NZ services sector expansion subdued in May on rough weather

The services sector expanded in May for the seventh consecutive month, but the rate of expansion softened as some sectors were affected by rough weather, the Business NZ/BNZ Performance of Services Index shows.

Here is the full announcement below from BusinessNZ/BNZ and the interactive chart below:

The service sector as a whole continued to push forward in May, but the rate of progress has eased back a touch. May’s Performance of Services Index stood at a seasonally adjusted 53.3, down a smidge from 53.9 in April that itself was down from 56.7 in March. Despite easing over the past two months, the PSI remains above the breakeven 50 mark indicating the sector is expanding.

The seasonally adjusted BNZ - Business NZ Performance of Service Index (PSI) for May stood at 53.3, down 0.6 points from April but the seventh consecutive month in expansion. The May 2010 result was also the highest May figure recorded since 2007.

All five sub-indices were in expansion mode for the third consecutive month - the first time since late 2007. Encouragingly, activities/sales (55.0) rose 1.7 points from April, although new orders/business (55.7) dipped to its lowest value since October 2009. Employment (50.8) slipped 3.6 points from April to be at a similar level to February. Supplier deliveries (51.2) returned to a similar level experienced in January, while stocks/inventories (50.9) returned exactly to its March result. Unadjusted activity was positive in the North Island, but negative in the South Island.

The Central region (54.9) again led the way, albeit lower than in April. The Northern region (52.4) improved 1.6 points from April after a significant fall the previous month. Both South Island regions remained in contraction in May, with the Canterbury/Westland region (44.7) slipping further. The Otago/Southland (48.3) region was largely unchanged from April. Results for the various service sectors showed a variety of results for May.

At one end, property & business services (59.1) continued to display strong growth, in addition to retail trade (57.5) picking up significantly from April. At the other end, accommodation, cafes & restaurants (39.4) fell further in decline during May, while transport & storage (47.1) recovered somewhat from April.

Three of the four firms by employment size showed expansion during May, with medium-large sized firms (51-100) (54.6) again leading the way in terms of expansion (albeit at a lower level than April). Small-medium sized firms (11-50 workers) (49.7) dipped to show slight contraction, while micro-sized firms (1-10 workers) (52.4) showed the reverse with an improvement on April’s result. Large sized firms (101+ workers) (51.9) improved significantly from the previous month, returning to activity levels experienced in March.

The further dip in the level of expansion during May also meant the proportion of positive comments from respondents decreased to 50.6%, compared with 53.2% in April. The largest proportion of negative comments was centred on the wet weather conditions experienced throughout the country.