BNZ – BusinessNZ
Performance of
Services Index

October falls flat for service sector activity – PSI

16 Nov, 2009

After three months of expansion, the service sector fell flat during October, according to the BNZ Capital – BusinessNZ Performance of Services Index (PSI).

The PSI for October stood at 49.9, which were 3.3 points down from September, and the first time since June 2009 that activity was below 50.0. In comparison with previous years, the October result was 1.2 points up from October 2008, but 8.5 points down from 2007. A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining. The average PSI value for 2007 was 58.1, while for 2008 it was 49.1. So far for 2009, the average score has been 47.6.

BusinessNZ Chief Executive Phil O’Reilly said that despite a significant improvement in the key indicators of activity/sale and new orders/business during September, both fell back sharply in October, with the former retreating back into contraction mode.

“Despite the set back heading into the last quarter of the year, the result for October meant the sector largely stayed the same, so at least not a return to the significant contractionary periods experienced in 2008 and for most of 2009. Also, despite the flat result it was pleasing to see positive movement in employment, which had previously recorded decline for 19 consecutive months.

“The flatness in activity was also mirrored in comments by respondents, with many noticing a lull in their respective markets. No doubt for many, the approaching Xmas period may provide some relief, while the recently announced revised dairy pay-out may also provide an end of year boost for those sectors providing services in particular to rural communities.

BNZ Capital senior economist Craig Ebert said that while there’s not yet any clear signs of advancement in the Performance of Services Index nor the latest retail sales statistics, there’s a sense of stability forming in both.

“We believe an improvement is beginning to emerge, such that we’ll see some moderate expansion through the December quarter – in line with indications from the improvement in such things as consumer sentiment and the housing market. However, it’s nothing that looks particularly strong at the moment.”

The two major contributors to the drop in overall activity came from a 9.6 point fall in activity/sales (48.4) and a 6.0 point fall in new orders/business (52.6). In contrast, employment (50.4) displayed its first (albeit small) expansion since February 2008. Both stocks/inventories (47.0) and deliveries (49.1) remained largely unchanged from September.

Activity was positive for two of the four main regions during October, with the Canterbury/Westland region (54.5) leading the way with its highest level of expansion since December 2008. The Central region (51.6) jumped back to its level experienced in August, while the Northern region (48.9) fell 6.9 points after three consecutive months of expansion. The Otago/Southland region (47.5) improved on its previous months’ result, but remained the poorest performing region for the second consecutive month.

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: Craig Ebert ph 04 474 6799

BNZ - BusinessNZ PSI

Time Series Data

View seasonally adjusted and unadjusted time series data for the BNZ - BusinessNZ PSI

Sponsor Statement

BNZ is delighted to be associated with the Performance of Services Index (PSI) and BusinessNZ.

This association brings together the significant experience of leading business advocacy body BusinessNZ, and business finance specialist BNZ.

We look forward to continuing our association with BusinessNZ and associated regional organisations, and to playing our part in the ongoing development of the New Zealand service sector.

PSI Time Series Table

The results are seasonally adjusted.

BNZ – BusinessNZ PSI Time Series

January 1966 – January 1970

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About the PSI

The BNZ – BusinessNZ Performance of Services Index is a monthly survey of the service sector providing an early indicator of activity levels.

A PSI reading above 50 points indicates service activity is expanding; below 50 indicates it is contracting.

The main PSI and sub-index results are seasonally adjusted.

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BNZ – BusinessNZ
Performance of
Composite Index

PCI Time Series Table

The results are seasonally adjusted.

BNZ – BusinessNZ PCI Time Series

January 1966 – January 1970

About the PCI

The BNZ – BusinessNZ Performance of Composite Index (PCI) takes into account results from both the Performance of Manufacturing Index (PMI) and the Performance of Services Index (PSI). Combined results are shown in two ways:

GDP-Weighted Index:
Apportions the weight of the manufacturing and services index within the economy to produce an overall result.

Free-Weighted Index:
Combines data from both indexes to produce an overall result.

Both time series for the PCI are then seasonally adjusted.

BNZ - BusinessNZ PCI

Time Series Data

View seasonally adjusted and unadjusted time series data for the BNZ - BusinessNZ PCI

Our Contributors

The BNZ – BusinessNZ PSI contains data obtained through BusinessNZ’s regional organisations