in fast expansion mode, was a welcome change and “certainly indicative of an economy continuing to push forward”, he said.

“Only time will tell if it is the forerunner of a more general economic improvement into year’s end, but for now, at least, it has broken the run of negative data.”

Of the five services sub-indices, four were in expansion in September led by new orders/business which rose 2.7 points to 57; activities/sales up3 points to 57.4, employment rose 1.4 points to 53.5; and supplier deliveries grew 5 points to 53. Stocks/inventories rose 2.6 points from August to 49.8.

For the first time since March, unadjusted activity was positive throughout the country, led by the northern region with 58.5, its highest result since November 2007. The central, Canterbury/Westland and Otago/Southland regions all returned to expansion this month.

Also for the first time since March, all firms by size were in expansion although small firms remain underperformers with a PSI reading of 51.8 compared to the larger-firm indicators ranging from 59.0 through to 61.5.

Mr Steel noted that accommodation, cafes, restaurants and general retail along with cultural, recreational and personnel services remained as clear areas of weakness within the sector.

So far, the average PSI score for 2010 is 53.8, compared to 48.8 for 2009 and 49.1 for 2008.

Nina Fowler
Mon, 18 Oct 2010
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Services sector bounces back
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