Service sector continues solid expansion – PSI
Service sector activity is still expanding at a solid level, according to BusinessNZ’s new monthly survey.
The BusinessNZ Performance of Services Index (PSI) for June stood at 57.8 which, although down slightly from the 58.5 recorded in May, still shows a healthy level of expansion for the sector. A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining.
Four of the five diffusion indices that make up the PSI showed expansion in June. New orders/business (66.1) continues to perform well above the other indices, while activity/sales (61.1) also remains above the 60-mark. Employment (53.8) increased for the second consecutive time and well above the 51.2 recorded for May. Stocks/inventories (47.2) continued to decrease, although this is often due to increased overall activity.
Activity was generally similar across most parts of the country, although the Central region (63.1) was the only area that performed above the national result.
Most service sectors showed expansion during May, again led by both property & business services (64.8) and wholesale trade (58.1). Accommodation, cafes & restaurants (48.3) experienced another dip in activity, due to winter setting in and a perceived drop in visitor numbers.
BusinessNZ CEO Phil O’Reilly said that given the drop in activity in the manufacturing sector during June, a strong service sector was important for ongoing economic growth as a country.
“Although most sectors are feeling the impact of higher interest rates and an increase in the value of the New Zealand dollar, strong results for orders/new business in the service sector provides a positive statement that the sector should enjoy growth in the coming months ahead.”
The number of negative and positive comments relating to activity over the month was again very similar (52.9% positive compared with 47.1% negative). However, there was a noticeable difference when related to business activity from the same month last year. Those who provided negative comments showed activity to be largely unchanged from June 2006, while those who provided positive comments experienced a modest rise in activity.