Kirk Hope

Chief Executive, BusinessNZ

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New Zealand's services sector continued in expansion mode during May, according to the BNZ - BusinessNZ Performance of Services Index (PSI).

The PSI for May was 56.1 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining).  Although this was down 5.1 points from its highest ever result in April, it was still above its long term average of 53.9.

BusinessNZ chief executive Kirk Hope said that the drop in the level of expansion for May was not unexpected, given the significant level of activity seen in April.

"New Zealand continues to follow global trends with strong New Orders/Business (62.1) and Activity/Sales (58.7).  However, Supplier Deliveries (45.1) remains solidly in contraction."

BNZ Senior Economist Doug Steel said that "while the current strength in the PSI (and PMI) says good things for economic growth over coming quarters, the obvious supply side stresses suggests significant upward pressure is building on inflation."

View the PSI Time Series Data

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Main Indicies

Regional Results

Doug Steel

Senior Economist, BNZ

Strong expansion

Service sector expansion remains strong. The Performance of Service Index (PSI) headline reading of 56.1 in May portrays strength. Sure, it didn’t match April’s record high of 61.2, but it is still well above its long-term average of 53.8, indicating above average growth.
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With challenges

Amid the broad positive tenor of the PSI, the service sector is not without significant challenges. First, the general lack of international tourism and education continues to see acute pain in parts, even if the trans-Tasman bubble has helped some at the margin. Second, supply side issues are pervasive and persistent.
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Demand pressuring supply

In contrast to the considerable difficulties on the supply side, demand looks vigorous. Combining PSI new orders and sales as an indicator of demand gives a May average of 60.4. That far exceeds the combination of PSI employment, inventories, and supplier deliveries which averaged 50.3 in the month.
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View the BNZ Services Landscape

BNZ - BusinessNZ PSI Time Series

July 2014 – May 2021

International Results

J.P. Morgan Global Manufacturing PSI^TM
3 Jun 2021

59.4

56.8

GDP-Weighted Index

57.8

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 lower levels of expansion for May.

The May GDP-Weighted Index (56.8) decreased 3.8 points from April, while the Free-Weighted Index (57.8) slid 1.3 points to return to expansion levels seen in March.

BNZ - BusinessNZ PCI Time Series

July 2014 – May 2021