The service sector is springing back to life in a “staggering” leap last month, running counter to a string of grim economic news recently.
In what Bank of New Zealand economists called a “massive bounce” the Performance of Services Index zoomed up to 57.4 in October, from 49.9 in September. It is the biggest monthly increase in the PSI since the survey began in 2007. A figure above 50 indicates the sector is expanding and under 50 that it is shrinking.
BusinessNZ chief executive Phil O’Reilly said there are reasons to cheer the latest figures.
“Both activity/sales and new orders/business were either struggling or heading in the wrong direction in recent months, so a strong turnaround for both to lift the overall result has come at the right time.’’
Comments from respondents also provide a telling story - in September, only 47 per cent of comments were positive, which rose to 62 per cent in October O’Reilly said.
BNZ economists said: “In the context of some horrible economic indicators for the third quarter, the big bounce in the October PSI is very welcome.
“While one needs more than one month’s data to be sure of genuine bounce in activity, it is a first step to suggesting a reasonable rebound from a soft patch earlier in the year.”
Figures out earlier this month showed a big jump in unemployment to 7.3 per cent.