Services industry growth quickens in May

New Zealand’s services industry growth quickens in May as new orders jump

By Margreet Dietz

June 18 (BusinessDesk) - New Zealand’s services sector expanded at an accelerated pace in May, posting its second-highest rate of growth in the past 11 months, according to the BNZ - BusinessNZ performance of services index (PSI).

The PSI for May was 57.3, which was 0.9 points higher than the April reading. A PSI reading above 50 indicates that the service sector is generally expanding; below 50 that it is declining.

“The positive signals in May from the PSI reinforce improvement we have seen in the index over recent months, following a somewhat weaker patch earlier in the year,” BNZ senior economist Doug Steel said in the report.

“New orders surged higher to a very strong 64.6 — a reading only bettered twice in the past 10 years,” Steel noted. “It signals good demand for services and bodes well for sales ahead.”

New Zealand’s latest GDP data, for the March quarter, are set for release on Thursday. BNZ predicts the Statistics New Zealand report will show 0.5 percent growth for the first quarter on a seasonally adjusted basis, according to Steel. That compares with a 0.6 percent pace in the fourth quarter of last year, a rate that disappointed economists.

“A composite index (PCI), of the improving PSI along with an above average reading in last week’s performance of manufacturing index (PMI), cautions against extrapolating any softness in Q1 GDP too far forward,” Steel said.

The New Zealand dollar recently traded at 69.35 US cents at 10.50am Wellington time, compared with 69.49 cents at the close on Friday.

(BusinessDesk)

© Scoop Media