While New Zealand’s services sector experienced an increase in expansion levels during July, there were mixed results when looking beyond the main figure, according to the BNZ – BusinessNZ Performance of Services Index (PSI).
The PSI for July was 55.1, which was 2.4 points higher than June (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). However, it did not show a full recovery from the sizeable drop in June.
BusinessNZ chief executive Kirk Hope said that while it was good to see overall expansionary levels not dropping further, there were still elements of the July result that gives pause for thought.
“Although the two key sub-indices of activity/sales (57.9) and new orders/business (60.1) recovered somewhat from June, the remaining three indicators remain sluggish, most notably employment (49.9) which technically fell into contraction for the first time since January 2013.
In addition, the proportion of positive comments in July (53.8%) decreased from June (59.5%) and May (58.0%). While some businesses noted new business opportunities, others equally noted a general slowdown and a quieter market for new customers.”
BNZ Senior Economist Doug Steel said that “the three month average has slipped to 54.9, which is the lowest it has been this year and lower than last year’s average of 56.9”.
