Break in service – PSI

20 May 2019

51.8

April

-0.5

Monthly Change

expanding

slower rate

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Kirk Hope

Chief Executive,

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Activity in New Zealand’s services sector slipped further during April, according to the BNZ - BusinessNZ Performance of Services Index (PSI).

The PSI for April was 51.8, which was 0.5 points down from March, and the third consecutive month-on-month decrease in expansion levels (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining).  The April result was the lowest since September 2012, and below the long term average of 54.4 for the survey.

BusinessNZ chief executive Kirk Hope said that the ongoing decline in expansion is a concern, exacerbated by a few factors during April

"The proportion of positive comments for April (43.9%) decreased significantly from March (55.8%).  The decline was partly due to a number of comments centred on the ANZAC/Easter break disrupting usual business activity.  Others noted a general economic downturn and slowing demand".

In terms of the sub-index values for April, activity/sales (51.1) was at its lowest point since July 2012, while employment (48.6) dropped to its lowest point since August 2012.  New orders/business (55.1) bucked the trend slightly, increasing marginally from 54.9 in March.

BNZ Senior Economist Craig Ebert said that "unless there is a sizable bounce in May’s PSI, we’ll be left with the distinct impression of a slowing services sector".

View the PSI Time Series Data


Main Indicies

Regional Results

Services Landscape
View Craig Ebert's profile

Craig Ebert

Senior Economist, BNZ

PSI Strained

New Zealand’s Performance of Services Index (PSI) is starting to struggle. From the 52.3 level it slipped to in March, it eased further in April, to 51.8. This meant the slowest pace since 2012 – whether on a monthly or 3-monthly average basis.
Read more

GDP Growth Dampener

This is all the more significant as the services sector has been the backbone to New Zealand’s economic growth since the 2008/09 recession. So, even with the rebound in April’s Performance of Manufacturing Index, to an ”almost normal” level of 53.0, GDP growth looks prone to toil on the basis of the latest PSI.
Read more

Demand versus Supply

Having said this, we continue to argue that it’s crucial to understand why GDP might be slowing. Is it from a softening of demand, or an exhaustion of supply potential?
Read more

View the BNZ Services Landscape

PSI Time Series Table

The results are seasonally adjusted.

National IndiciesApr
2018
Dec
2018
Jan
2019
Feb
2019
Mar
2019
Apr
2019
BNZ - BusinessNZ PSI 55.753.056.453.552.351.8
Activity/Sales 56.752.261.653.052.351.1
Employment52.050.552.551.750.748.6
New Orders/Business60.859.460.659.154.955.1
Stocks/Inventories52.251.149.949.249.748.3
Supplier Deliveries50.851.852.050.150.951.6

View the PSI Time Series Data

BNZ - BusinessNZ PSI Time Series

July 2014 – April 2019

PSI Time Series Graph

International Results

J.P. Morgan Global Manufacturing PSITM
6 May 2019

52.7

International PSI

BNZ - BusinessNZ PCI

51.6

GDP-Weighted Index

51.3

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 continue their downward path in expansion levels during April.

The April GDP-Weighted Index (51.6) decreased 0.1 points from March, while the Free-Weighted Index (51.3) decreased 0.4 points.  A decrease in expansion levels for both sectors meant there was a continued drop in the two measurements offered.

PCI Time Series Table

The results are seasonally adjusted.

National IndiciesApr
2018
Dec
2018
Jan
2019
Feb
2019
Mar
2019
Apr
2019
GDP-Weighted Index 55.753.656.153.751.751.6
Free-Weighted Index56.654.955.054.151.751.3

View the PCI Time Series Data

BNZ - BusinessNZ PCI Time Series

July 2014 – April 2019

PCI Time Series Graph