Jubilant July

New Zealand’s service sector showed a jump in activity for July, according to the BNZ - BusinessNZ Performance of Services Index (PSI).

The PSI for July was 58.1.  This was up 3 points from June, and the highest level of activity since October 2012 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining).  Compared to previous July results, the 2013 value was the highest since the survey began in 2007.  So far in 2013, the PSI has averaged 55.7.

BusinessNZ chief executive Phil O’Reilly said that after 5 months of consistent and healthy growth in activity, the July result provides additional evidence that 2013 is continually shaping up as a positive one for the New Zealand economy.

“Both new orders, business and activity, and sales remain strong, which is helping drive the strong overall result.  In addition, positive comments from respondents picked up a gear at 62%, compared with 58% in June.”     

Craig Ebert, senior economist at BNZ, said the latest PSI adds to numerous signs that the economic expansion is now accelerating. “Indeed, the chances of getting 5% GDP growth over the coming 12 months cannot be taken lightly.”

All five main sub-indices were again in expansion during July for the third consecutive month.  New orders/business (63.1) again led the way, increasing 3.2 points from June to its highest level since November 2007.  Activity/sales (61.8) also produced a post-60 result, rising 4.2 points from June.  Supplier deliveries (57.3) recorded its highest value since May 2007, while stocks/inventories (54.9) rose 1 point from the previous month.  Employment (52.2) recovered 2.1 points after a fall in expansion during June.

Activity was again positive throughout the country in July.  The overall strong national result was led by the Northern region (62.6), which recorded its highest level of activity since November 2007.  The Central region (50.5) fell back slightly compared with June, but remained in slight expansion.  In the South Island, the Canterbury/Westland region (48.8) fell back into slight contraction, while the Otago/Southland region (52.3) managed to show some expansion, despite a dip from June.

The seasonally adjusted BNZ - BusinessNZ Performance of Composite Index or PCI (which combines the PMI and PSI) for July saw both options for measuring the PCI improve significantly.  The GDP-Weighted Index (58.3) increased 3.1 points from June, while the Free-Weighted Index (59.1) rose 3.7 points over the same period.  The strong lift in both was due to both the manufacturing and service sectors showing improved activity.

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