Service sector growth at lowest level since 2012
New Zealand’s services sector activity grew at its slowest pace in more than six years in March, potentially signalling a slowdown in the domestic economy.
The BNZ-BusinessNZ performance of services index fell 0.7 of a point to a seasonally adjusted 52.9 compared to February and was 6.5 points lower than in March 2018. That's the lowest reading since December 2012. The index remains below the long-term average of 54.5. A reading above 50 indicates expansion.
Services account for about two-thirds of the national economy. BusinessNZ chief executive Kirk Hope said there were several concerning elements that contributed to the easing of activity for March.
“New orders/business, which is a key component to overall activity, dropped to its lowest point since September 2012. Activity/sales also slipped further, so all eyes will be on these key results in the months ahead to ascertain whether expansion continues its downward trend," he said.
The new orders/business measure fell 4.3 points to 54.9 versus February and was down 9.6 points from March last year. Activity/sales fell 0.9 of a point to 52.5 and were down 12.3 points from March 2018.
Bank of New Zealand senior economist Doug Steel said the PSI trends remain "OK, but a slower March reading heightens focus on the next few months to see if the slower pace is transitory or not".
The PSI's employment sub-index was at 50.9, down 0.9 of a point from February but up 0.2 of a point compared to March last year. Supplier deliveries were up 0.8 of a point at 50.8 versus February but down 4.2 points compared with March.
The stocks/inventories measure was at 49.8, up 0.6 of a point from February but down 4.6 points on the year.
The PSI's sister survey, the performance of manufacturing index, was released on Friday. It showed manufacturing activity continues to expand but at the slowest pace since July last year as production and new orders eased.
Combining the two surveys, the composite index fell 1.7 points from February to 52 on a GDP-weighted basis. That was also lower than the 57.9 reading a year earlier. On a free-weighted basis, the measure fell 2.3 points to 51.9. It had been 56.3 a year earlier.
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