Struggle street – PSI

21 Jan 2019

51.9

December

-1.0

Monthly Change

expanding

slower rate

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Kirk Hope

Chief Executive, BusinessNZ

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New Zealand’s services sector ended the year on a low point, according to the BNZ - BusinessNZ Performance of Services Index (PSI).

The PSI for December was 51.9, which was 1 point down from November (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining).  The December result was also the lowest level of expansion since September 2012, and well below the long term average of 54.4 for the survey.

BusinessNZ chief executive Kirk Hope said that despite the sector not falling into contraction at any stage during 2019, the weak December result was a disappointing end to the year.

"The headline PSI figure averaged 53.8 over 2019, which was below the 54.9 experienced in 2018 and well below the 57.0 mark for 2017.  The fact that new orders, which is one of the key sub-index values has now recorded consecutive low expansion values not seen since 2011 shows how much ground the sector needs to make up to get back on track.

BNZ Senior Economist Craig Ebert said that "December’s PSI unequivocally counsels caution for the time being. Indeed, combining the weak PSI with last week’s retreat in the PMI suggests the economy may be currently travelling at a sub-2% rate.".

View the PSI Time Series Data


Main Indicies

Regional Results

Services Landscape
View Craig Ebert's profile

Craig Ebert

Senior Economist, BNZ

Hang on a minute

As the New Year gets underway, there seems to be some hope building that the economy will do better in 2020 than it did in 2019. Various business confidence surveys have shown a little less pessimism recently. And, so the story goes, the hard data will start to show improvement before too long. If that is the story, the script did not get to the Performance of Services Index respondents in December.
Read more

Signal or noise?

At this point, it is difficult to determine if the PSI dip is a signal of more weakness ahead or rather a result of the material uncertainty prevailing through the latter part of last year.  We say this as December's economic data is notoriously tricky to decipher signal from noise with various holidays and trading day changes occuring.
Read more

Grounds for hope

With the housing market warming up again, an important consideration for the service sector – and the economy as a whole – this year is how much it encourages household spending. Evidence to date is mixed with fits and starts in the likes of the electronic cards transactions data through November and December. For the PSI, at least to date, the indications are unambiguously weak.
Read more

View the BNZ Services Landscape

PSI Time Series Table

The results are seasonally adjusted.

National IndiciesDec
2018
Aug
2019
Sep
2019
Oct
2019
Nov
2019
Dec
2019
BNZ - BusinessNZ PSI 53.354.754.455.152.951.9
Activity/Sales 53.056.454.457.853.952.6
Employment50.353.652.551.551.652.3
New Orders/Business59.556.858.862.453.754.5
Stocks/Inventories51.853.251.251.259.051.5
Supplier Deliveries52.551.850.549.651.648.6

View the PSI Time Series Data

BNZ - BusinessNZ PSI Time Series

July 2014 – December 2019

PSI Time Series Graph

International Results

J.P. Morgan Global Manufacturing PSITM
6 Jan 2020

52.1

International PSI

BNZ - BusinessNZ PCI

51.8

GDP-Weighted Index

51.2

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 again from the previous month.

The December GDP-Weighted Index (51.8) decreased 0.9  points from November, while the Free-Weighted Index (51.2) fell 1 point.  The fact that both the manufacturing and services sectors displayed lower levels of activity in December caused the two options to measure the PCI to fall.

PCI Time Series Table

The results are seasonally adjusted.

National IndicesDec
2018
Aug
2019
Sep
2019
Oct
2019
Nov
2019
Dec
2019
GDP-Weighted Index 53.854.053.754.752.751.8
Free-Weighted Index55.151.951.954.852.251.2

View the PCI Time Series Data

BNZ - BusinessNZ PCI Time Series

July 2014 – December 2019

PCI Time Series Graph