Winter touch – PSI

14 Aug 2017

56.0

July

-2.3

Monthly Change

expanding

slower rate

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Kirk Hope

Chief Executive, BusinessNZ

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New Zealand's services sector remained in positive territory, despite winter having a negative effect on some businesses, according to the BNZ - BusinessNZ Performance of Services Index (PSI).
 
The PSI for July was 56.0.  This was 2.3 points lower than June, and the lowest value since April (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 despite the dip in expansion, July's main result was still clearly above the long-term average for the survey, and showing solid expansion. 
"Looking at comments from respondents, a number of negative comments centred on wet and wintery conditions hampering business activity, although almost 60% still outlined positive comments."
 
BNZ Senior Economist Doug Steel said that "service sector growth cooled somewhat in July. The weather looks to have been, at least partly, to blame, as it was for the slight dip in the month's Performance of Manufacturing Index (PMI) released last week".

View the PSI Time Series Data


Main Indicies

Regional Results

Services Landscape
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Doug Steel

Senior Economist, BNZ

PSI Cools

The Performance of Services Index (PSI) eased a couple of points in July to 56.0 from 58.3 in June. This suggests service sector growth cooled somewhat in July. The weather looks to have been, at least partly, to blame, as it was for the slight dip in the month's Performance of Manufacturing Index (PMI) released last week. Many respondents to the PSI survey noted extreme weather as having a negative impact on their business this month. Consistent with disrupted logistics, supplier deliveries slowed the most across the major components. Despite the disruption, the PSI remains above its long term average of 54.4 indicating solid growth.
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Sales Growth Slows - Temporarily?

Sales growth slowed in July, with the index dipping to 55.5 from 59.0 in June. This is not as much of a slowdown as the 52.8 recorded in April, when cyclones caused havoc, but it is still a sizeable dip. Of course, it might not be all the weather's doing. A cooling housing market, some election uncertainty, and an unwind from the Lions rugby tour are a few potential candidates for slower sales growth in the month. For now we are treating the slowing in sales growth as temporary, but await coming months' data for confirmation. We are encouraged by new orders remaining very healthy at over 60 and employment ticking higher.
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Jobs Strong

PSI employment rose to 55.2 in July from 54.2 in June. This follows a lift in PMI employment last week. The composite employment index has lifted sharply. On a smoothed three month average basis it remains near record levels. The mild Q2 dip recorded in the official employment figures always looked a bit odd in the context of other surveys showing an increase in filled jobs and paid hours, strong employment intentions and high job ads. Ongoing strength in the PSI and PMI employment indicators adds to the case of a decent bounce back in official employment in Q3.
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Good Orders

PSI and PMI new orders eased in July, but both remain above their long term average. Recent strength in the composite new orders indicator bodes well for a pick-up in economic growth following a softer period at the end of last year and at the start of this year. On a smoothed three month average basis, the recent buoyancy in new orders even suggest some upside risk to our near term GDP forecasts. But all considered, including the slower sales indicators noted above, we'll stick with our view that the economy will expand around 2.5% this year.
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View the BNZ Services Landscape

PSI Time Series Table

The results are seasonally adjusted.

National Indicies July
2016
Mar
2017
Apr
2017
May
2017
Jun
2017
Jul
2017
BNZ - BusinessNZ PSI 55.558.752.858.558.356.0
Activity/Sales 58.660.952.062.659.055.5
Employment53.653.055.854.454.255.2
New Orders/Business58.665.655.463.063.860.1
Stocks/Inventories52.756.646.254.554.852.5
Supplier Deliveries49.855.547.955.156.952.5

View the PSI Time Series Data

BNZ - BusinessNZ PSI Time Series

January 2012 – July 2017

PSI Time Series Graph

International Results

J.P. Morgan Global Manufacturing PSITM
3 Aug 2017

53.7

International PSI

BNZ - BusinessNZ PCI

55.8

GDP-Weighted Index

56.1

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 again both decrease in July.

The July GDP-Weighted Index (55.8) dropped 1.9 points from June, while the Free-Weighted Index (56.1) slipped 1.2 points.  The overall decrease in expansion levels for both the manufacturing and services sector led to both measures slipping in July.

PCI Time Series Table

The results are seasonally adjusted.

National Indicies Jul
2016
Mar
2017
Apr
2017
May
2017
Jun
2017
Jul
2017
GDP-Weighted Index 55.458.653.658.457.755.8
Free-Weighted Index56.058.454.859.057.356.1

View the PCI Time Series Data

BNZ - BusinessNZ PCI Time Series

January 2013 – July 2017

PCI Time Series Graph