A perfect storm? – PSI

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15 May 2017

52.8

April

-6.0

Monthly Change

expanding

slower rate

View Kirk Hope's profile

Kirk Hope

Chief Executive, BusinessNZ

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New Zealand's services sector experienced a sudden drop in expansion levels during April, according to the BNZ - BusinessNZ Performance of Services Index (PSI).

The PSI for April was 52.8. This was 6.0 points lower than March, and the lowest level of expansion since December 2012 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining).

BusinessNZ chief executive Kirk Hope said that the drop in expansion levels compared with recent months was most likely due to a number of factors affecting the business community in recent weeks.

"Looking at comments from respondents, it was fairly evident that school holidays, public holidays and severe weather conditions combined to create a number of impediments to expansion during April."

"Looking ahead, with new orders (55.6) still in healthy territory, we would hope that expansion picks up again in the months ahead".

BNZ Senior Economist Doug Steel said that "if there is a slowing in underlying economic momentum underway, the drop in the PSI surely overstates it. That said, it will be good to see a decent bounce back in May to confirm that is indeed the case".

View the PSI Time Series Data


Main Indicies

Regional Results

Services Landscape
View Doug Steel's profile

Doug Steel

Senior Economist, BNZ

Bad Weather Holidays

After months and months of persistent strength, the sudden drop in the Performance of Services Index raises an eyebrow. April's 52.8 result still indicates some growth occurred in the month. But in being a full six index points below March, to the lowest reading since late 2012, it points to a sharp slowdown in the rate of progress.
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Help Found

Strong employment is one reason to not get too downbeat by the weak headline PSI result. Despite expressing difficulty in finding labour over recent quarters, service sector firms report they have managed to fill many positions in April.
Read more

Spending Disrupted

April's holiday and weather events seemed to have also distorted the value of electronic card transactions. In those, annual growth slumped to 2.8% in April from 6.2% in March.
Read more

Housing

House sales have moderated over the past year although the holiday-and-weather-affected 32% y/y drop in April probably overstates the case.
Read more

View the BNZ Services Landscape

PSI Time Series Table

The results are seasonally adjusted.

National Indicies Apr
2016
Dec
2016
Jan
2017
Feb
2017
Mar
2017
Apr
2017
BNZ - BusinessNZ PSI 58.158.559.358.658.852.8
Activity/Sales 63.563.260.660.460.952.3
Employment53.254.153.754.653.055.8
New Orders/Business61.361.464.261.865.855.6
Stocks/Inventories53.453.257.557.657.046.7
Supplier Deliveries55.456.956.958.555.848.5

View the PSI Time Series Data

BNZ - BusinessNZ PSI Time Series

January 2012 – April 2017

PSI Time Series Graph

International Results

J.P. Morgan Global Manufacturing PSITM
4 May 2017

53.6

International PSI

BNZ - BusinessNZ PCI

53.4

GDP-Weighted Index

55.1

Free-Weighted Index

The seasonally adjusted BNZ - BusinessNZ Performance of Composite Index or PCI (which combines the PMI and PSI) saw the two options for measuring the PCI both decrease in April.

The April GDP-Weighted Index (53.4) decreased 5.2 points from March, while the Free-Weighted Index (55.1) fell 2.9 points. The drop in both indices was mainly due to the lower result for the services sector.

PCI Time Series Table

The results are seasonally adjusted.

National Indicies Apr
2016
Dec
2016
Jan
2017
Feb
2017
Mar
2017
Apr
2017
GDP-Weighted Index 58.058.058.658.158.653.4
Free-Weighted Index57.856.756.957.458.055.1

View the PCI Time Series Data

BNZ - BusinessNZ PCI Time Series

January 2012 – April 2017

PCI Time Series Graph