Monday 16th July 2018 |
Text too small? |
New Zealand's services sector activity, which accounts for about two-thirds of the economy, slowed to its smallest expansion in June since December 2012, according to the BNZ-BusinessNZ performance of services index (PSI).
The PSI for June was 52.8, which was 4.3 points lower than the May reading. A PSI reading above 50 indicates that the service sector is generally expanding; below 50 that it is contracting. The last time is fell below 50 was July 2010.
"While some have discounted weak business confidence readings of late, the PSI and PMI results are not so easily dismissed as these are surveys of business outcomes not based on sentiment, outlooks, or expectations. In this sense, they are arguably more worrying from a growth perspective," Bank of New Zealand senior economist Doug Steel said in a note.
Business confidence has taken a tumble since the new government was elected last year with the latest surveys showing it is at a seven-year low.
All five PSI sub-indices fell in the month, with activity/sales dropping 3.2 points to 54.7, and supplier deliveries down 4.8 points to 48.3. Stocks/inventories dropped 3.5 points to 50.9 and new orders/business fell 5.5 points to 58.6. Employment fell 3 points to 50.
While the June result may be just "monthly noise" after a strong result in May "we are wary of dismissing June’s weakness out of hand, given the PSI is not usually that volatile and the weaker result echoes last week’s softer performance of manufacturing index (PMI)," said Steel.
The PSI comes after the manufacturing PMI survey for June released last week showed activity slowed to its lowest level in six months.
The seasonally adjusted composite index, which combines the PSI and the PMI, fell 4.2 points to 52.7 on a GDP-weighted basis and fell 3.4 points to 53.1 on a free-weighted basis.
(BusinessDesk)
No comments yet
PGW Guidance Update
CNU - Commerce Commission releases draft expenditure decision
Spark announces departure of Product Director
TGG - T&G appoints new Director
April 18th Morning Report
SKC - APPOINTMENT OF CHIEF EXECUTIVE OFFICER
Devon Funds Morning Note - 17 April 2024
Consultation opens on a digital currency for New Zealand
TWL - TradeWindow's $2.2 million capital raise now unconditional
April 17th Morning Report