The level of expansion picked up for the second month of 2008 after two consecutive months of easing, according to the Bank of New Zealand – BusinessNZ Performance of Services Index (PSI).
The PSI for February stood at 55.6, which was 3.7 points up from the January result. A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining. The survey began in April 2007, with an average score of 57.3.
BusinessNZ chief executive Phil O’Reilly said that it was pleasing to see the February month showing some recovery from the lower levels of activity over the Xmas/holiday season.
“Comments from respondents highlighted the increasing economic uncertainty and a general slowdown in activity, which is consistent with the majority of other economic indicators at this time. Inflationary pressures and current interest rate levels were also mentioned, which are both issues that will not ease anytime soon” he said.
All five diffusion indices that make up the PSI exhibited expansion and improved on the January results. New orders/business (61.4) leapt back over the 60-mark, while stocks/inventories (51.3) returned to show positive activity after the Xmas/Holiday sales period. Activity/Sales levels (56.2) also improved from its stationary position at the start of 2008, although like the overall PSI result still below its average figure of 59.0.
Activity by region was up for all, with the Otago/Southland region (61.1) recovering strongly from two consecutive months of decline to lead the February results. This was closely followed by the Canterbury/Westland region (60.2). The Northern region (52.8) result for February was almost identical to January, while the Central region (55.6) showed moderate growth.
Most service sectors showed consistent expansion for the second month of 2008, with seven sectors within a fairly narrow band of activity. Retail trade (56.6) took the top spot for activity, followed by health & community services (55.7). The lowest result was for accommodation, cafes & restaurants (53.4), after leading the sectors in January.
Click here to view the April PSI & PCI
Click here to view the PSI time series data
Click here to view the PCI time series data
For media comment: Georgina Bond, 021 959 831
