NZ services sector activity picks up in February as jobs growth makes up for manufacturing

Monday 14th March 2016

New Zealand's services sector activity expanded at a faster pace in February, as a better employment outlook made up for a deteriorating jobs picture among manufacturers.

The BNZ-BusinessNZ performance of services index rose 1.5 points to a seasonally adjusted 56.9 last month, snapping two declines. The series has been above 50, which separates expansion from contraction, for five-and-a-half years.

Among the sub-indices, employment increased 2.4 points to 53.5. That's in contrast to a contraction in employment in the PSI's sister survey, the performance of manufacturing index released on Friday.

"The most reassuring aspect of February's PSI was the bounce back in its employment index," BNZ senior economist Craig Ebert said in his report. "This proved important in that it offset the softness in February's performance of manufacturing index on staffing, which at 48.5 moved slightly into contraction territory."

New Zealand's services sector has benefited from strong inbound tourism, robust consumer confidence in the face of concerns about the strength of the global economy, and a persistently upbeat housing market.

Today's data show new orders/business activity increased at the fastest pace, rising 2.9 points to 61.4, while activity/sales was up 2 points to 60. Stocks/inventories increased 0.8 of a point to 55.5 and supplier deliveries slipped 0.6 to 53.8.

BNZ's Ebert said the series remained above its long-term average of 53.9, with wholesale trade showing potential to resume growing in the early part of this year. However, retail showed some weakness, falling from a strong reading in January, he said.

The PMI showed manufacturing activity slowed in February as employment dropped to a two-and-a-half year low.

The performance of composite index, a combined measure of the surveys, increased 0.7 of a point to 56.7 on a GDP-weighted basis, and fell 0.4 to a free-weighted 57.1.

BusinessDesk.co.nz

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