Expansion in the services sector eased during November, although still remains at solid levels, according to the BNZ – BusinessNZ Performance of Services Index (PSI).
The PSI for November was 54.8. This was 2.2 points down from October, and similar to expansion levels seen mid-way through 2014. So far for 2014 the PSI has averaged 56.5 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining).
BusinessNZ chief executive Phil O’Reilly said that easing expansion levels should not undermine the fact that the sector is still in positive and solid territory.
“While overall activity was not as high as has been seen after three consecutive months of values between 57-58, the sub-indices that underpin the main result are all still positive, along with expansion across the country.
“Overall, given the fact that over 60% of comments received were still along a positive line confirms the sector remains in good heart”.
BNZ economist Doug Steel said, “There have been many drivers of service sector growth through 2014, not least the very strong net inward migration through the year. More people equals more demand.”
Despite the dip in expansion levels, for the sixth month running all five main sub-indices were in expansion. New orders/business (56.4) led the way in November, although at its lowest result since February this year. This was followed by activity/sales (55.7), which also dropped below the 60-point level of expansion. Stocks/inventories (53.3) increased from October, as did employment (53.2). Supplier deliveries (52.8) decreased 0.3 points, which was all but at the level seen in September.
Activity remained positive throughout the country, although again there were some movements in relation to the previous month. In the North Island, the Northernregion (55.5) dropped 3.6 points to record its lowest result since June this year, while the Central region (57.1) returned to its level seen in September. In the South Island, the Canterbury/Westlandregion (56.8) fell slightly from the previous month, while the Otago/Southland region (65.3) did likewise.
The seasonally adjusted BNZ – BusinessNZ Performance of Composite Index or PCI (which combines the PMI and PSI) for November saw the two options for measuring the PCI both dip to almost the exact same level. The GDP-Weighted Index decreased 3.2 points from October to stand at 54.0, while the Free-Weighted Index (54.1) decreased 3.5 points from October. This put the activity levels of both options roughly on par with the month of May this year.
For media comment: Phil O’Reilly 04 4966552 or DougSeel 04 474 6923