Activity in the services sector was back on track in March after a dip in expansionary levels during the previous month, according to the BNZ - BusinessNZ Performance of Services Index (PSI).
The PSI for March was 58.3. This was up 5.5 points from February, and the highest level of activity since November 2007 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). For the first quarter of 2014, the PSI averaged 56.4.
BusinessNZ chief executive Phil O’Reilly said that the dip in expansionary levels experienced in February was short-lived, as growth in the sector was across the board.
“Both new orders/business and activity/sales have returned to strong levels, which are key determinants for the overall result. While a number of positive comments from respondents focused on seasonal factors, there is nothing to suggest that growth will significantly ease with the changing season in the months ahead.”
BNZ Economist Doug Steel said the strong March PSI result supports thoughts from a month ago that the softer looking February reading was just monthly noise in an otherwise strong positive growth pulse across the service sector.
All five main sub-indices were in expansion during March. New orders/business (62.1) rose back above the 60-point value, which has now been the case for six of the last seven months. Activity/sales (60.7) also recorded a post-60 value, although not to the same level as January. Employment (54.3) increased 0.8 points from February, while supplier deliveries (55.5) rose 5.3 points. Stocks/inventories (55.3) rose 6.5 points after two consecutive months in decline.
Activity was positive and consistent across all of the country in March. In the North Island, the Northern region (59.4) rose 1.7 points after three consecutive months at the 57-point mark. The Central region (59.2) dipped 0.5 points from February, although still at a very healthy level of activity. In the South Island, the Canterbury/Westland region (58.5) recovered from a dip in the previous month, while the Otago/Southland region (59.4) picked up a further 5.4 points.
The seasonally adjusted BNZ - BusinessNZ Performance of Composite Index or PCI (which combines the PMI and PSI) for March saw both options for measuring the PCI recover from a dip in expansionary levels seen in February. The fact that both the services and manufacturing sectors saw increased growth in March, particularly the former, meant the GDP-Weighted index was just ahead of the Free-Weighted Index.