Expansion levels for New Zealand’s services sector saw a sizeable uplift in August, according to the BNZ – BusinessNZ Performance of Services Index (PSI).
The PSI for August was 58.6 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). This was up 4.2 points from July, and the highest level of activity since April 2021. It was also above the long-term average of 53.6 for the survey.
BusinessNZ chief executive Kirk Hope said that the August result had a number of different aspects to it that led to a substantial level of overall activity. The two key sub-indexes of New Activity/Sales (67.1) and Orders/Business (66.5) both displayed significant gains, while stocks/inventories (59.6) were at its highest level since November 2019. Although Employment (50.8) remained somewhat lacklustre and Supplier Deliveries (49.6) remained in contraction, the positive position of the other sub-index values was more than enough to push the national result higher.
In line with the improved main figure, the proportion of positive comments for August (56.3%) came out on top, compared with negative comments in July (58.2%) and June (59%) dominating.
BNZ Senior Economist Doug Steel said that “overall, combining August’s strong PSI with last week’s firmer PMI yields a composite index (PCI) that suggests annual GDP growth up toward 5% in Q3 2022. We currently forecast 5%+ for that period but that strength is mostly a function of the very weak base period. If the PCI is truly bouncing, the key question is for how long?”
