New Zealand's services sector, which makes up about two thirds of the economy, slowed in February while remaining in expansion, led by sales, with signs the strong pace of growth in 2014 is continuing into the current year.
The BNZ-BusinessNZ performance of services index (PSI) fell 2.2 points to 55.6 last month, with all five sub-indexes above the 50 level that separates contraction from expansion.
The services sector survey follows the manufacturing series last week, which rebounded from a two-year low to extend its expansion to 29 months in a row. The combined results indicate the New Zealand economy is still growing at a sturdy pace, with the BNZ-BusinessNZ performance of composite index, or PCI, falling 1.3 points to 55.5 on a GDP-weighted basis and rising 1.6 points to 56.4 on a free-weighted basis. Data this week is expected to show gross domestic product grew 0.7 percent in the fourth quarter, slowing from a 1 percent pace three months earlier.
PSI activity/sales rose to 62.1 in February, from 60.2 in January. New orders/business fell 2.9 points to 58.1 and supplier deliveries declined 3.6 points to 51.4. Stocks/inventories fell to 52.8 from 53.9 and employment fell to 52.7 from 54.5.
"The service sector expansion remains fit and healthy," said Doug Steel, an economist at Bank of New Zealand. Combined with the manufacturing survey, "it bodes well for economic growth."
By region, Northern gained 2.9 points to 55.4, while central slipped to 59 from 60.1.Canterbury/Westland rose to 59.1, the highest since April last year, from 57.3. Otago/Southland fell to 60.9 from 64.7.