New Zealand’s services sector expands slowly in September, PMI remains above 50-point mark

The services sector of New Zealand economy expanded at a slower pace during the month of September, with the unit’s Purchasing Managers’ Index (PMI) remaining well above the 50-point threshold mark that demarcates expansion from contraction in economic activity.

The BNZ-BusinessNZ performance of services index declined to a seasonally adjusted 54.1 in September from an eight-month high of 57.9 in August. However, all of the five sub-indexes remained above the 50 level that separates contraction from expansion.

Further, the survey showed large firms experienced a contraction in the month, with a reading of 46.4, and also had a weaker reading in last week's Performance of Manufacturing Index. Moreover, the performance of composite index, which combines the two measures, declined to 54.6 from 57.5 on the GDP-weighted basis, and slid to 55.9 from 56.7 on a free-weighted basis, data showed.

"The Performance of Services Index (PSI) suggests service sector growth is tempering. albeit at a touch slower pace, remains widespread with positive readings across the major headline indices covering sales, employment, and new orders as well as across all industries and regions and most firm sizes," said Doug Steel, Senior Economist, Bank of New Zealand.

In addition, the reading for employment index slipped to 51.6 from 54.2, while activity/sales declined to 57.3 from 61.4; new orders/business fell to 56 from 60.4, while stocks/inventories slid to 53.3 from 55.8. Also, supplier/deliveries sank to 51.7 from 56.3.

Meanwhile, according to a data released last week, companion PMI of manufacturing activity rose in September to its highest levels since January this year.