The services sector only just made it into positive territory in October and the Rugby World Cup's (RWC) impact was probably negative overall as consumer dollars headed in that direction as opposed to other sectors of the economy, said BusinessNZ chief executive Phil O'Reilly.
The BNZ-BusinessNZ Performance of Services Index (PSI) fell 2.3 points to 50.6 in October from September and was down from 53.6 in August. A PSI above 50 points indicates the services sector is expanding while a reading below 50 indicates a contraction.
The average PSI value for calendar 2011 so far is 52.4 points, down from 53.2 in 2010 but up from 48.8 in 2009.
O'Reilly said both the balance and detail of comments from businesses illustrate the fine line the services sector is on at present.
“Looking at regional differences, a decline in activity for the Northern region to its lowest level since 2009 matches a similar result for the October PMI (Performance of Manufacturing Index),” he said.
“Given its relative weight to the economy, any upturn in national activity to finish the year on a positive note will need to see the Northern region reversing current trends.”
The survey is broken down into four regions, Northern, Central, Canterbury/Westland and Otago Southland. The Northern region dropped to 48.6 points in October from 55.8 points in September, Central fell to 54.5 from 57, Canterbury/Westland rose to 64.2 from 57.2 and Otago/Southland rose to 43.7 from 34.4.
BNZ head of research Stephen Toplis said the PSI's drop is yet another sign the New Zealand economy is struggling at the moment.
“There is nothing like uncertainty to batter business confidence and things don't get much more uncertain than they are now,” Toplis said.
Among other things undermining business confidence is the confusion created by chaos in Europe, the expected pick-up in construction activity being postponed, weak domestic demand in Australia, the post-RWC hangover and the first signs that commodity prices might fall in a meaningful way,” he said.
Other negatives are the General Election and the fall-out from the PSA kiwifruit disease in the Bay of Plenty.
“Perhaps the remarkable thing about recent confidence readings is that they are as strong as they are,” Toplis said.
(BusinessDesk)
Performance of services index
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2 Comments
Is it a wonder the economy is struggling!
One of the biggest sectors if not the largest for many reasons is the building sector...that's been smashed by the straw that broke its back...the 15% tax on everything to do with building a house...and all reno work...QED people have closed their wallets and said stuff that to bank credit....who wants to be going into debt to a bank to borrow credit to pay the govt tax...stupid to think people would leap into that fire.
You the mug Kiwi are expected to grab a fistful of credit from a bank...to give a massive chunk of it to the govt in gst...and you pay interest on that...and then the council sets your rates based on the value which includes the gst lump...happy are we?....then you pay gst on the rates that are partly assessed on the gst you forked out to build......sucker.
Another nail in TSY's forecasts for a government surplus by 2015.
TSY forecast a 6% increase in services exports for the year to June 2012. Four months in and services are not looking good. prospects for an orderly resolution of the euro area debt crisis are remote, dairy export receipts are flat and won't to make their forecast 8% gain for the year, unemployment is up rather than decreasing, and still we get fantasy BS from our campaigning politicians.
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