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The BNZ-Business NZ Performance of Services Index (PSI) fell by 1.2 points in January to 47.9, which indicates the sector is contracting for the third consecutive month.
A reading above 50 in the PSI suggests expansion, while anything below signals contraction. The long run historical average of the PSI is 54.
The employment sub-index fell sharply over the past month, down by about 6 points to 46.9, which points to jobs being shed from the sector.
BNZ senior economist Doug Steel said firms were struggling with ongoing issues related to falling inventories and difficulties getting supplies. If we look at the component of the PSI, the supplier deliveries, that index is down at 41.6..[which] is quite a dreadful reading and suggests there are multitude of issues out there.
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Photo: 123RF
The BNZ-Business New Zealand Performance of Manufacturing Index (PMI) for December dropped 6 points to 48.7, indicating contraction.
BNZ senior economist Doug Steel said the result was disappointing but not completely surprising given six months of expansion - where the index read above 50 points. Perhaps the December dip is just monthly noise. It will pay to monitor upcoming results to confirm that or otherwise. The PMI s three-month moving average sits at an expansionary 51.8, albeit below its long-term average of 53. This all suggests some expansion in the final quarter of last year, but the softer December month suggests some caution heading into the New Year.
16th Dec 20, 11:14am
The relatively low imports arriving in New Zealand this Covid year have helped the deficit between what we get from exports and what we spend on imports to shrink to the lowest level since 2001.
Statistics New Zealand reports that our current account deficit for the year to September 2020 was $2.6 billion, representing 0.8% of our GDP. That compares with a $11.7 billion deficit for the same period up to September 2019.
You have to go back to the end of 2001 for the last time the deficit was so low relative to GDP, while to find a lower figure than the 0.8% you need to go back to 1989.