Activity in New Zealand’s services sector grew at a slower pace in November as sales eased and supplier deliveries declined.
The BNZ-Business NZ performance of services index fell 1.9 points to 53.5 in November, below the long-run average of 54.5. The PSI was slightly more negative than its sister survey – the performance of manufacturing index – which dipped 0.2 points to a seasonally adjusted 53.5 in November, holding near the 53.7 long-run average.
Any reading above 50 indicates growth.
The composite index – which combines both indices – fell 1.7 points on a GDP-weighted basis to 53.5 and was down 0.9 points on a free-weighted basis to 53.8.
“Overall, the latest PSI result adds to the evidence that growth in the service sector has settled at a slower pace over the past six months compared to what prevailed previously,” Bank of New Zealand senior economist Doug Steel said in a note.
Slower activity/sales stood out on the softer side in November, with this sub-index easing to 53.6 from 57.6 in October. Supplier deliveries were also weak, dipping below the 50 mark that delineates expansion from contraction, said Steel. It was at 48.5 versus 50.9 in October.
Steel noted, however, that slower sales haven’t led to a build-up in inventory with the stock/inventories sub-index slipping 1.4 points to 50.7, its lowest rate in 18 months. He also said demand doesn’t appear weak given that the new orders/business measure remained firm at a reading of 57.3, down 0.9 points.
“Whatever the case, the balance of supply and demand will be important to watch over the coming months,” he said.
One PSI component showing strength in November was employment. This lifted to 54.7 from 53.7 in October, indicating “a clear pick up in service sector employment growth has occurred early in the final quarter of the year,” said Steel.
He said the data adds to the view that New Zealand’s economic growth has remained robust in the second half, but won’t match the June quarter strength when it expanded 1 percent.
Economists expect data Thursday to show that the economy expanded 0.6 in the September quarter, according to a Bloomberg poll. The Reserve Bank forecasts quarterly growth of 0.7 percent.