Business NZ’s monthly Performance of Services Index (PSI) declined in March 2012. The seasonally-adjusted index fell 1.9 points from February to 53.9 in March 2012. Despite this fall, the PSI index is up 2.3 points on year-earlier levels.
The PSI is a monthly survey of businesses in the service sector. It provides an indication of the levels of activity in the sector, where a PSI reading of over 50 indicates an expansion in activity and a reading below 50 indicates a contraction.
The index is made up of five subcategories (activity/sales, employment, new orders/business, stocks/inventories, supplier deliveries). The readings for all but one of the sub-categories indicated expansion in March 2011. However, the supplier deliveries index of 48.3 suggests contraction. Also, the sales/activity measure has declined over the past year, with the index down 2.5 points to 51.6 in March 2012. However, the reading of 51.6 indicates sales are still expanding, albeit at a slower rate.
Comparing the March 2012 PSI readings with February 2012, the indices for all categories except employment have declined. In contrast, employment has increased marginally from 52.3 to 52.4.
The PSI is also measured across four regions in New Zealand – Northern, Central, Canterbury/Westland and Otago/Southland. The Canterbury/Westland region had the greatest expansion in March, with an index of 65.6, followed by Central with 60.0 and Northern with 51.5. The only region that contracted was Otago/Southland, with a measure of 49.3.
However, the regional indices are not seasonally adjusted, so month-on-month comparisons should be interpreted with caution. The picture illustrates 3-month average values for the regional indices, in order to smooth some of the monthly and/or seasonal volatility.
Compared with February 2012, the PSI measures for all but the Northern and Otago/Southland regions have increased. As illustrated, the PSI indicator has increased compared to March 2011 for all regions except the Northern area. The measures also indicate expansion across all regions, with signs of a resurgent Canterbury taking hold.