Services sector activity ends 2014 on up note

New Zealand's services sector activity picked up in December, led by wholesale trade and hospitality.

The BNZ-BusinessNZ performance of services index rose 1.8 points to 56.5 in December from November, which was the average level over 2014. That compares to average expansion of 55.8 in 2013. The service sector, which accounts for about two-thirds of the economy, has been growing since July 2010, based on the PSI, which uses a scale where 50 divides expansion from contraction.

"Along with the robust PSI reported for December, the latest NZIER quarterly survey of business opinion also showed an upbeat NZ services sector," BNZ economist Craig Ebert said in a note. "This goes to show that it's not just the construction industry, with Canterbury's rebuild, and merchants, with reports of bumper Q4 retail spending, driving the expansion."

The PSI data follows its sister manufacturing series which showed industrial production activity at a decade high in December. New Zealand's economy is estimated to grow at about a 3 percent annual pace this year, outperforming its developed nation rivals, despite the drop in global dairy prices which weigh on the country's biggest export commodity.

The performance of composite index, which combines the services and manufacturing indices, rose 2.6 points to 56.7 on a GDP-weighted basis and gained 3.5 points to 57.5 on the free-weighted measure.

Today's survey showed wholesale trade led the expansion in the month at 63.1, followed by accommodation, cafes, and restaurants at 60.9. Property and business services slowed to 52.9.

All five sub-indices were in expansion for the seventh month in a row. New orders/business rose 4.2 points to 60.3, while activity/sales expansion was at 57.3. Supplier deliveries was at 56.2, its highest level since August, while stocks/inventories expansion accelerated for a third month to 54.8. Employment slipped to 51.9.

Northern region activity rose 2.1 points to 57.6, while the central region was unchanged at 50. Canterbury/Westland fell 5.3 points to 51.5, while Otago/Southland was largely unchanged at 65.4.

(BusinessDesk)