Service sector in tough times leading into Xmas – PSI
There is little Xmas cheer for the service sector as 2008 draws to a close, according to the Bank of New Zealand – Business NZ Performance of Services Index (PSI).
The PSI for November stood at 47.3, down 1.4 points from October and a significant 15.3 points down from November 2007. A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining. The average PSI value for 2007 was 58.1, while it has so far been only 49.2 for 2008.
Business NZ chief executive Phil O’Reilly said that despite the last few months of the year typically being a strong period of sales for many businesses, the difference in overall values between November 2007 and 2008 highlight the fact that the traditional seasonal pickup is stagnant for many.
“Of particular concern is the sharp drop in new orders – the lowest it has been since the survey began. This will feed through into general business activity/sale over the next few months, and with recent figures showing global service sector activity plunging to much lower levels than in New Zealand, it is likely that the eight consecutive months of contraction will continue through to 2009.
Four of the five diffusion indices that make up the PSI exhibited contraction during November. Activity/sales (45.7) fell from October, although employment (49.5) picked up to be close to the level of no change. New orders/business (45.9) slumped to its lowest ever result, which will undoubtedly create further pressure on future activity/sales for many businesses. Stocks/inventories (51.1) experienced another minor drop but still in expansion, while deliveries (46.6) reverted back to a result similar to that recorded in September.
Activity by region was mixed for November, with a combination of both expansion and contraction. The Northern region (44.8) recorded its second worst result, while the Central region (50.4) also experienced a drop in activity, albeit still in expansion for five consecutive months. In the South Island, the Canterbury/Westland region (55.3) continued to build on its October result, while the Otago/Southland region (47.6) recovered from three consecutive sub-40 results to post its highest activity result since March 2008.Click here to view the November PSI & PCI
For media comment: Georgina Bond, 021 959 831