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NZ services sector on a tear as sales, new orders climb; inventories shrink

Monday 19th April 2010

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New Zealand’s services sector accelerated last month, driven by sales and new orders, heralding stronger economic growth through the remainder of 2010.

The BNZ-Business NZ performance of Services Index climbed 3.6 points to 57.3 in March, the highest since November 2007. The activity/sales sub-index had a reading of 62.9, the first time it has broken through 60 in 28 months. New orders climbed 3.8 points to 62.7. A PSI reading above 50 points indicates services activity is expanding.

The PSI follows last week’s survey on manufacturing, which showed a similar strong result, as property & business services and wholesale trade expanded. The services index is now near the levels it reached three years ago, before the recession.

“The better tones go a long way to portending the stronger growth we’re picking for the June quarter, complementing what we’ve seen in the PMI,” BNZ economist Craig Ebert said. The PSI heralds an economic recovery gathering strength this year “when there is not overwhelming evidence of it in the hard data yet.”

Among the other sub-indices, employment chalked up its six consecutive expansion at 51.9, while supplier deliveries picked up to 53.1. Stocks/inventories hovered just in contraction at 49.7.

Small to medium-sized firms (11-50 workers) recorded the strongest improvement, at 63.4. Companies with more than 101 workers slipped 3 points to 51.6.Figures on April 15 showed New Zealand manufacturing is the healthiest it has been for over two years, reflecting a significant global manufacturing recovery.

The BNZ-Business NZ Performance of Manufacturing Index March figure increased 2.7 points from February to 56.3, with all five indices expanding.

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