Service industry seesaws, stays in contraction: PSI

Monday 15th June 2009

New Zealand’s service industry picked up in May, while remaining in contraction for the 14th straight month, suggesting the sector still is awaiting stronger signs of improvement from the worst recession in 30 years.

The Bank of New Zealand – Business NZ Performance of Services Index (PSI) rose to 46.2 last month from 43.7 in April, having slipped from more than 47 in March. Employment jumped to 46.3, the highest since December, from 42.5. Activity/sales rose to 43.9 from 40.9. A PSI number above 50 indicates expansion while a result below 50 signifies a decline.

Government figures today showed gains in the volume of meat and dairy sales boosted New Zealand manufacturing data into positive territory for the first time in 15 months. Total manufacturing sales lifted a seasonally adjusted 0.2% in the first three months of the year, its first gain since December 2007, driven by a 23% increase in the amount of meat and dairy sold, according to data from Statistics New Zealand.

Reserve Bank Governor Alan Bollard last week forecast the economy was facing a seven-quarters-long recession, with GDP shrinking 1% in the first three months of this year. Still, Bollard said this month that there is cause for optimism for a return to growth later this year, amid higher immigration and lower borrowing costs.

“There are reasons to think we might be near the end of the rout,” said Craig Ebert, economist at Bank of New Zealand.

Today’s PSI showed little change in new orders/business at 49.7, while stocks/inventories rose 2.1 points to 44.7. Deliveries were unchanged at 44.7.

Businesswire.co.nz

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