Service sector continues expansion

Media release
August 20, 2007

Service sector continues expansion

Service sector activity is continuing to expand, although not at levels recently recorded, according to Business NZ’s monthly survey.

The Business NZ Performance of Services Index (PSI) for July stood at 55.2, which was down from the 57.8 and 58.5 recorded in June and May respectively. A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining. The survey has now been running for four months.

Four of the five diffusion indices that make up the PSI showed expansion in July. New orders/business (61.8) was again strong, but down from the 66.1-68.3 values recorded for the first three months. Activity/sales (56.4) took a similar dip, while employment (51.7) and supplier deliveries (52.4) displayed minor expansion. Stocks/inventories (49.4) continued to decrease, although this is often due to increased overall activity.

Activity was again similar across most parts of the country, although the Canterbury/Westland region (49.1) bucked the trend and recorded a result indicating a slight decline.

Most service sectors showed expansion during July, led by health & community services (63.5). Property & business services (60.1) slipped to second for ranking of industry group, although still displayed a strong level of expansion. At the other end, retail trade (48.7) experienced a decline for the first time, largely due to a fall in sales levels.

Business NZ chief executive Phil O’Reilly said that given the survey was only four months old, it was difficult to ascertain whether a continued weakening of expansion was part of a general downwards trend. Unfavourable weather conditions, as outlined by a large number of respondents, may indicate seasonal factors playing a significant role for this time of year.

The number of negative and positive comments relating to activity over the month was again very similar (52.6% positive compared with 47.4% negative). Compared with the same time last year, those with negative comments for the current month had an average score of 3.3 (where 1=large rise and 5=large fall), compared with 2.1 for those enjoying positive activity at present. Overall, the national result for activity compared with 2006 stood at 2.7, up from 2.5 in June.

Click here to view the July PSI.

ENDS

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