Kirk Hope

Chief Executive, BusinessNZ

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Activity in New Zealand’s services sector improved from the previous month, but still recorded contraction, according to the BNZ - BusinessNZ Performance of Services Index (PSI).

The PSI for December was 49.2, which was up 2.5 points from November (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining).  The PSI averaged 47.0 over 2020.

BusinessNZ chief executive Kirk Hope said that the December result typified a difficult year for the sector, with half the year spent in contraction.

"While June and July showed a post-lockdown recovery, the remainder of 2020 displayed either soft expansion or contraction.  The two key sub-indices of activity/sales and new orders/business failed to show any consistent pattern of expansion, while the remaining sub-indices spent a significant proportion of time under the key 50.0 mark".

BNZ Senior Economist Craig Ebert said that "activity indicators such as these have had their work cut out lately, in trying to nail GDP to the nearest percent. In any case, the composite index is consistent with our view that NZ real GDP will be broadly flat over the six months to March 2021".

View the PSI Time Series Data

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Main Indicies

Regional Results

Services Landscape

Craig Ebert

Senior Economist, BNZ

The PSI

After bobbing up to the surface back in June and July, New Zealand’s Performance of Services Index (PSI) has since been treading water. This was affirmed in December’s reading.
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Industry

By industry, Transport & Storage remained the most obvious weak spot, with an (unadjusted) index of 31.3, from 33.3 in November. Could this (and the noted weakness in supplier deliveries) be yet another manifestation of the supply problems we keep hearing about?
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QSBO Parallels

As it turned out, the latest PSI gelled with the services component of last week’s NZEIR Quarterly Survey of Business Opinion (QSBO), in that the latter was still reserved in its reports of activity regarding the trailing three months.
Read more

GDP Growth Touch and Go

It wasn’t just the PSI that was labouring in December. So too was the Performance of Manufacturing Index (PMI), which stumbled to 48.7, from 55.3 in November. Combined, the PSI and PMI painted a picture of GDP struggling to expand, after the latter’s massive rebound in the September quarter.
Read more

View the BNZ Services Landscape

BNZ - BusinessNZ PSI Time Series

January 2016 – December 2020

International Results

J.P. Morgan Global Manufacturing PSI^TM
6 Jan 2021

51.8

49.2

GDP-Weighted Index

49.1

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 almost identical results during December.

The December GDP-Weighted Index (49.2) increased 1.5 points from November.  The Free-Weighted Index (49.1) decreased 1.4 points after showing slight expansion in November.

BNZ - BusinessNZ PCI Time Series

January 2016 – December 2020