The services sector remained at consistent and healthy levels of expansion during October, according to the BNZ – BusinessNZ Performance of Services Index (PSI).
The PSI for October was 57.8. While this was 0.2 points down from September, the index has remained particularly consistent over the last four months, indicating healthy activity in the sector. So far for 2014 the PSI has averaged 56.8 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining).
BusinessNZ chief executive Phil O’Reilly said that the October result provided a good start to the last quarter of 2014.
“After the third quarter of 2014 experienced its highest overall level of quarterly expansion since 2007, both activity/sales and new orders/business have remained above the 60-point mark. This meant the overall index has kept pace with previous expansion, and puts the sector in a good position heading into the last few months of the year.
“The other pleasing aspect of October’s result was the strong upswing in positive comments from respondents, which stood at almost 70%. Major influences on activity were varied, but increased demand and seasonality were two common themes.”
BNZ senior economist Craig Ebert said the employment aspect of the current expansion in services was most positive, with 53 percent of job creation occurring outside of the construction sector, and a similar amount occurring outside of Christchurch.
“We forecast annual employment growth to remain above three percent right through into 2016, and that it is likely to be less dominated by the construction industry over time.”
For the fifth month running, all five main sub-indices were in expansion. Activity/sales(61.9) led the way in October, which was its highest value since January this year. New orders/business (61.1) was relatively close behind, which increased marginally from September. Supplier deliveries (53.4) increased by 0.5 points on the previous month, while employment (53.0) dropped 1.8 points. Stocks/inventories (51.5) improved slightly after a drop in expansion levels in September.
Activity continued to remain positive throughout the country, although there were some movements in relation to the previous month. In the North Island, the Northernregion (59.1) recorded its highest expansion level since March this year, while the Central region (50.2) managed to keep its head above water after a drop in expansion levels. In the South Island, the Canterbury/Westland region (58.2) was all but unchanged from the previous month, while the Otago/Southlandregion (68.8) increased a further 2.8 points.
The seasonally adjusted BNZ – BusinessNZ Performance of Composite Index or PCI (which combines the PMI and PSI) for October saw the two options for measuring the PCI record an almost identical result. The GDP-Weighted Index decreased 0.4 points from September to stand at 57.8, while the Free-Weighted Index (57.9) decreased 0.8 points from September.
Click here to view the October PSI & PCI
Click here to view the PSI time series data
Click here to view the PCI time series data
For media comment: Phil O’Reilly 04 4966552 or Craig Ebert 04 4746799
