Activity in New Zealand’s services sector improved from the previous month, but still recorded contraction, according to the BNZ – BusinessNZ Performance of Services Index (PSI).
The PSI for December was 49.2, which was up 2.5 points from November (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). The PSI averaged 47.0 over 2020.
BusinessNZ chief executive Kirk Hope said that the December result typified a difficult year for the sector, with half the year spent in contraction.
“While June and July showed a post-lockdown recovery, the remainder of 2020 displayed either soft expansion or contraction. The two key sub-indices of activity/sales and new orders/business failed to show any consistent pattern of expansion, while the remaining sub-indices spent a significant proportion of time under the key 50.0 mark”.
BNZ Senior Economist Craig Ebert said that “activity indicators such as these have had their work cut out lately, in trying to nail GDP to the nearest percent. In any case, the composite index is consistent with our view that NZ real GDP will be broadly flat over the six months to March 2021”.