The pace of expansion in New Zealand's service sector slowed last month but is still pointing to a pick-up in activity, according to the BNZ-Business NZ performance of services index (PSI).
The index fell 1.9 points to a seasonally adjusted 53.9 in March, where a reading above 50 indicates expansion. Four of the five sub-groups expanded last month, with new orders/business at 60, employment at 52.4, and activity/sales and stocks/inventories each reporting 51.6. Supplier deliveries was the only sub-group to contract with a reading of 48.3.
"March's PSI result builds on February's uplift, which along with the services elements of the NBNZ (National Bank Business Outlook) and QSBO (quarterly survey of business opinion) business surveys reinforces the notion that the services sector is in a solid growth pulse," BNZ economist Craig Ebert said. "Information is information. And the signal we're getting is increasingly positive."
The PSI's sister series, the performance of manufacturing index, last week showed the sector also slowed its pace of expansion in March, but indicated the industry probably made a decent contribution to first-quarter gross domestic product, according to BNZ economists.
A composite measure of the two series showed monthly declines from February on both a GDP-weighted index and free-weighted index, though both measures showed expansion.
Service sectors were mixed in the month, with health and community services showing the biggest expansion at 64.2 followed by property and business services at 60.2. Accommodation, cafes and restaurants showed the biggest contraction at 45.2, followed by wholesale trade at 47.5.
Otago/Southland was the only region to report a contracting service sector at 49.3. Canterbury/Westland was the fastest growing region at 65.6, followed by Central's 60 and Northern's 51.5.