New Zealand’s services sector experienced a decrease in expansion levels during June, according to the BNZ – BusinessNZ Performance of Services Index (PSI).
The PSI for June was 52.8, which was 4.3 points lower than May (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). It was also the lowest level of expansion since December 2012.
BusinessNZ chief executive Kirk Hope said that the components that make up the overall PSI result all experienced a noticeable drop in expansion levels.
“The key sub-indexes of activity/sales (54.7) and new orders/business (58.6) slowed in June, with the latter recording its lowest figure since April 2017. In addition, employment (50.0) was at the no change level, and the lowest result since January 2013.
Interestingly, the proportion of positive comments in June (59.5%) was slightly up on May (58.0%), although given the sector is still showing expansion a swing to negative comments dominating would have been surprising. All up, a PSI result that is at its lowest level for around five and a half years means the next few months will be watched closely for further signs of a slowdown”.
BNZ Senior Economist Doug Steel said that “while some have discounted weak business confidence readings of late, the PSI and PMI results are not so easily dismissed as these are surveys of business outcomes not based on sentiment, outlooks, or expectations. In this sense, they are arguably more worrying from a growth perspective”.
