Step Down – PSI

15 Nov 2021

44.6

October

-1.9

Monthly Change

contracting

faster rate

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Kirk Hope

Chief Executive, BusinessNZ

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New Zealand's services sector stepped further into contraction during October, according to the BNZ - BusinessNZ Performance of Services Index (PSI).

The PSI for October was 44.6 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining).  This was down 1.9 points from September, reversing some of the 11.1 point increase from August to September.

BusinessNZ chief executive Kirk Hope said that it was disappointing that the gains in September did not also flow through to October.

"The key sub-indexes of Activity/Sales (43.7) and New Orders/Business (46.4) still clearly remain in contraction, while Employment (50.0) remains unchanged.  With Auckland taking another recent step towards opening up, this will hopefully provide greater ability for a number of service sector businesses in New Zealand's largest city to lift their activity levels and prepare more fully for the Xmas period ahead."

BNZ Senior Economist Doug Steel said that "the ongoing weakness in services overall – in contrast to the improvement we saw in last week’s Performance of Manufacturing Index – fits with our thinking that any bounce in Q4 GDP will be modest, especially in comparison to the decline in Q3."

View the PSI Time Series Data


Main Indicies

Regional Results

Services Landscape
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Doug Steel

Senior Economist, BNZ

PSI pain continues

The Performance of Services Index (PSI) reveals a sector with segments enduring significant pain. Disconcertingly, October’s 44.6 result is nearly 2 full points back from September’s already very weak 46.5. Moreover, this marks the third consecutive month well below the breakeven 50 mark as Covid restrictions linger.
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Not uniform

The recent hit to service sector performance has not been uniform. Across industries for example, unadjusted PSI readings over the past three months indicate that the burden of restrictions has fallen heaviest on the likes of the cultural, recreational, and personal industries, hospitality, and transport and storage.
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Regional differences

Non uniformity is also a feature across regions. It is no surprise to see Northern remaining the weakest, given its relative tightness in Covid restrictions. In contrast, the Central and Canterbury/Westland regions posted a decent lift from prior weakness with 58.0 and 57.2 respectively in October.
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Size matters

Performance varied significantly by firm size in October.  Bigger firms tended to do better than smaller firms. At the extremes, large firms (those with 101 or more staff) outperformed (with PSI at 57.8), while micro firms (1 to 10 staff) have continued to underperform (42.3).
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View the BNZ Services Landscape

PSI Time Series Table

The results are seasonally adjusted.

National IndiciesOct
2020
Jun
2021
Jul
2021
Aug
2021
Sep
2021
Oct
2021
BNZ - BusinessNZ PSI 50.157.555.835.446.544.6
Activity/Sales 49.260.961.325.045.143.7
Employment49.756.554.349.051.450.0
New Orders/Business55.764.359.232.647.446.4
Stocks/Inventories52.350.350.947.650.546.6
Supplier Deliveries45.245.246.126.641.537.1

View the PSI Time Series Data

BNZ - BusinessNZ PSI Time Series

July 2014 – October 2021

PSI Time Series Graph

International Results

J.P. Morgan Global Manufacturing PSITM
4 Nov 2021

55.6

International PSI

BNZ - BusinessNZ PCI

45.9

GDP-Weighted Index

49.9

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 October PCI show contrasting outcomes.

The October GDP-Weighted Index (45.9) decreased 1.4 points from September, while the Free-Weighted Index (49.9) rose 0.8 points.

PCI Time Series Table

The results are seasonally adjusted.

National IndicesOct
2020
Jun
2021
Jul
2021
Aug
2021
Sep
2021
Oct
2021
GDP-Weighted Index 50.257.956.636.047.345.9
Free-Weighted Index50.559.060.837.549.149.9

View the PCI Time Series Data

BNZ - BusinessNZ PCI Time Series

July 2014 – October 2021

PCI Time Series Graph