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Ongoing expansion in the service sector

Ongoing expansion in the service sector

Expansion in the service sector is at its highest level in the lead-up to Christmas, according to the Business NZ Performance of Services Index (PSI).

The November PSI stood at 62.6, which was 4.2 points above the October result. A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining. The survey has now been running for eight months, with previous results ranging from 55.2-59.4.

Business NZ chief executive Phil O’Reilly says the ongoing high values recorded for the new orders/business sub-index have now filtered through to strong activity overall as Christmas approaches.

“Although it’s difficult to compare these expansion levels with previous years, because the PSI began in April, it’s heartening to see activity at post-60 results, with the retail and wholesale sub-groups doing particularly well.”

“Comments from businesses pointed to a larger than expected influx of activity occurring earlier than expected, along with new areas of sales. There were also various comments relating to a pick up in staff numbers, which has certainly borne through with the employment index result,” he said.

For the third consecutive month, all five diffusion indices that make up the PSI continued to exhibit expansion. New orders/business (66.0) again led the way, with its highest value recorded to date. The remaining indices were also largely similar to the previous month, with three of the other four recording their highest ever value.

Activity by region was again strong in the top half of the North Island, with the Northern region (64.1) leading the November values with its highest ever result. Both the Central (61.9) and Otago/Southland (62.0) regions also experienced post-60 values.

Almost all service sectors showed expansion in November, with retail trade (70.2) exhibiting strong growth, followed by wholesale trade (67.5). Accommodation, cafes & restaurants (61.7) and property & business services (62.2) were the other sectors to produce a post-60 figure.

The lift in the rate of expansion was also reflected in the rise in positive comments received during November, which increased from 52.0% in October to 61.3% for the current month.

Click here to view the November PSI.

ENDS

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