Activity in New Zealand’s services sector picked up after three consecutive monthly falls in expansion, according to the BNZ – BusinessNZ Performance of Services Index (PSI).
The PSI for May was 53.6, which was 1.6 points up from April, and a return to levels of activity seen in February (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). However, the May result was still below the long term average of 54.4 for the survey.
BusinessNZ chief executive Kirk Hope said that while the pick-up in activity is a positive step, further expansion in the coming months will be dependent on a few factors.
“New orders/business (55.7) has remained around that level for the last three months, which is below the long-term average of 58.6. Given this sub-index feeds through into activity/sales and employment, a lift in this space would need to take place to improve the overall result.
Looking at comments from respondents, the proportion of positive comments for May (56.6%) recovered from April (43.9%), and was similar to March (55.8%). A sustained improvement in the overall result would also require a consistent proportion of respondents noting positive influences on their business activity”.
BNZ Senior Economist Craig Ebert said that “overall, the results paint a picture of a slowing economy, which might struggle to live up to most forecasters’ GDP growth forecasts”.
