Sharechat Logo

Perky services sector in Janary soothes fears over cooling economy

Monday 18th February 2019

Text too small?

Activity in New Zealand's services sector picked up in January, with strong sales and new orders helping to allay fears that the economy may be poised for a downturn this year. 

The BNZ-BusinessNZ performance of services index rose 3.1 points to a seasonally adjusted 56.3 in January, compared to December, tracking ahead of its long-term average, and above the 55 reading this time last year. A reading of 50 separates expansion from contraction. 

The activity/sales sub-index jumped 9.2 points to 61.5, and up from 59.1 in January 2018; new orders/business increased 1.8 points to 61.4, compared to 58.2 a year earlier. 

Services account for about two-thirds of New Zealand's economic activity. The sector grew 0.5 percent in the September quarter, half the pace of growth in the June quarter and down from 0.7 percent in September 2017. That was largely due to shrinking production in information media and telecommunications, and transport, postal and warehousing. There was.also a sharp slowdown in retail trade and accommodation. 

Bank of New Zealand senior economist Craig Ebert said today's performance of services index, or PSI, will go some way to alleviating fears of a slowing economy as it indicates GDP growth is tracking at around trend rather than below it. 

"January’s PSI suggests that the services sector is still chugging along relatively well, as we head into 2019, rather than fading as a backbone to GDP growth," he said. 

The PSI's sister survey, the performance of manufacturing index, which was released on Friday, showed growth in new orders slowed for a third month in January, raising the prospect of a slowdown. 

Combining the two surveys, the index of composite performance rose 2.3 points in January compared with December - reaching 56.1 on a GDP-weighted basis. It was also higher than the 55.4 reading a year earlier. On a free-weighted basis, the compositive measure edged up 0.2 of a point month-on-month to 55.3, but was down from 55.9 a year earlier. 

The PSI's employment sub-index rose 2.6 points to 52.9, above the 50.7 reading a year earlier, while supplier deliveries edged up 0.2 of a point to 51.9, and was below the 53.4 reading a year earlier. 

The only sub-index below the 50 mark - indicating a contraction in activity - was a 49.9 reading for stocks/inventories, down from 51.2 in December and 53.2 a year earlier. 

BNZ's Ebert said the dip in the inventories index appeared to be driven by the increase in sales and new orders. 

(BusinessDesk)



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar becalmed on US-China trade/politics nexus
Govt to pull Infrastructure Commission into Auckland port imbroglio
Wind to displace diesel for Stewart Island power
Eroad's five year target: doubling unit sales
Blinky boxes and gobbledegook: tips for choosing a cyber-security vendor
Govt support for NZME/Stuff merger difficult, not impossible, says Jarden
NZ dollar stalled; US-China trade signals remain mixed
Ryman warns NZ, Australia to take population ageing more seriously
MARKET CLOSE: NZ shares fall as US-China trade concerns weigh on markets; Ryman slips
NZ dollar stalled; US-China trade deal may be postponed

IRG See IRG research reports