NZ services PMI softens in June, still stays above the benchmark

New Zealand’s services sector witnessed marginal slowdown during the month of June, although it remained well above the benchmark point, suggesting that the services activity in the country is expanding, striking hopes of positivity for the country’s near-term outlook.

The performance index of New Zealand’s services sector, as measured by the Purchasing Services’ Index (PSI) slipped 0.2 of an index point to a seasonally adjusted 56.7 in June, compared to 56.9 in May. However, it remained well above the 50-point mark that separates expansion from contraction.

The measure of PSI comes immediately after a survey on the manufacturing sector indicated the fastest pace of expansion in the North Island. As it turned out, June's PSI was barely different to May's outcome of 56.9 and took the three-month average up to a very solid 57.1, reports said.

"Much like the PMI did, the PSI exhibited resilience in June, with an index reading of 56.7," said Craig Ebert, Senior Economist, Bank of New Zealand.

In addition, a composite index combining both the measures remained unchanged at 56.9 on a gross domestic product-weighted basis and edged down 0.3 of a point to 57.2 on a free-weighted basis. Also, three amongst the five sub-indices witnessed improvement in June with supplier deliveries up 2.8 points to 55.2 and inventories gaining 1 point to 53.4.

Meanwhile, employment index rose 0.4 of a point to 55.1. Activity/sales index dropped 2.1 points to 58.1, and businesses index fell 1.7 points to 58.3. Further, Ebert said that the retail trade category had been one of the strongest performers in the PSI, with a three-month average of 56.5, compared to 49.2 a year earlier.