The BNZ Capital – Business NZ Performance of Services Index (PSI) stood at 43.7 in April, down 3.4 points from March.

Over the last three months the PSI has averaged 45.7 indicating that overall service sector activity has continued to contract throughout 2009. Looking year on year, the PSI in April 2009 stood 5.2 points below that recorded in April 2008 (48.9). A PSI reading above 50.0 indicates that the service sector is generally expanding.

All indices contracted during April, the largest contraction was in the indice for activity/sales. Last month the indice for activity/sales lifted to its highest value since July 2008 to sit at 47.8. This month it dropped 6.9 points to sit at 40.9. Looking at three monthly averages this indice has had an average value of 43.9. In this regard, across the indices it led the weakening of service sector activity. The activity/sales indice has recorded values below 50 since March 2008.

Employment (42.5) also remained weak in April, with all firms by employment size experiencing contraction. Contraction also continued in the various service sectors, where results and sentiment were generally negative. The health and community services sector (51.1) was the only sector to show expansion for the month. Negative comments from respondents during April increased to 56.7 percent compared with 54.6 percent in March.

This weakness was reflected in the four main regions monitored, all recording values below 50 in April. Comparing three month averages year-on-year, the contraction in the regions is evident. The largest contractions were in the Central and Otago region, where three monthly averages year on year have declined 7.1 and 7.8 points respectively.