New Zealand’s services sector continued to push higher in terms of expansion, according to the BNZ - BusinessNZ Performance of Services Index (PSI).
The PSI for October was 58.2. This was up 1.8 points from September and the highest level of activity since November 2007 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). Compared with previous October results, the 2013 value was the highest since 2007 when the survey began. So far in 2013, the PSI has averaged 55.6.
BusinessNZ chief executive Phil O’Reilly said that a second expansion level over the 58.0 mark in the last four months is indicating how the sector is building further momentum after the first half of 2013.
“Nobody could complain about the levels of activity experienced during the first six months, which were very healthy and consistent at around 55.0. However, the second half of 2013 is shaping up as another step above that, with new orders and activity/sales particularly strong.
BNZ Senior Economist Craig Ebert said the new-orders component of the PSI was sending a strong signal that production would keep expanding briskly.
“This PSI result, like the latest PMI, gives further positive indication that GDP growth is picking up to an above-trend pace,” Mr Ebert said.
All five main sub-indices were in expansion during October, with none showing a decline for six consecutive months. New orders/business (63.0) increased a further 1.7 points from the previous month to match its result in July, while activity/sales (60.9) also produced a post-60 value. Stocks/inventories (54.8) increased after consecutive drops in expansion levels, while employment (52.8) experienced its highest result since May. Supplier deliveries (51.4) was the only index to show lower expansion than September, falling 1.7 points.
Activity was positive across most parts of the country in October. In the North Island, the Northern region (60.8) increased 3.5 points to reach its highest value since July. The Central region (52.6) also increased from the previous month, rising 0.7 points. In the South Island, the Canterbury/Westland region (54.9) experienced a slight dip in expansion levels from September, while the Otago/Southland region (46.8) continued to see-saw between expansion and decline.
The seasonally adjusted BNZ - BusinessNZ Performance of Composite Index or PCI (which combines the PMI and PSI) for October saw both options for measuring the PCI increase from September. The GDP-Weighted Index (57.1) increased 1.4 points from September, while the Free-Weighted Index (56.0) rose 0.5 points. The fact that both the manufacturing and services sector improved, but more so with the latter, meant the GDP-Weighted Index showed a greater improvement than the Free-Weighted one.
Link to the October PSI & PCI
Link to PSI time series data
Link to PCI time series data