December Value: 56.0
Monthly Change: -0.5
Expanding: Slower rate
Solid performer
New Zealand’s services sector ended the year in solid expansion territory, according to the BNZ - BusinessNZ Performance
of Services Index (PSI).
The PSI for December was 56.0, which was 0.5 points lower than November (A PSI reading above 50.0 indicates that the
service sector is generally expanding; below 50.0 that it is declining).
BusinessNZ chief executive Kirk Hope said that 2017 ended up with expansion averaging out at 56.9, slightly up on the
56.6 for 2016. In addition, a key sub-index of new orders showed strong expansion with an average over 60 points for
2017.
“While the proportion of positive comments for December (60.0%) was down from November (68.7%), there was a heavy
seasonal factor at play, with Christmas and the holiday period being a key influence".
BNZ Senior Economist Craig Ebert said that "this above-average outcome was doubly significant, considering the
Performance of Manufacturing Index (PMI) decelerated sharply in December. Had the PSI done so too, we would have been
much more concerned that the economy might be choking back a bit, following the election".
The PSI
The Performance of Services Index (PSI) remained patently expansive for December. Index-wise it came in at 56.0,
compared to the 56.5 level it strengthened to in November. This above-average outcome was doubly significant,
considering the Performance of Manufacturing Index (PMI) decelerated sharply in December.
QSBO Services
It wasn’t just December’s PSI that suggested New Zealand’s services sector continues to expand well, post the transition
to the new government. So too did last week’s NZIER Quarterly Survey of Business Opinion (QSBO).
Merchants
Separate to services, the merchants’ category of the QSBO went a bit below par in Q4 – whether about trading activity
over the last three months, or expectations for the coming three.
Housing
Much still hinges on how the housing market pans out. The Real Estate Institute data for December failed to provide much
direction, however.