Negative November – PSI

14 Dec 2020

46.7

November

-4.1

Monthly Change

contracting

previously expanding

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Kirk Hope

Chief Executive, BusinessNZ

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Activity in New Zealand’s services sector fell back into contraction during November, according to the BNZ - BusinessNZ Performance of Services Index (PSI).

The PSI for November was 46.7, which was down 4.1 points from October (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining).  This was the lowest level of activity since May 2020.  

BusinessNZ chief executive Kirk Hope said that the drop in activity was disappointing to see, but symptomatic of how COVID-19 has caused significant disruption throughout most of 2020.

"Almost all of the sub-indices were in contraction during November.  Activity/Sales (45.5) went further in contraction from last month, while New Orders/Business (52.6) experienced lower expansion levels.  Employment (49.1) remained in contraction for the 9th consecutive month, while logistical disruptions continued to be evident with Supplier Deliveries (39.8) at its lowest since April 2020."

BNZ Senior Economist Craig Ebert said that "the PSI's 3-month running average was below the 50 breakeven level in November, with a reading of 49.2. This paints a picture of momentum lost, after a couple of months of solid rebound in June and July."

View the PSI Time Series Data


Main Indicies

Regional Results

Services Landscape
View Craig Ebert's profile

Craig Ebert

Senior Economist, BNZ

The PSI

The caution we touched on last month has taken on extra meaning, with November’s Performance of Services Index (PSI) slipping to 46.7, from 50.8 in October. Indeed, it was an even weaker result than back in August, when Auckland went back into level-3 lockdown and the rest of the country level 2.
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Devil in the Details

With this, it’s natural to ask…what’s behind the weakness?  By major component we would note the exaggerated weakest in Supplier Deliveries, with a seasonally adjusted reading of 39.8 (11.4 points below its long-term average).
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Other details

Delving further into the PSI details and one runs into the fact that many of the sub-indices are not seasonally adjusted.  This is especially important for November, as this is when seasonality in the PSI peaks; when its headline index is typically flattered by 4 points, just because of the time of year.
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Other signs of a slower November

With the contractionary undertones in the latest PSI, we will remain on guard for other signs of slowing momentum (after what’s expected to be a chunky rebound in Q3 GDP, due Thursday).
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View the BNZ Services Landscape

PSI Time Series Table

The results are seasonally adjusted.

National IndiciesNov
2019
Jul
2020
Aug
2020
Sep
2020
Oct
2020
Nov
2020
BNZ - BusinessNZ PSI 53.054.447.250.150.846.7
Activity/Sales 53.255.445.652.449.845.5
Employment50.749.547.649.049.649.1
New Orders/Business54.055.447.955.057.552.6
Stocks/Inventories59.255.548.544.751.845.2
Supplier Deliveries54.356.945.142.943.839.8

View the PSI Time Series Data

BNZ - BusinessNZ PSI Time Series

July 2014 – November 2020

PSI Time Series Graph

International Results

J.P. Morgan Global Manufacturing PSITM
3 Dec 2020

52.2

International PSI

BNZ - BusinessNZ PCI

47.8

GDP-Weighted Index

50.8

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 show mixed results during November.

The November GDP-Weighted Index (47.8) decreased 3.2 points from October. The Free-Weighted Index (50.8) decreased 0.8 points, although still remained in expansion.

PCI Time Series Table

The results are seasonally adjusted.

National IndicesNov
2019
Jul
2020
Aug
2020
Sep
2020
Oct
2020
Nov
2020
GDP-Weighted Index 52.655.147.850.651.047.8
Free-Weighted Index51.557.149.152.151.650.8

View the PCI Time Series Data

BNZ - BusinessNZ PCI Time Series

July 2014 – November 2020

PCI Time Series Graph