Kirk Hope

Chief Executive,

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

The PSI for April was 25.9, which was 11.4 points down from March* (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 also the lowest level of activity since the survey began in 2007.

BusinessNZ chief executive Kirk Hope said that like its sister survey the PMI, the almost total lockdown of the country at level 4 meant most businesses were either significantly affected, or simply couldn't trade at all during April.

"The proportion of negative comments for April stood at 91%, with COVID-19 the key word used throughout.  Given the move to level 2 last week for most businesses, a return to higher levels of activity is expected looking forward.  However, the social distancing restrictions that remain in place will still provide a brake for many."  

BNZ Senior Economist Craig Ebert said that "a sizable rate of contraction is what you get when businesses are forbidden from operating, especially those with a customer-facing focus. Covid-19 has seen to that, with policy responses reinforcing the sudden stop".

*Due to not running the March 2020 PSI because of COVID-19, the March figures have been obtained by taking an average of both the actual combined February 2020 and April 2020 values.  The results have then been seasonally adjusted.

View the PSI Time Series Data

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Main Indicies

Regional Results

Craig Ebert

Senior Economist, BNZ

The PSI

As low as it was, the 25.9 reading on the Performance of Services Index (PSI) for April shouldn’t have come as any surprise. A sizable rate of contraction is what you get when businesses are forbidden from operating, especially those with a customer-facing focus.
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Details

There wasn’t a great deal of variation across service industry type, with all registering very low readings for April (in unadjusted terms).
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Employment

If there was any good news in the latest PSI, it’s something we also saw in the PMI. That is, a relative resilience about staffing. Not a positive one, for sure, but a lot less negative than other aspects of the survey.
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Global

Unemployment might not look to be as bad in New Zealand as it’s getting in a global sense (witness the US jobless rate at 14.7% in April). However, our readings on the PSI and PMI are, broadly speaking, very much in the thick of the weakness we’ve seen across the world.
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View the BNZ Services Landscape

BNZ - BusinessNZ PSI Time Series

July 2014 – April 2020

International Results

J.P. Morgan Global Manufacturing PSI^TM
6 May 2020

26.5

25.7

GDP-Weighted Index

24.0

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 at their lowest levels ever.

The April GDP-Weighted Index (25.7) decreased 10.8 points from March, while the Free-Weighted Index (24.0) fell 12.4 points.

BNZ - BusinessNZ PCI Time Series

July 2014 – April 2020