New Zealand’s services sector went back into contraction in October, according to the BNZ – BusinessNZ Performance of Services Index (PSI).
The PSI for October was 48.9 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). This was down 1.7 points from September, and well below the long-term average of 53.5 for the survey.
BusinessNZ chief executive Kirk Hope said that the return to expansion in September was short lived, with the key sub-index results for Activity/Sales (47.4) and New Orders/Business (51.9) showing a lower level of activity in October. Employment (49.3) returned to slight contraction, while Supplier Deliveries (49.8) remained in a tight band of activity that has been evident over the last three months.
“Despite the October result falling back into contraction, the proportion of negative comments stood at 58.2% for October, which was down from 61.8% in September and 63.9% in August. Overall, negative comments continued to be strongly dominated by the recent General Election, as well as a general slowdown in the economy”.
Looking at the broader perspective, BNZ Senior Economist Craig Ebert said that “combined, the PSI (48.9) and PMI (42.5) paint a picture of economic angst. This counsels caution around GDP for Q3, after it posted a surprising gain of 0.9% in Q2”.