Service sector expansion for April built on the solid performance of the previous two months, according to the BNZ – BusinessNZ Performance of Services Index (PSI).
The PSI for April was 56.1. This was up 0.5 points from both March and 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 April results, the 2013 value was the highest since the survey began in 2007.
BusinessNZ chief executive Phil O’Reilly said that in the context of the survey’s time series, the strong April result contributed to the strongest three month result since the last quarter of 2007.
“Unlike previous times where one or two months of solid expansion were followed by a drop in expansion or even contraction in the sector, the April result kicked on with stronger growth. Despite the slight dip in the number of positive comments (60% in April compared with 65% in March), there were numerous comments about the continued good weather providing on-going business activity, which helped boost the overall result.
BNZ senior economist Craig Ebert says, “The latest PSI echoes many of the features of the PMI, rocking along rather well with production and new orders leading the charge. Employment is a bit softer for now, but jobs growth is still the more general likelihood.”
The seasonally adjusted BNZ – BusinessNZ Performance of Composite Index or PCI (which combines the PMI and PSI) for April saw both options for measuring the PCI increase. The GDP-Weighted Index (56.1) increased 0.8 points from March, while the Free-Weighted Index (56.1) rose 1.5 points over the same period. This is the first time since December 2010 that both measures have produced the same value, and the highest value for the latter since May 2012.
Like March, four of the five main sub-indices were in expansion during April. Leading the way was production (62.6), which increased 4.9 points from the previous month. This was followed by new orders/business (60.7), while supplier deliveries (53.3) increased 1 point after a dip in expansion during the previous month. Employment (51.3) fell back 1.8 points but remained in slight expansion, while stock/inventories (47.1) fell back a further 2.2 points to its lowest level of activity since January 2012.
Activity was positive in three of the four regions during April. In the North Island, the Northern region (55.4) decreased 1.8 points, although contributed to a solid three months of activity. The Central region (58.4) bounced back from a strong dip in March to record its highest value since March 2012. In contrast, the Canterbury/Westland region (49.9) slipped back to all but no change for April after two similar months of strong expansion, while the Otago/Southland region (50.8) also fell back from the previous two months.