NZ services sector strong in February
Activity in NZ's services sector, which accounts for about two-thirds of the economy, dipped slightly last month but remains strong with broad-based growth.
20 March 2017
Activity in New Zealand's services sector, which accounts for about two-thirds of the economy, dipped slightly last month but remains strong with broad-based growth.
The BusinessNZ-BNZ performance of services index fell 0.7 points to 58.8 in February, above the long-term average of 54.1.
Three of the five sub-indices increased, and all remained above the level of 50 that separates expanding activity from contraction.
Bank of New Zealand economist Doug Steel said the tight range in the PSI of 58.3-to-59.5 range over the past four months and the four-year range of 53.4-to-59.6 underscored the strength of the sector.
"The persistently high level of the PSI indicates that the service sector is growing at a strong and steady pace," Mr Steel said.
"Indeed, such growth was integral to NZ posting positive economic growth in last week's Q4 GDP (gross domestic product) figures, when manufacturing and primary sector activity dipped."
Sales and new orders both dipped, with sales down 0.1 points to 60.6 and new orders falling 2.2 points to 61.8, though both sub-indices posted their fourth consecutive month above the 60 mark.
Employment rose 0.9 points to 54.6, meaning it entered its fifth year without contraction, while supplier deliveries rose 1.7 points to 58.8 and stocks gained 0.1 points to 57.5.
The PSI strength, combined with gains for the performance of manufacturing index last week, points to GDP growth ahead, Mr Steel said.
The composite index, which marries the PSI and PMI, dipped 0.4 points to 58.3 on a GDP-weighted basis and gained 0.6 points to 57.4 on a free-weighted basis, with the latter mainly due to the lift in manufacturing activity.
"It is supportive evidence to the idea that economic growth has picked up a bit in early 2017 following a deceleration in the final quarter of 2016," he said.
Building consents and house sales continued to slow, albeit from a historically high level, with house sales down 10 per cent in February and trend residential building consents in January about 5 per cent lower.
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