Service sector blips up despite retail recession

The latest Bank of New Zealand - Business NZ Performance of Services Index (PSI) indicated a retail recession, as retail sales figures dropped for two successive quarters. Despite this, the New Zealand services sector recovered slightly in the month of July, although it was still contracting. The July figure was 48.9, up 3.3 points from June and steady with April. However, the July figure was under 50, indicating that the services sector still contracted. The figure was 6.3 points down from July 2007. Retail sales dropped for two consecutive quarters, down 1.5% in the June quarter following a 1.2% drop in the first quarter. New orders/business remained the strongest index at 52.7, up from its lowest figure of 51.4 since the survey began. Activity/sales (47.9), employment (47.5) and supplier deliveries also improved on June figures. Stocks/inventories (46.7) remained stable. Regionally, the Central and Canterbury/Westland regions experienced growth in July, at 54.9 and 51.1 respectively. Northern region was up 4.3 points to 48.2 whilst Otago/Southland lagged behind at 40.4, although this is up from June. Micro firms (1-10 workers) were the best performing firms in July at 51.3. Large Firms (101 plus workers) were at their lowest level since the survey began, at 44.1. The PSI is conducted monthly to provide an early indicator of activity levels in the services sector.