Services sector expansion stalls

BusinessNZ chief executive Phil O’Reilly Photo / Mark Mitchell

New Zealand's services sector, which makes up about 70 per cent of New Zealand's economy, expanded at a slower pace in January, with hiring at its weakest since August 2009 even while new orders climbed.

The BNZ BusinessNZ performance of service index for January fell
1.3 points from December to 50.8.

A PMI reading above 50 indicates service activity is expanding, while a reading below 50 indicates contraction.

For the first time a composite index, the PCI, was published of the PSI and its sister survey, the performance of manufacturing index.

The GDP weighted index fell to 51.3 from 52.2 in December, while the free-weighted index fell to 52.2 from 52.6

The PCI "does not signal a strong pick-up is underway, although there is some encouragement from the positive new orders," BNZ economists said.

Still, it also fails to show an economy re-entering recession.

The PSI showed activities and sales were little changed at 50.3 as were supplier deliveries at 50.2. New orders/business rose to 54.8 and stocks and inventories was at 51. Employment contracted, at 47.8.

BusinessNZ chief executive Phil O'Reilly said that the uninspiring result for the January PSI would have been worse had it not been for continued strength in new orders/business.

"While new orders/business fell from December, it remained high enough to ensure there was a degree of expansion in January.

"Looking at the other end of the spectrum, the drop in employment to its lowest level since August 2009 was an unwelcome result, and represents four consecutive months in decline," he said

- BusinessDesk and NZ Herald Online