The services sector continued to show healthy expansion for February, according to the BNZ – BusinessNZ Performance of Services Index (PSI).
The PSI for February was 55.6. Although this was 2.2 points lower than January, it represents ongoing growth in the sector (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining).
BusinessNZ chief executive Phil O’Reilly said that the positive economic climate at present has assisted many businesses in ensuring steady income flows, as well as new opportunities for expansion.
“Comments from respondents point to customers and clients remaining confident as they continue to have money in their pockets to spend. In addition, a number of service sector businesses continue to adapt by way of new products and opportunities to expand their sales base, including offshore”.
BNZ senior economist Doug Steel said, “The PSI reading shows that the service sector expansion remains fit and healthy. It bodes well for overall ongoing economic growth.”
All five main sub-indices were again in expansion, with activity/sales (62.1) leading the way for the first time since November. New orders/business (58.1) dipped 2.9 points during February, while supplier deliveries (51.4) dropped 3.6 points. Both stocks/inventories (52.8) and employment (52.7) were at similar levels of expansion, with the latter back to levels of expansion seen towards the end of last year.
Activity remained positive and healthy throughout the country. In the North Island, the Northern region (55.4) was up 2.9 points from January, while the Central region (59.0) experienced very similar levels of expansion compared with the previous month. In the South Island, the Canterbury/Westland region (59.1) recorded its highest level of expansion since April 2014, while the Otago/Southland region (60.9) remained above the 60 point mark.
The seasonally adjusted BNZ – BusinessNZ Performance of Composite Index or PCI (which combines the PMI and PSI) saw the two options for measuring the PCI experience contrasting movements from the previous month. The GDP-Weighted Index decreased 1.3 points to stand at 55.5 for February, while the Free-Weighted Index (56.4) rose 1.6 points.
The increase in the free weighted index was primarily due to pick up in manufacturing activity, while a drop in expansion for the services sector meant the GDP-weighted index showed lower levels of expansion for February.