RTTNews - New Zealand's service sector activity continued to contract in May, for the 14th consecutive month, the latest survey from the Business New Zealand showed Monday.
The Performance of Service Index stood at 46.2 in May, up 2.5 points from April, but down 2.9 points from May last year.
A reading above 50 indicates expansion, while a reading below 50 signals a contraction.
Commenting on the latest PSI data, Phil O'Reilly said the May result reinforced views that the level of carnage seen in the services sector abroad hasn't been as bad in New Zealand.
We haven't experienced a sub-40 result for overall activity, while other countries such as Australia and until recently the broader Eurozone region have seen activity drop to that level. Encouragingly, new orders/business has, for the best part, shown continued resilience in the face of some tough times, but will really need to start showing expansion to help boost activity for the second half of 2009, Reilly said.
Moreover, Craig Ebert, Senior Economist pointed out how it was blessing that the country was not involved in car sales, as countries like the U.S and Japan were suffering from it. At the same time, he noted that the the recent slump in domestic car sales hit the economy hard, by way of lessening throughput for the wholesale distribution sector. However, the economist believed the worst was over now.
In May, all sub indices showed contraction, but an improvement over April. The activity index stood at 43.9, up from 40.9 in April. The employment index stood at 46.3, the highest value since December last year. New orders at 49.7 was almost unchanged in May. The inventories index rose 2.1 points to 44.7, while the deliveries index remained relatively unchanged from the previous month at 44.7.
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