Activity in the service sector fell back to its lowest level recorded since the survey began, according to the Bank of New Zealand – BusinessNZ Performance of Services Index (PSI).
The PSI for March stood at 50.8, which was 4.8 points down from the February result. A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining. The survey began in April 2007, with an average score over the history of the survey of 56.8.
BusinessNZ chief executive Phil O’Reilly said that although the March result was still in positive territory, the sharp fall from February, the recording of the lowest value since the PSI began, as well as a low January result has shown the first quarter of 2008 to be fairly lacklustre for the service sector.
“Comments from respondents continued to focus on negative sentiments, with various comments centred on customers/clients and other businesses spending less. Other comments relate to rising costs and current interest rate levels” he said.
Three of the five diffusion indices that make up the PSI exhibited some level of expansion, although new orders/business (52.9) fell sharply from February and exhibited its lowest result. Activity/sales (51.8) also fell back from February, closer to the level experienced in January. Employment (48.9) declined for the first time, while stocks/inventories (49.0) also contracted for the second time in three months.
Activity by region was split between expansion and contraction. The Central (57.1) and Otago/Southland (52.9) regions both showed positive activity for March, albeit with the later having lower levels of growth than February. The Canterbury/Westland region (47.7) experienced its second and lowest level of contraction, while the Northern region (49.7) displayed a fall and first sub-50 result.
The various service sectors displayed a mix of expansion and decline. The retail trade (54.2) again took the top spot for activity, followed by health & community services (53.0). In contrast, the lowest result was again accommodation, cafes & restaurants (42.9), which has fallen significantly since the start of the year. The remaining sectors recorded results that were close to the 50 point mark.
Click here to view the March PSI & PCI
Click here to view the PSI time series data
Click here to view the PCI time series data
For media comment: Georgina Bond, 021 959 831
