Employment dip doesn't shake New Zealand's service sector

New Zealand's service sector maintained steady growth in July despite indications that employment in the sector was down, according to the BNZ-Business New Zealand Performance of Services Index (PSI).

The PSI for July was 54.5, marginally down from 54.7 in June and the highest July result since Y 2007.

A PSI reading above 50 indicates general expansion and below 50 contraction. The average PSI figure for 2009 was 48.8 and last year 53.2, but the average so far this year is 52.6.

Business New Zealand chief executive Phil O'Reilly said 1st drop in the employment indictor in 6 months had marred an otherwise good July result.

"While the results for both June and July represented an ongoing and steady level of expansion, the dip in employment to its 1st decline since January 2011 was disappointing given it had managed to keep its head above water for the previous 5 months," said Mr. O'Reilly.

However, the rise in new orders-business was likely to continue in months ahead with business flowing from the rebuilding of the earthquake-battered city of Christchurch and the Rugby World Cup, which kicks off in New Zealand next month.
Bank of New Zealand head of research Stephen Toplis said July's PSI was further evidence that the New Zealand economy had plenty of momentum before the financial market volatility of last week.

"Unfortunately, it's likely that the global equity rout, in particular, will have a negative impact on confidence next month. We will await the next set of indicators with baited breath in the hope that the fall out is not excessive."

Four of the five sub-indices were in expansion during July, with new orders-business (58.6) at its highest since March 2010, while activity-sales (56.3) down slightly from June as was stocks- inventories (53.5). Supplier deliveries (52.0) recorded its highest value since September 2010, while employment (48.8) recorded its first decline since January.

Paul A. Ebeling, Jnr.

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.