NZ services remain in expansion in October

New Zealand's services sector expansion slowed in October from a month earlier, as economic growth moderated from a rapid to a more sustainable pace.

The BNZ-Business NZ performance of services index fell 0.2 points to 57.8 in October, from September, and was unchanged from the same month a year earlier. The service sector, which accounts for about two-thirds of economy, has been in expansion since July 2010, where a reading above 50 indicates increased activity.

The index has been consistent over the past four months, indicating healthy activity in the sector, said Bank of New Zealand economist Craig Ebert. The PSI follows its sister survey, the performance of manufacturing index, which last week rose to its highest level in 15 months, supported by migration-fueled population growth.

Today's survey shows the performance of composite index, which combines PSI and PMI measures, edged lower in October. The GDP-weighted index fell 0.4 points from September to 57.8, still above last year's reading of 57.3. The Free-weighted index decreased 0.8 points to 57.9 in the month, but was above last year's reading of 56.4.

For the fifth consecutive month all five sub-indices of the PSI were in expansion, led by activity/sales at 61.9 at its highest value since January this year, paced by new orders/business at 61.1. Supplier deliveries rose 0.5 points from the previous month to 53.4, while employment dropped 1.8 points to 53 and stocks/inventories was 51.5.

Sub-sectors were mixed, with retail trade activity contracting to 46, while health and community services declined to 49.1. Wholesale trade was buoyant at 66.6 and property and business services reported an uplift to 54.

Otago/Southland led activity across the regions at 68.8, while the Northern region reported 59.1, its highest region since March. The Central region just remained in expansion at 50.2, while the Canterbury/Westland region was unchanged at 58.2.