Contraction continues – PSI 15 Feb 2021 47.9January-1.2Monthly Changecontractingfaster rate Kirk Hope Chief Executive, BusinessNZ View profile Activity in New Zealand’s services sector remained in contraction for a third consecutive month, according to the BNZ - BusinessNZ Performance of Services Index (PSI).The PSI for January was 47.9, which was down 1.2 points from December (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). This was also well below the long term average of 53.8 for the survey.BusinessNZ chief executive Kirk Hope said that the January result was generally negative when examined more deeply."While New Orders/Business (53.7) remained in expansion mode, the remaining sub-indices all displayed contraction, including Activity/Sales (46.4) and Employment (46.9). Looking at the comments made by respondents, the ongoing trend of contraction was typified by the influences of the Xmas period, ongoing COVID-19 related issues (including freight challenges) and a slower return to business as usual post holidays".BNZ Senior Economist Doug Steel said that "combining last week’s very strong PMI with today’s soft PSI points to some slowing in growth. But we also need to factor in strong public sector jobs growth and a booming construction sector". View the PSI Time Series Data Main Indicies Regional Results Doug SteelSenior Economist, BNZ Soft ServeA very strong bounce in Q3 GDP and solid Q4 labour market data shows the NZ economy is generally in a much better place than forecasters thought would be the case. But that does not mean progress has been uniform.Read moreSupply Side Issues Still EvidentLooking across the major PSI components in January, softness was visible in sales activity and employment after somewhat better readings in December.Read moreHospitality HurtingAfter some better readings in previous months, the accommodation, cafes, and restaurant’s PSI slumped to an unadjusted 41.9 in January.Read moreNot all badA weak PSI result fits with our long-held cautious view around near-term GDP, including a likely decline in the first quarter of 2021.Read more View the BNZ Services Landscape PSI Time Series TableThe results are seasonally adjusted. National IndiciesJan2020Sep2020Oct2020Nov2020Dec2020Jan2021 BNZ - BusinessNZ PSI 57.450.150.846.649.147.9 Activity/Sales 56.052.450.045.651.046.4 Employment53.349.149.749.052.846.9 New Orders/Business63.854.957.252.150.953.7 Stocks/Inventories57.345.351.845.848.449.9 Supplier Deliveries56.442.943.838.939.741.6 View the PSI Time Series Data BNZ - BusinessNZ PSI Time SeriesJuly 2014 – January 2021 International ResultsJ.P. Morgan Global Manufacturing PSITM 3 Feb 202151.6 49.2GDP-Weighted Index52.5Free-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 contrasting results in January.The January GDP-Weighted Index (49.2) remained unchanged from December. However, the Free-Weighted Index (52.5) increased 3.0 points, given the PMI went into solid expansion during January. PCI Time Series TableThe results are seasonally adjusted. National IndicesJan2020Sep2020Oct2020Nov2020Dec2020Jan2021 GDP-Weighted Index 56.250.650.947.749.249.2 Free-Weighted Index52.152.251.650.749.552.5 View the PCI Time Series Data BNZ - BusinessNZ PCI Time Series July 2014 – January 2021 In this section Surveys & Statistics Performance of Manufacturing Index Performance of Services Index Compliance Cost Survey Exporters Survey Southern Cross Health Society - BusinessNZ Wellness in the Workplace Survey Reports & Publications BusinessNZ Planning Forecast International Guides & Tools BNZ - BusinessNZ PSI Time Series Data View seasonally adjusted and unadjusted time series data for the BNZ - BusinessNZ PSI BNZ - BusinessNZ PCI Time Series Data View seasonally adjusted and unadjusted time series data for the BNZ - BusinessNZ combined PMI & PSI. BNZ is delighted to be associated with the Performance of Services Index (PSI) and BusinessNZ.This association brings together the significant experience of leading business advocacy body BusinessNZ, and business finance specialist BNZ.We look forward to continuing our association with BusinessNZ and associated regional organisations, and to playing our part in the ongoing development of the New Zealand service sector. View website Media Comment For media comment, please contact: Kirk Hope, 04 496 6560 Doug Steel, BNZ 04 474 6799 Technical Comment For more information or assistance with data interpretation, please contact: Steve Summers 04 496 6564 ssummers@businessnz.org.nz Our ContributorsThe BNZ - BusinessNZ PSI contains data obtained through BusinessNZ's regional organisations About the PSIThe BNZ - BusinessNZ Performance of Services Index is a monthly survey of the service sector providing an early indicator of activity levels.A PSI reading above 50 points indicates service activity is expanding; below 50 indicates it is contracting.The main PSI and sub-index results are seasonally adjusted.About the PCIThe BNZ - BusinessNZ Performance of Composite Index (PCI) takes into account results from both the Performance of Manufacturing Index (PMI) and the Performance of Services Index (PSI). Combined results are shown in two ways: GDP-Weighted Index: Apportions the weight of the manufacturing and services index within the economy to produce an overall result. Free-Weighted Index: Combines data from both indexes to produce an overall result.Both time series for the PCI are then seasonally adjusted. Related Articles RMA shakeup long overdue Softening in September – PSI Spring is in the air Smooth operator – PSI Easing expansion – PSI View more