16 Oct 2023

Services sector expands after three months of contraction

1:58 pm on 16 October 2023
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(file image) Photo: RNZ / Samuel Rillstone

The services sector activity is expanding after three months of contraction.

The BNZ-Business New Zealand Performance of Services Index (PSI) gained 3 points in September to 50.7 from 47.7 the previous month.

A reading above 50 indicates expansion in the sector.

New orders led the charge at 53.9 from 48.5 in the prior month.

While activity and sales activity jumped to 50.9 from 44.9 the previous month.

However, BNZ senior economist Doug Steel said the PSI was below its long-term average of 53.5 and showed an economy which was hardly buoyant.

"The PSI managed to right its way back to positive territory in September, albeit only just," Steel said.

"It's not strong growth, I think generally speaking economic activity is struggling to expand," he said.

"If you look at the detail of the PSI improvement on last month and if you put it together with last week's PMI of 45.3, it suggests that economic activity is struggling to expand."

Despite monthly sales activity increasing, sales were negative in the September quarter at 45.4, dropping four points from the June quarter at 49.2, Steel said.

In the regional statistics, Otago and Southland steamed well ahead of others as their performance of services index rose from 43.9 in August to 63.2.

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