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NZ services sector activity slows in June

NZ NewswireNZ Newswire 17/07/2016 Sophie Boot

New Zealand's services sector, which accounts for about two-thirds of the economy, slowed in June although it remains in positive territory with retailing one of the strongest industries.

The BNZ-BusinessNZ performance of services index fell 0.2 of an index point to a seasonally adjusted 56.7 last month, with all five sub-indices holding above a reading of 50 which separates contraction from expansion.

"Much like the PMI did, the PSI exhibited resilience in June, with an index reading of 56.7," Bank of New Zealand senior economist Craig Ebert said.

"There was also accord in the fact the PSI indicated the fastest rate of expansion was occurring in the North Island. As it turned out, June's PSI was barely different to May's outcome of 56.9 and took the three-month average up to a very solid 57.1."

The PSI comes after its sister survey showed manufacturing improved again in June, with all regions expanding, though economists warned a stronger New Zealand dollar could weigh on the sector's export earnings.

The composite index, which combines the two measures, was unchanged at 56.9 on a GDP-weighted basis and edged down 0.3 of a point to 57.2 on a free-weighted basis.

Mr Ebert said the retail trade category had been one of the strongest in the PSI, with a three-month average of 56.5, compared to 49.2 a year earlier.

Three of the five sub-indices improved in June, with supplier deliveries up 2.8 points to 55.2 and stocks/inventories gaining 1 point to 53.4.

Employment rose 0.4 of a point to 55.1. Activity/sales dropped 2.1 points to 58.1, and new orders/business fell 1.7 points to 58.3.

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