NZ services sector activity comes off its highs in October

Monday 16th November 2015

New Zealand's services sector, which accounts for about two-thirds of the economy, expanded at a slower rate in October as it came off its highest level in almost eight years.

The BNZ-BusinessNZ seasonally adjusted performance of services index slipped to an eight-month low of 56.2 in October, down from 59 in September which was the highest since November 2007. All of the five sub-indices were above the 50 reading that separates contraction from expansion.

The slowing of activity in the services sector comes after last week's sister survey of manufacturing also showed weaker activity, declining to a seasonally adjusted 53.3 from 55. Still, service sector activity was coming off near-record highs and remained healthy, particularly in the key areas of sales and new orders, boding well for the sector, the report said.

"The PSI and PMI still give the impression of an economy growing at a comparatively solid pace at the outset of Q4, following a champing performance through Q3," Bank of New Zealand senior economist Craig Ebert said in the report.

BNZ is betting third quarter gross domestic product, scheduled for release on Dec. 17, will show quarterly growth of 0.5 percent for an annual rate of 1.9 percent.

The latest PSI showed activity/sales slipped to 57.6 in October from 62.7 in September, while new orders/business fell to 57.1 from 62.8. Employment dropped to 52.7 from 53.6, while stocks/inventories declined to 56.1 from 57. Meanwhile, supplier/deliveries advanced to 56 from 55.2.

The proportion of positive comments declined to 61.8 percent in October, from 65.8 percent in September, with no clear patterns emerging, although many felt that conditions were "ticking along as usual", the report said.

BusinessDesk.co.nz

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