Services industry index falls to record low

Monday 16th February 2009

New Zealand's services industry contracted for the tenth straight month in January as activity levels and employment weakened.

The Bank of New Zealand - Business NZ Performance of Services Index (PSI) fell to 42.7 last month, from 48 in December, the lowest reading since the survey began. A reading below 50 indicates a contraction.

All five diffusion indexes sank last month, with activity/sales falling to a record 37.3.

Employment dropped to 43.5 from 46.2 and new orders fell to 45.2 from 49.8. Stocks/inventories dropped to 45.7 from 49.2 and deliveries declined to 44.2 from 51.4.

The economy fell into its first recession in a decade last year and is now in its fifth quarter of contraction, according to the Treasury. The central bank slashed its official cash rate to 3.5% on January 29 and said there's room for further cuts as the global economy stumbles and inflation dissipates.

By Jonathan Underhill

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