The BNZ Capital – Business NZ Performance of Services Index (PSI) stood at 50.1 in July 2009, up 5.1 points from June, and 3.9 points from May.

Over the last three months the PSI has averaged 47.1 indicating that overall service sector activity has continued to contract throughout 2009. Looking year on year, the PSI in July 2009 stood 1.2 points below that recorded in July 2008 (48.9). A small difference, but a PSI reading above 50.0 indicates that the service sector is generally expanding.

Two of the five indices measured recorded an expansion in activities between June and July. Activities/sales recorded the largest expansion, moving 7.8 points from 43.9 in June to 51.7 in July. New orders/business also recorded an expansion in activity for the second month in a row, moving 5.7 points from 50.8 to 56.5. The three other indices also recorded an expansion in activity but at a weaker level. The indice for employment moved up 4.3 points to sit at 47.9 in July, while the indice for deliveries moved up 3.8 points t sit at 46.0. Finished stocks stayed at a similar level from June, sitting at 42.1.

Although the indice for employment recorded its highest value for the 2009 year, (47.9), three of the four firms by employment size experienced contraction. Looking at three monthly averages this indice has had an average value of 45.9, which is a similar value to the three monthly average for employment seen in July 2008 (45.4).

Contraction continued in the various service sectors, but results and sentiment were generally mixed. As would be expected, given the slight improvement in overall activity levels, the proportion of negative comments dropped slightly to 51.9% compared with 58.8% in June. The health and community services sector led the way with the strongest level of expansion (57.1), up 8.5 points from June, followed by transport and storage (53.5).

This weakness was reflected in the four main regions monitored; only Canterbury recorded a value above 50 in July. Comparing three month averages year-on-year, the contraction in the regions is fairly similar. The largest contractions were in the Central and Canterbury regions, where three monthly averages year on year have declined 4.8 and 2.8 points respectively.