19 Jul 2021

Services sector continues to expand despite staff shortages

2:10 pm on 19 July 2021

The services sector continues to expand for the fourth month in a row, led by sales and new orders.

NFC technology, customer do payment with contactless credit card. Credit card reader implements payment execution, in the shop

Photo: 123rf

The BNZ-BusinessNZ Performance of Services Index rose 2.3 points in June from May to 58.6, well above its long term average.

Only once before has the three-month average been stronger than it was now, and that was in the June quarter of 2007.

A reading above 50 indicates the service sector is generally expanding.

BusinessNZ chief executive Kirk Hope said: "While the key indicators show very healthy expansion, comments from respondents were very similar to its sister survey, the PMI, highlighting staff/skills shortages and general logistics issues".

BNZ senior economist Craig Ebert said the indicators were strong, but supplier deliveries had contracted, suggesting capacity constraints and serious inflation pressure.

He said the combined service and manufacturing index indicated hefty growth in economic activity, suggesting 4 percent annual rate of growth in GDP was on the cards.

"At one level, this is very encouraging. At another, it suggests the economy is running headlong into even worse capacity constraint and, with it, serious inflation pressure," Ebert said.