Service sector expansion for May continued a solid run of recent expansion, according to the BNZ – BusinessNZ Performance of Services Index (PSI).
The PSI for May was 56.2. This was identical to the result for April, and given both March and February stood at 55.7 this represents a very stable and healthy level of activity for the sector (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). Compared to previous May results, the 2013 value was the highest since the May 2007 value.
BusinessNZ chief executive Phil O’Reilly said that the healthy levels of activity, now evident for four consecutive months, is helping the sector follow a brighter path for growth than in recent years.
“However, it is important to point out that the first few months of 2012 started out in a similar fashion, but faded during the winter months. Time will tell whether other recent and positive economic indicators for the economy will lead to further expansion in the service sector.”
BNZ senior economist Craig Ebert said, “This is the strongest sustained growth pulse we’ve seen from New Zealand’s services sector since the economy began grinding its way out of recession back in 2009. No wonder the PSI jobs index is now turning clearly positive.”
The seasonally adjusted BNZ – BusinessNZ Performance of Composite Index or PCI (which combines the PMI and PSI) for May saw both options for measuring the PCI again increase. The GDP-Weighted Index (56.9) increased 0.6 points from April, while the Free-Weighted Index (58.2) rose 1.8 points over the same period. For the latter, it was at its highest level of overall activity since May 2007.
All five main sub-indices were in expansion during May. While new orders/business (59.5) and activity/sales (56.9) both exhibited a lower level of expansion from the previous month, employment (53.6) increased to its highest level of expansion since April 2012. Stock/inventories (53.7) went back into expansion after two consecutive months in contraction, while supplier deliveries (56.1) increased to its highest rate since June 2007.
Activity was again positive in three of the four regions during May. In the North Island, the Northern region (58.6) increased 3.2 points to its highest level of activity since November 2012. However, the Central region (53.2) fell back 5.2 points from April, but remained in expansion. In contrast, the Canterbury/Westland region (47.3) remained in contraction, while the Otago/Southland region (51.9) lifted 1.1 points from the previous month.