New PSI survey charts service growth

Media release
14 May 2007

New PSI survey charts service growth

The first results from a new monthly survey series shows expansionary activity in the service sector.

The Business NZ Performance of Service Index (PSI) for April stood at 58.3. A PMI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining.

The first Business NZ PSI for the month of April shows growth in all component indexes, with the highest growth recorded for new orders (68.3), indicating continued expansionary activity in the foreseeable months ahead. The lowest result was for employment (51.0), which although positive, is indicative of the wider problem most businesses are currently facing regarding labour shortages.

The survey of the service sector draws on data from over 300 service sector companies around New Zealand and provides an early indicator of activity levels in the sector.

The structure of the survey is similar to the current Business NZ PMI, and is compatible with other similar surveys in the US, EU, Asia and Australia, allowing for valid comparisons between service sector activity in New Zealand and other countries.

Business NZ Chief Executive Phil O’Reilly said the result for April was a positive start and in line with similar indicators of the service sector.

“The fact that New Zealand’s service sector makes up a 71% share of industry GDP sends a signal that for now, the service sector is currently enjoying a positive growth period. However, concerns about skill shortages and the effect of the high New Zealand dollar will certainly have a dampening effect on the ability for further growth”.

Despite the strong overall result for April, the number of negative and positive comments relating to activity over the month was very similar (51.5% positive compared with 48.5% negative). Also, when comparing business activity with the same month last year, out of a score from 1 (large rise) to 5 (large fall), the average score was 2.6, indicating on balance activity was roughly the same as April 2006.

Click here for full results of the PSI.

ENDS

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