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NZ services sector expands in March

NZN 19/04/2017 Rebecca Howard

Activity in New Zealand's services sector, which accounts for about two-thirds of the economy, expanded in March.

This came as the new orders/business sub-index pushed higher as record migration and tourism have underpinned recent gains in consumer spending.

The BusinessNZ-BNZ performance of services index rose 0.3 points to 59 in March, the second-highest level of expansion over the past 18 months.

Two of the five sub-indices increased, and all remained above the level of 50 that separates expanding activity from contraction. The PSI three-month average was 59, its highest level since the first three months of the survey in 2007.

''New orders/business were at its highest level since June 2007, which should feed through to activity/sales in the months ahead.

''Combined with 65.6 per cent of respondents providing positive comments, the sector is currently in a solid and positive place," said BusinessNZ chief executive Kirk Hope. New orders/business rose to 66.4 versus 62 in February.

Consumer spending last year surprised the Reserve Bank, stoking concerns people were more willing to fund retail purchases through debt at a time when consumer price increases have been fairly flat.

Bank of New Zealand economist Doug Steel noted the unadjusted PSI for retail trade punched up to 63 in March, well above its average for this time of year. Electronic card transaction data supports the buoyant demand story.

In the other direction, the 8504 house sales in March were 10.7 per cent down on a year earlier.

In the PSI, finance and insurance as well as the property and business components sit well above average levels for this time of year, said Mr Steel.

Employment, however, dipped to 52.8 from 54.7 in February but "still implies reasonable employment growth," said Mr Hope.

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