BusinessDesk: NZ services sector growth slowed in December, though employment still strong

New Zealand’s services sector growth slowed in December as activity and supplier deliveries contracting, while employment remained strong.

The BNZ-BusinessNZ Performance of Services Index fell 5.6 points to 50.6 last month, reversing its gain in November. A reading above 50 signifies expansion.

Signs that firms are still willing to take on new workers bodes well for the outlook for the economy, even while other elements of the PSI were weaker, said Bank of New Zealand economist Craig Ebert. It follows the release last week of the sister survey on manufacturing (PMI), which showed employment grew in December for the first time since March.

“Most every business survey we’ve clapped eyes on over the last month or two has maintained a constructive view on staffing,” Ebert said. “This is a good omen to New Zealand’s labour market remaining the backbone to the economy this year.”

Of the five sub-indexes, three showed expansion last month. New orders/business rose to 53.6, employment was at 52.7 and stocks/inventories was at 51.9. Activity/sales fell to 49.7, the first contraction since July 2010 and supplier deliveries fell to 48.6, the first contraction since March 2011.

Canterbury/Westland was the region showing the greatest expansion in December, at 55.3, still the slowest since July last year. The central region was on 54.5 while Northern eased back to 51.7. Otago/Southland tumbled 10.3 points from November to 50.5.

(BusinessDesk)