The service sector was in a complete holding pattern in August, according to the BNZ – BusinessNZ Performance of Services Index (PSI).
The PSI for August was 50.0. This was down 2.4 points from July, and the fourth consecutive fall in expansion (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). Compared to previous August results, the 2012 value was the second lowest recorded since 2007.
BusinessNZ chief executive Phil O’Reilly said that the dead even result for service sector activity was very much borne out in either positive or negative results received from businesses.
“Comments were almost split down the middle between those finding current conditions either positive or negative for activity. Like last month, a general slowdown and lack of demand continues to adversely affect some, while trying to establish the main reasons for positive business activity is difficult given the wide spectrum of comments.
“Looking beyond the comments, of particular concern is the employment result, which combined with the weak employment result for the manufacturing sector shows that one would have to go back to 2009 to record a lower composite figure.”
BNZ senior economist Craig Ebert said “The degree of slowdown in August’s PSI, along with the seizure in its employment component, certainly asks questions about the economy’s momentum.”
The seasonally adjusted BNZ – BusinessNZ Performance of Composite Index or PCI (which combines the PMI and PSI) for August showed the two options for measuring the PCI both in contraction, as negative manufacturing activity and a sluggish service sector pulled results lower. The GDP-Weighted Index (49.6) decreased another 2.2 points from July, showing its first decline in activity since July 2010. The Free-Weighted Index (48.9) faired worse with a lower overall result, and in contraction for the first time since October 2011.
Looking more in-depth at the August PSI result, although the overall result showed no change, there were considerable differences within the five sub-indices for August. New orders/business (55.4) again led the charge, although at its lowest point since December 2011. Activity/sales (51.0) slipped another 0.8 points, while stocks/inventories (51.8) increased 0.5 points from July. Supplier deliveries (46.6) continued its trend downwards, while employment (46.5) experienced the largest drop of 5.8 points from July to be at its lowest point since June 2009.
In a reversal from July, unadjusted activity was in contraction for three of the four regions. In the North Island, the Northern region (49.4) experienced its lowest level of activity since October 2011, while the Central region(57.9) again improved its level of activity and showed expansion for August. In the South Island, the Canterbury/Westland region (47.9) fell back into contraction after 12 consecutive months of expansion, while the Otago/Southland region (46.1) continued to hover within the 45-50 point mark.
Click here to view the August 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 04 496 6552 or Craig Ebert 04 474 6799
