Services industry index up from record low

Monday 16th March 2009

New Zealand's services industry edged up from a record slump in February, while remaining in contraction for the 11th straight month, with activity levels weak.

The Bank of New Zealand - Business NZ Performance of Services Index (PSI) rose to 46.3 last month, from 42.7 in January, which was the lowest reading since the survey began. A reading below 50 indicates a contraction.

All five diffusion indexes remained in contraction last month, while improving from their readings in January. Activity/sales rose to 42.9 from a record low 37.3. Employment gained to 44.9 from 43.5 and new orders rose to 49.8 from 45.2. Stocks/inventories gained to 48.3 from 45.7 and deliveries rose to 47.2 from 44.2.

Reserve Bank Governor Alan Bollard last week predicted the economy shrank 0.8% in the fourth quarter and is heading for a similar contraction in the first three months of 2009. He cut the official cash rate to a record low 3% and said any further cuts would be smaller, as the economy is expected to trough mid-year.

"The services-based retail sector will remain under pressure for the near term," said Craig Ebert, markets economist at Bank of New Zealand.

By sector, retail trade showed the weakest performance in February, at 40.7, the lowest reading for the month. Property and business services rose to 43.8 and health & community services continued to expand, at 55.2.

By Jonathan Underhill

Comments from our readers

No comments yet