20 Jul 2020

Services sector surges following lockdown lows

11:06 am on 20 July 2020

New orders and sales are leading a resurgence for the services sector, which is back in growth territory following the lockdown period.

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Photo: Supplied

The BNZ-Business NZ Performance of Services Index (PSI) rose to 54.1, up 16.6 points from May.

A reading above 50 points indicates growth, and below contraction.

BNZ senior economist Doug Steel said like its sister survey in the manufacturing sector (PMI), the growth was good news, but it had come off a very low base.

"It is positive, if only one step forward after a giant leap backwards."

In April the PSI sunk to its lowest levels ever.

Steel said the lift in indicators also tracked alongside a boost in electronic card sales in June.

"Total transactions extended the bounce from April's lockdown lows with a lift of over 19 percent in June to push just above pre-Covid levels.

"As good as this looks, summing total transactions over the past four months compared to the same period a year earlier reveals a decline of 16.4 percent. That arguably better reflects the hole that the business sector has had to deal with over recent months."

Housing figures pushed the property and business component of the services sector above 50 as well, although Steel said like the spending figures, questions remained over how sustainable the improvement was.

Like PMI, employment figures lagged at 45.1 points and indicated the industry was still losing staff, albeit at a slower rate than last month.