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Making coffee - Source: ONE News
The service sector has climbed out of decline for the first time in over a year, according to the latest Performance of Services Index (PSI).
The BNZ Capital-Business NZ index for July saw the service sector rise 5.1 points from the month before to 50.1 - the first time the sector has stepped into expansionary territory (above 50.0) since March 2008.
Of the indicators making up the index, activity/sales and new orders/business were in expansion. Employment, stock/inventories and deliveries remained in contraction but all showed improved results.
The health and community services sector showed the strongest level of expansion, followed by the transport and storage sector.
Regionally, the service sector in two of the four regions is expanding, with Canterbury/Westland (53.1) and Northern (51.2) showing their strongest levels since last year.
The Otago/Southland region slipped back slightly on its June levels to 43.7 and the Central region languished in its record low of 45.8.
Business NZ CEO Phil O'Reilly is encouraged by the results but says they should be treated with a measure of caution.
"New Zealand is now ahead of the game compared with service sector activity levels on the global scale (46.5)...But other comments show many businesses still struggling, and the possibility of further closures and staff layoffs are not out of the question," he says.
Similarly, BNZ Capital senior economist Craig Ebert says some regions are still firmly in contraction and industry sectors such as finance and hospitality also need to show improvement.
"However, the signs are there that genuinely higher production and a more concerted pulse in subsequent New Zealand PSI surveys is in store. There are positive signs of progress and we might even say that New Zealand's PSI overall is now getting the better of its global competitors," he says.
New Zealand's average PSI value for 2009 so far remains in
contraction at 45.9 compared with 49.1 in 2008 and 58.1 in
2007.
