New Zealand’s services sector experienced a positive and solid level of expansion heading into Xmas, according to the BNZ - BusinessNZ Performance of Services Index (PSI).
The PSI for November was 56.3. Although this down 1.4 points from October, the last three months have remained in the 56-57 expansion range (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). So far in 2013, the PSI has averaged 55.7, compared with 54.0 for the same time period in 2012.
BusinessNZ chief executive Phil O’Reilly said that the last three months have provided values which show expansion is now well entrenched. This is also clearly reflected by the positive comments by respondents.
“The proportion of positive comments is now at almost 74%, compared with 71% in October. This represents a clear signal from a large proportion of the business community that a range of influences, including the pre-Xmas rush, finer weather, the flow-on work from the earthquake rebuild and increased consumer confidence are flowing through to the main indicators of activity/sales and new business opportunities.”
BNZ economist Doug Steel noted how the labour market implications from this month’s positive results show that overall employment is on the rise. “The rise in the PSI and PMI employment indicators suggests labour demand is accelerating. These indicators are consistent with the unemployment rate falling below 6% in short order. Our current projections have annual employment above 3% by mid-2014 – or sooner going by these PMI and PSI indicators.”
All five main sub-indices were again in expansion during November, which has now been the case for the last seven months. New orders/business (60.8) remained on top, with seven of the last eight results showing a post-60 point value. Activity/sales (58.3) experienced a minor dip in expansionary levels for November after a sharp pick-up for the previous month, while employment (54.4) recorded its highest value since April 2012. Both stocks/inventories (51.2) and supplier deliveries (50.5) experienced a drop in expansion from October.
Activity was positive across most parts of the country in November. In the North Island, the Northern region (60.9) experienced an almost identical result to October, and the first consecutive post-60 results since the same period last year. The Central region (58.7) increased 6.1 points from October to record its highest level of expansion since March 2012. In the South Island there was changing fortunes from the previous month, as the Canterbury/Westland region (46.8) experienced a decline, while the Otago/Southland region (72.4) saw strong growth, mainly due to strong new orders/business and sales.
The seasonally adjusted BNZ - BusinessNZ Performance of Composite Index or PCI (which combines the PMI and PSI) for November saw both options for measuring the PCI remain in solid expansion. The GDP-Weighted Index (55.8) decreased 1.3 points from September, while the Free-Weighted Index (56.8) rose 0.6 points.
Link to the November PSI & PCI
Link to PSI time series data
Link to PCI time series data
Link to the PMI & PSI release date schedule