Service sector activity expanded in August with readings for both employment and new orders positive, according to the BNZ - Business NZ Performance of Service Index (PSI) for August.
The seasonally adjusted PSI rose 1 point from July to 51.4 in August. This was, however, the second lowest level of activity since October 2009.
BNZ and Business NZ said three of the five sub-indices surveyed were in expansion mode during August. The new orders/business and activity/sales categories both notched readings of 53.9, with the former unchanged from July, and the latter up 3.6 points. Employment rose to 51.8 from 51.1 after falling in July. Supplier deliveries fell to 47.1 from 47.8 and stocks/inventories dropped to 46.5 from 52.1.
BNZ and Business NZ suggested that If the manufacturing sector was jogging on the spot, the services sector was doing doggy paddle and keeping its head above water.
"Sure, this is not the most encouraging situation to be in. And the PSI components are still bobbing around all over the show. However, there has been enough substance, on average, to keep the overall index above the 50-breakeven mark," BNZ and Business NZ said.
They took positives from the employment reading remaining in positive territory.
"Sure, it’s far from gung-ho. But it is consistent with underlying jobs growth – something the Reserve Bank certainly thinks is the trend through the recently volatile labour market data, given in dedicated discussion of this very issue in last week’s Monetary Policy Statement."
The BNZ-Business NZ PSI is a monthly survey of the services sector that aims to provide an early indicator of activity levels. A PSI reading above 50 points indicates services activity is expanding; below 50 indicates it is contracting. The main PMI and sub-index results are seasonally adjusted.
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