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NZ services sector stalls in August

Monday 17th September 2012

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New Zealand's services sector stalled in August, led by a fall in employment and activity and sales, according to the BNZ-BusinessNZ performance of services index (PSI).

The index was 50 in August from a revised 52.4 points in July. A reading above 50 indicates expansion. That's the lowest value for the month of August since 2008.

The decline was led by employment, down 5.8 points to 46.5, at its lowest point since July 2009; followed by activity and sales slipping 0.8 points to 51; and supplier deliveries on 46.6 points. New orders and business was still the strongest category, at 55.4 points, despite easing to its lowest level since December 2011. Stocks and inventories rose 0.5 points to 51.8.

"The international economy has been slowing over recent months, especially in its industrial sectors, related to a cooling in capital investment," BNZ senior economist Craig Ebert said in a statement. "Moreover, the New Zealand dollar has been, and still is, high."

The kiwi recently traded at a six month high of 82.85 US cents.

Last week's performance of manufacturing index slipped further into contraction on 47.2 points, with employment at its lowest since July 2009, suggesting weaker demand for exports and a resilient kiwi dollar are hurting companies.

On a regional basis, the Northland region PSI rating slipped to 49.4 points, its lowest level since October last year, while Canterbury/Westland fell back into contraction after 12 consecutive months of expansion on 47.9 points. The Central region bucked the trend on 57.9 points.

The GDP-weighted performance index, which combines the manufacturing and services indices, decreased a further 2 points to 51.4 points in August.

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