Outside the zone – PSI

20 Sep 2021

35.6

August

-20.3

Monthly Change

contracting

previously expanding

View Kirk Hope's profile

Kirk Hope

Chief Executive, BusinessNZ

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New Zealand's services sector fell back in contraction during August, according to the BNZ - BusinessNZ Performance of Services Index (PSI).

The PSI for August was 35.6 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining).  This was the second lowest level of activity since the survey began, with the April 2020 result still the lowest during the national lockdown last year.

BusinessNZ chief executive Kirk Hope said that like its sister survey the PMI, the national lockdown was the sole influencing factor causing service sector activity levels to plunge into contraction.  Even for those outside Auckland moving down alert levels to resume business activity, there will be residual effects at least through September with both uncertainty and lower alert level restrictions playing their part.

BNZ Senior Economist Craig Ebert said that "while the August result wasn’t quite as bad as the 26.0 it plunged to in April 2020, the September 2021 result might be the better marker as the first half of August’s trading would have been solid, if July’s PSI result of 55.9 was any lead."

View the PSI Time Series Data


Main Indicies

Regional Results

Services Landscape
View Craig Ebert's profile

Craig Ebert

Senior Economist, BNZ

The PSI

While we all understand the need to control COVID-19, it’s also important to recognize how much damage lockdowns do to the economy. Encouragingly, business expectations for future activity levels have been holding up better than they did during last year’s lockdowns. However, the latest hit to the economy appears roughly comparable.
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Composition

Similarities to last year’s (first) lockdown were also evident in the latest PSI’s component detail, in that Activity/Sales (25.8) and New Orders/Business (32.8) were hit the hardest.  And, it was no surprise to see the overwhelming majority of comments denoted as “negative”, with reference to COVID.
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Industry features

By industry, there was a familiar pattern regarding who suffers the most from lockdowns. Accommodation, Cafes & Restaurants, for example, slumped to 21.4, which was about as bad as things got back in April 2020 (18.1). Cultural, Recreational & Personal was the weakest industry in August 2021, however, with 20.0.
Read more

GDP inferences

While it’s difficult to map the PSI (and PMI) precisely onto GDP, there is certainly a warning in August’s composite PCI that the hit to Q3 2021 GDP could be closer to what we saw in Q2 of 2020 than is the consensus view.
Read more

View the BNZ Services Landscape

PSI Time Series Table

The results are seasonally adjusted.

National IndiciesAug
2020
Apr
2021
May
2021
Jun
2021
Jul
2021
Aug
2021
BNZ - BusinessNZ PSI 47.660.656.457.855.935.6
Activity/Sales 46.661.958.761.861.025.8
Employment47.861.054.356.454.849.2
New Orders/Business49.267.162.464.660.032.8
Stocks/Inventories49.455.251.250.651.448.0
Supplier Deliveries45.447.045.345.946.826.8

View the PSI Time Series Data

BNZ - BusinessNZ PSI Time Series

July 2014 – August 2021

PSI Time Series Graph

International Results

J.P. Morgan Global Manufacturing PSITM
3 Sep 2021

52.9

International PSI

BNZ - BusinessNZ PCI

36.2

GDP-Weighted Index

38.0

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 August PCI both fall into significant contraction.

The August GDP-Weighted Index (36.2) decreased 20.9 points from July, while the Free-Weighted Index (38.0) fell 21.6 points.

PCI Time Series Table

The results are seasonally adjusted.

National IndicesAug
2020
Apr
2021
May
2021
Jun
2021
Jul
2021
Aug
2021
GDP-Weighted Index 48.159.756.958.157.136.2
Free-Weighted Index49.859.157.959.459.638.0

View the PCI Time Series Data

BNZ - BusinessNZ PCI Time Series

July 2014 – August 2021

PCI Time Series Graph