Sector growth eases

New Zealand's service sector growth has eased from record levels but activity in May is still indicating above-average growth.

The BNZ-BusinessNZ Performance in Services Index (PSI), released yesterday, showed the New Zealand seasonally adjusted reading at 54.2, down 4.3 points from April but still higher than the February result of 52.9.

The PSI has averaged 56.4 points so far for 2014.

A reading of above 50 shows a sector in expansion and the higher the number, the stronger the expansion.

Regional activity remained strong in May with northern on 55.5, central on 51.2, Canterbury-Westland on 54.5 and Otago-Southland on 51.3.

Otago-Southland Employers Association chief executive John Scandrett said the Otago-Southland reading was marginally expansionary but the region had seen a tight eight-point band in the past four months.

''We continue to track on the right side of the break-even contraction-versus-expansion threshold.''

Through May, the business and property sub-sectors' performance had generated strongly positive responses.

Likewise, health services' sentiment was buoyant, he said.

The region's widely diverse tourism activities had identified both upswings in performance - adventure tourism, in particular - but also sluggish below-expectation results in the more general tourism market.

Sales levels and forward orders were in the ''marginally expansionary'' side of the ledger, Mr Scandrett said.

BNZ economist Doug Steel said Thursday's economic growth figures for the three months ended March should look good.

A wide range of positive activity indicators suggested growth in excess of 1% in the quarter, which would result in an annual pace of economic growth close to 4%.

''If it transpires, it will be the strongest annual growth since the global financial crisis and well above the past 10-year average of just over 2%.''

 

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