New Zealand services PMI jumps in August, RBNZ policy decision in focus

The services sector of New Zealand, which accounts for about two-thirds of the economy showed improvement during the month of August, with all five sub-indices and geographic areas improving and above the 50-point mark that separates contraction from expansion.

The services sector in New Zealand continued to expand in August, and at an accelerated pace, data released from the latest survey of Business NZ (BNZ) showed Monday with a Performance of Services Index score of 57.9. That is up from the upwardly revised 54.4 in July (originally 54.2), and it moves further above the boom-or-bust line of 50 that separates expansion from contraction.

Further, all five of the sub-indices expanded, including sales at 61.6, new orders rose to 60.8, supplier deliveries at 56.4, while stocks and inventories at 55.9 and employment at 54.3.

"The widespread positivity in August's PSI combined with the overall good-looking Performance of Manufacturing Index from last week indicates above trend economic growth has continued," said Doug Steel, Economist, BNZ.

In addition, supplier deliveries moved out of a previous reading of contraction in August, up 8.9 points to 56.4, helping drive expansion in the services sector last month. Stocks and inventories recorded a reading of 55.9, while activity & sales 61.6, new order & business 60.8 and employment 54.3.

Meanwhile, the performance of composite index, which combines the two measures, increased 3.1 points to 57.8 on the gross domestic product-weighted basis and edged up 1.3 points to 56.8 on a free-weighted basis.

The yield on the benchmark 10-year bond, which moves inversely to its price, hovered around 2.59 percent mark, the yield on 7-year note remained steady at 2.255 percent and the yield on short-term 2-year note stood flat at 1.975 percent, while New Zealand’s benchmark S&P/NZX50 Index traded 5.98 points higher to 7,256.49 by 03:50 GMT.