Service sector expansion for March was almost identical to the previous month, according to the BNZ – BusinessNZ Performance of Services Index (PSI).
The PSI for March was 55.4. This was only 0.1 point down from the previous month, following a 2.5 point increase in February (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). Compared to previous March results, the 2013 value was the highest since 2010.
BusinessNZ chief executive Phil O’Reilly said that consecutive and consistent levels of healthy expansion in the service sector have been few and far between over the last few years, so the current result is encouraging.
“Like the main result, the proportion of positive comments from respondents (64.7%) was all but identical from last month. Weather conditions dominated actual comments made, with many finding the fine weather a boost for activity. However, others providing negative comments have outlined the drought as a constraint on growth.”
BNZ senior economist Craig Ebert said, “There are question marks about the sustainability of the recent housing market upswing. However, the recent hot spots likely helped the March PSI to its still-strong reading for March, via real estate, legal and financial services.”
The seasonally adjusted BNZ – BusinessNZ Performance of Composite Index or PCI (which combines the PMI and PSI) for March saw both options for measuring the PCI edge lower from February, but still in healthy territory.
The GDP-Weighted Index (55.2) decreased 0.2 points from February, while the Free-Weighted Index (54.4) fell 1.3 points over the same period. Despite the dip, the last three months have shown a level of consistent expansion not seen since early 2010.
Four of the five main sub-indices were in expansion during March. Again, leading the way was new orders/business (58.4), which has been fairly consistent over the last three months.
This was followed by activity/sales (57.3), while employment (53.3) recorded its second consecutive increase and highest result since April 2012. Supplier deliveries (52.1) fell back 3.2 points, while stock/inventories (49.6) fell back to levels seen in December/January.
Activity was positive in three of the four regions during March. In the North Island, the Northern region (57.2) rose a further 0.7 points.
However, the Central region (45.3) fell back into negative territory after two months of consistent levels of expansion. In the South Island, the Canterbury/Westland region (58.7) displayed a similar level of expansion to the previous month, while the Otago/Southland region (62.3) also showed a close result to February.