Steady service for now – PSI

16 Sep 2019

54.6

August

-0.2

Monthly Change

expanding

slower rate

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Kirk Hope

Chief Executive,

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Expansion in New Zealand’s services sector dropped back marginally in August, according to the BNZ - BusinessNZ Performance of Services Index (PSI).

The PSI for August was 54.6, which was 0.2 points down from July (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining).  The August result was also above the long term average of 54.4 for the survey.

BusinessNZ chief executive Kirk Hope said that despite the slight dip in expansion levels, the services sector has managed to remain above the long-term average for a second consecutive month.

"As pointed out last month, the jury is still out as to whether the August result for the PSI is the start of a genuine improvement going forward.  Given its sister survey the PMI remains in contraction and the average long-term difference in values between the two surveys is 2.4 points, the following months will provide a steer towards whether the gap closes in a positive or negative fashion.

Of the main sub-indexes, production (56.1) decreased 1.2 points, while new orders (56.8) fell 1.6 points.

Looking at comments from respondents, the proportion of positive comments for August (51.8%) improved from July (47.6%) and June (49.0%).   

BNZ Senior Economist Craig Ebert said that "we don’t believe the services sector is giving up the ghost. The PSI backs this up. Then again, it is important that this continues, to offset the tough times the manufacturing sector is getting mired in".

View the PSI Time Series Data


Main Indicies

Regional Results

Services Landscape
View Craig Ebert's profile

Craig Ebert

Senior Economist, BNZ

The PSI

New Zealand’s Performance of Services Index (PSI) continues to rumble along at a trend-like pace. Its August reading, of 54.6, was barely different to July’s 54.8 and, more to the point, was close to its long-term average of 54.4.
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Global Context

The firmness in the NZ PSI of late is all the more important, given the contractionary tone that is now infiltrating the Performance of Manufacturing Index (PMI). The latter printed at 48.4 in August. Yet it’s not a great surprise to see this split – of the PMI being quite weak compared to its PSI counterpart.
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GDP

In New Zealand’s case, the relatively robust PSI provides a key backstop to our near-term view on GDP growth. June quarter’s GDP is due for publication this coming Thursday.  While we expect it expanded 0.3% (undermined by falls in manufacturing, goods exports, and business investment), the services part of Q2 GDP we reckon increased about 0.6%.
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Consumer Spending

Of course, data on services industry activity in New Zealand – outside of the GDP accounts – is not exactly munificent.  However, we do have the monthly electronic card transaction values to go by, with respect to retail-type spending.
Read more

View the BNZ Services Landscape

PSI Time Series Table

The results are seasonally adjusted.

National IndiciesAug
2018
Apr
2019
May
2019
Jun
2019
Jul
2019
Aug
2019
BNZ - BusinessNZ PSI 53.352.153.753.154.854.6
Activity/Sales 53.451.855.155.157.356.1
Employment49.748.751.151.152.053.4
New Orders/Business59.055.156.155.358.456.8
Stocks/Inventories51.549.256.853.754.453.6
Supplier Deliveries51.751.351.449.748.951.6

View the PSI Time Series Data

BNZ - BusinessNZ PSI Time Series

July 2014 – August 2019

PSI Time Series Graph

International Results

J.P. Morgan Global Manufacturing PSITM
5 Sep 2019

51.8

International PSI

BNZ - BusinessNZ PCI

54.0

GDP-Weighted Index

51.9

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 August.

The August GDP-Weighted Index (54.0) decreased 0.2 points from July, while the Free-Weighted Index (51.9) also fell by the same margin.

PCI Time Series Table

The results are seasonally adjusted.

National IndiciesAug
2018
Apr
2019
May
2019
Jun
2019
Jul
2019
Aug
2019
GDP-Weighted Index 53.451.753.252.954.254.0
Free-Weighted Index53.551.552.052.552.151.9

View the PCI Time Series Data

BNZ - BusinessNZ PCI Time Series

July 2014 – August 2019

PCI Time Series Graph