Over the line – PSI

20 Jul 2020

54.1

June

+16.6

Monthly Change

expanding

previously contracting

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Kirk Hope

Chief Executive, BusinessNZ

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Like its sister survey in the manufacturing sector, activity in New Zealand’s services sector rose back into expansion, according to the BNZ - BusinessNZ Performance of Services Index (PSI).

The PSI for June was 54.1, which was 16.6 points up from May (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). This was the first time the sector exhibited expansion since February, and the highest value since January.

BusinessNZ chief executive Kirk Hope said that the comments from respondents underlie the two broad effects COVID-19 is currently having on the sector.

On the positive side, a number outlined a catch-up or bounce back from post lockdown conditions. However, those outlining negative comments are squarely centred on the disruption COVID-19 is still playing on their business. With comments split 44.4% vs 55.6% in terms of a negative stance, there is still scope for improvement ahead.

BNZ Senior Economist Doug Steel said that "activity/sales and new orders, which were hit hard over recent months, have led the bounce back. The activity/sales index has ramped up to 58.7 from 32.7 in May, while new orders jumped to 59.6 from 35.2. It is positive, if only one step forward after a giant leap backwards".

View the PSI Time Series Data


Main Indicies

Regional Results

Services Landscape
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Doug Steel

Senior Economist, BNZ

Better Service

The Performance of Services Index (PSI) looked a lot better in June than it has recently. In numbers, 54.1 in June versus 37.5 and 25.8 in May and April respectively. Now back above 50, the PSI indicates that the service sector is growing again. This is welcome news, even if it is growth off a low base at this stage.
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Spending Up

Improving PSI activity indicators coincide with a decent lift in the value of electronic card transactions in June. Total transactions extended the bounce from April’s lockdown lows with a lift of over 19% in June to push just above pre-COVID levels. As good as this looks, summing total transactions over the past four months compared to the same period a year earlier reveals a decline of 16.4%.
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Housing Resilient

June’s Real Estate Institute housing market figures confirmed a bounce back in activity. House sales were 7.1% higher than a year ago and are back near pre-COVID levels, on a seasonally adjusted basis. Prices were also buoyant with the REINZ House Price Index rising 0.9% in the month, to be up 8.6% on a year earlier.
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Not All Improving

Not everything is moving forward. Among the major components, employment remains the laggard. Yes, June’s 45.1 is higher than May’s 40.5, but it has only returned to levels seen during the 2008/09 recession and is still sub-50 indicating service sector job losses. It was a similar story for the Performance of Manufacturing Index (PMI) released last week.
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View the BNZ Services Landscape

PSI Time Series Table

The results are seasonally adjusted.

National IndiciesJun
2019
Feb
2020
Mar
2020
Apr
2020
May
2020
Jun
2020
BNZ - BusinessNZ PSI 53.352.236.225.837.554.1
Activity/Sales 55.454.429.311.132.758.7
Employment51.350.546.142.140.545.1
New Orders/Business55.654.732.316.635.259.6
Stocks/Inventories53.851.445.445.646.253.4
Supplier Deliveries50.044.333.925.040.453.4

View the PSI Time Series Data

BNZ - BusinessNZ PSI Time Series

July 2014 – June 2020

PSI Time Series Graph

International Results

J.P. Morgan Global Manufacturing PSITM
6 Jul 2020

48.0

International PSI

BNZ - BusinessNZ PCI

54.5

GDP-Weighted Index

55.9

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 rise into expansion for June.

The June GDP-Weighted Index (54.5) increased 16.7 points from May, while the Free-Weighted Index (55.9) rose 17.7 points.

PCI Time Series Table

The results are seasonally adjusted.

National IndicesJun
2019
Feb
2020
Mar
2020
Apr
2020
May
2020
Jun
2020
GDP-Weighted Index 53.152.536.125.637.854.5
Free-Weighted Index52.753.436.223.938.255.9

View the PCI Time Series Data

BNZ - BusinessNZ PCI Time Series

July 2014 – June 2020

PCI Time Series Graph