A for activity

New Zealand’s service sector remains at a consistent level of positive activity, according to the BNZ - BusinessNZ Performance of Services Index (PSI).

The PSI for June was 55.0.  While this was a slightly lower rate of increase than May, the PSI has averaged 55.3 since the start of the year (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining).  Compared to previous June results, the 2013 value was the highest since the June 2007 value.

BusinessNZ chief executive Phil O’Reilly said that like its sister survey the PMI, the PSI is now developing a trend of consistent and positive growth.

“The first six months of 2013 represent the best first half of the year since the survey began in 2007.  Comments from respondents remain far more positive than negative, and focus on stronger activity, continuing growth and a sense of confidence back in the market.”   

BNZ Economist Doug Steel said “It is good to see positive growth coming through in the hard data too, in line with what the PSI has been indicating all year.”

All five main sub-indices were again in expansion during June.  New orders/business (59.7) continued to lead the field, increasing 0.4 points from May.  Activity/sales (57.1) also increased from May, while employment (50.1) fell back to the level of all but no change.  Stock/inventories (53.8) rose 0.4 points, while supplier deliveries (55.0) fell 1.1 points, although still exhibited healthy expansion.

Activity was positive throughout the country in June.  In the North Island, the Northern region (54.9) fell back 3.7 points to its lowest level since January.  The Central region (50.9) also fell back 2.3 points from May, but remained in slight expansion.  In contrast, the Canterbury/Westland region (53.3) went back into expansion after two consecutive months in contraction, while the Otago/Southland region (56.9) continued to show more positive growth, with its highest result since March.

The seasonally adjusted BNZ - BusinessNZ Performance of Composite Index or PCI (which combines the PMI and PSI) for June saw both options for measuring the PCI come off recent highs in activity.  The GDP-Weighted Index (55.0) decreased 1.4 points from May, while the Free-Weighted Index (55.2) decreased 2.4 points over the same period.  The drops were due to both the manufacturing and service sectors coming off a strong May result.

Link to the June PSI & PCI
Link to PSI time series data
Link to PCI time series data