Spring step - BNZ BusinessNZ Performance of Services Index
14 October 2013
New Zealand’s services sector showed increased levels of expansion during September, according to the BNZ - BusinessNZ Performance of Services Index (PSI).
The PSI for September was 55.6. This was up 2.3 points from August and very consistent with the healthy levels of expansion seen in 2013 year (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). Compared with previous September results, the 2013 value was the highest since 2007 when the survey began. So far in 2013, the PSI has averaged 55.4.
BusinessNZ chief executive Phil O’Reilly said that after a dip in expansion levels during August, the level of expansion seen in September was consistent with how the services sector is performing in 2013.
“Overall, there are a number of factors to show that the sector continues on the right path. The proportion of positive comments remains healthy (almost 64% in September), while new orders/business also remains very strong. With the same 9 months in 2011 and 2012 averaging 52.5 and 53.6 respectively, the 2013 average clearly shows the economy picking up pace.”
BNZ economist Doug Steel said the September PSI results are more important than they look. “A series of softer spots that appeared in August have gone, keeping intact the firmly positive underlying growth trends we have seen in the service sector over the past year.”
All five main sub-indices were in expansion during September, which has now been the case for five consecutive months. New orders/business (61.1) increased 6.2 points from the previous month, while activity/sales (55.9) remained relatively stable, increasing 0.9 points from August. Supplier deliveries (53.5) increased 0.7 points, while employment (51.2) kept within the 50-52 band mark, which has now been evident for the last four months. Stocks/inventories (51.5) were the only sub-index to fall from the previous month, decreasing 1.7 points.
Activity was much more even across the both islands compared with August. In the North Island, the Northern region (57.3) increased 1.8 points after experiencing a dip in expansion levels for the previous month. The Central region (51.9) fell 1.6 points, although remained in slight expansion. In the South Island, the Canterbury/Westland region (55.6) recovered well from a decline in August, while the Otago/Southland region (58.2) also experienced a significant improvement, mainly due to a strong pick-up in new orders/business.
The seasonally adjusted BNZ - BusinessNZ Performance of Composite Index or PCI (which combines the PMI and PSI) for September saw both options for measuring the PCI display almost matching expansion. The GDP-Weighted Index (55.2) increased 1.2 points from August, while the Free-Weighted Index (55.4) experienced the exact level of expansion as the previous month. The fact that both the manufacturing expansion levels dipped slightly, while the services sector improved, meant the GDP-Weighted Index showed a greater improvement than the Free-Weighted one.