Activity levels in New Zealand’s services sector continued to improve during the last month of 2021, although still remained in overall contraction, according to the BNZ – BusinessNZ Performance of Services Index (PSI).
The PSI for December was 49.7 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). This was up 2.5 points from November, and close to the no change level of 50.0.
BusinessNZ chief executive Kirk Hope said that the ongoing move towards climbing out of contraction is encouraging, but illustrates the difficult period that many service scetor businesses are facing at present.
“On a positive note, the key sub-index of Activity/Sales (50.7) recorded its first positive activity level since July, while New Orders/Business (51.7) recorded consecutive expansion levels. The return to expansion for the sector as a whole will largely depend on these two indicies displaying higher and consistent expansion in the coming months.”
BNZ Senior Economist Craig Ebert said that “the PSI and PMI combined leaves us cautious as to what to expect for the bounce in GDP for Q4, and momentum into the start of 2022. Of course, the immediate factor is how the economy handles Omicron circulating in the community, under the new traffic light system. Movement into the Red setting impacts gathering limits, which is clearly important to many service industries.”
