Cold snap for service sector firms

JAMES WEIR
Last updated 12:29 16/06/2014

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The services sector hit a cold snap in May, with the businesses still growing, but at a slower pace than earlier in the year.

Sales and activity in the services sector is expanding, but at the slowest pace since the start of last year.

The overall BNZ-Business NZ Performance of Services Index was 54.2 points in May, down 4.3 per cent in April, thought still in positive territory. An index above 50 shows the sector is expanding, and below 50 that it is going backwards.

The index is now below its average for the year of 56.4 points.

Business NZ chief executive Phil O'Reilly said that while sales activity was not as solid as the previous month, new orders and business remained strong, which was a theme in the positive comments from the survey. There was no trend to negative comments, apart from the typical weather-related issues as winter approached.

"Overall, given the fact that nearly 60 per cent of comments received were along a positive line confirms the sector remains in good heart" he said.

The services sector was part of an expected "above trend" economic growth in the March quarter and the latest survey suggested "more of the same" in the June quarter, despite the dip in May, BNZ senior economist Doug Steel said.

New orders were down 5.5 points from April, but remain high at 60.6 points, a level of strong expansion.

But activity and sales fell 7.2 points to 54.3 points in the month to its lowest levels since the start of last year. Employment intentions were also weaker.

The weaker services sector survey followed last week's slower manufacturing survey.

The seasonally adjusted PMI for May was 52.7, which was 1.7 points lower than April, but the sector has now been expanding for 20 consecutive months.

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