The BNZ Capital – Business NZ Performance of Services Index (PSI) stood at 51.3 in August 2009, up 1.2 points from July and 6.3 points from June. This is the second month in a row this index has shown signs of expansion. And looking year on year, the PSI in August 2009 stood 3.4 points above that recorded in August 2008 (47.9).

However, over the last three months the PSI has averaged 48.8 indicating that overall service sector activity has continued to contract throughout 2009. A PSI reading above 50.0 indicates that the service sector is generally expanding.

Two of the five indexes that make up the PSI recorded an expansion in activities between July and August. The activities/sales index continued to record expansion, but had a slight fall in activity between July and August. This index moved 7.8 points from 43.9 in June to 51.7 in July and took a slight dip to 50.5 in August.

The new orders/business index also recorded an expansion in activity for the third month in a row, moving 1.1 points from 56.5 to 57.6. The three monthly average for new orders/business is now sitting at 55.0.

The three other indexes also recorded an expansion in activity but at a weaker level.

The finished stocks index was the largest moving index this month, moving 5.9 points to sit at 48.0. While the index for deliveries moved up 1.9 points to sit at 47.9.

The index for employment moved up 1.4 points to sit at 49.3 in August, the highest result for the employment index since November 2008. The index for employment recorded its highest value for the 2009 year, (49.3), with three of the four firms monitored by employment size indicating they have expanded. Looking at three monthly averages this index has had an average value of 46.9, which is a similar value to the three monthly average for employment seen in August 2008 (45.8).

Results in the various service sectors were generally positive this month. As would be expected, given the slight improvement in overall activity levels, the proportion of negative comments dropped slightly to 49.5% compared with 51.9% in July and 58.8% in June. The accommodation, cafes and restaurants sector led the way with the strongest level of expansion (61.8), followed by cultural, recreational and personal services (57.4).

This improvement in service level activities was also reflected in the four main regions monitored; with all regions recording a value above 50 in August compared with only Canterbury recording a value above 50 in July. Comparing three month averages year-on-year, the contraction in the Otago region continues but activity levels have improved by 10.2 points. Service sector activity in the Central region has contracted by 5.0 points comparing three monthly averages year-on-year. However, service level activities in the Northern and Canterbury regions have improved by 2.1 and 1.5 points respectively.