Growth in New Zealand’s service sector, which makes up about two thirds of the economy, slowed in April as stock/inventories and supplier deliveries dropped.

The BNZ-BusinessNZ performance of services index fell 1.1 points to 56.5, with all five sub-indices remaining above the 50 level that separates contraction from expansion. The April reading was lower than the same month a year earlier reading of 58.4.

“The key indicators of activity/sales and new orders/business remained over the 60-point mark, which bodes well for the short term in terms of ongoing growth,” BusinessNZ chief executive Phil O’Reilly said. “However, its sister survey the PMI has seen some inconsistent levels of expansion for 2015, so we will be monitoring whether this flows through to the PSI in the short-medium term.”

Last week’s manufacturing survey showed activity slipped in April while remaining in an expansionary mode for the 31st consecutive month. The BNZ-BusinessNZ performance of composite index fell 1.2 points to a GDP-weighted index reading 55.9, while the free-weighted index declined 1 point to 55.4.

Government figures showed spending on electronic cards dropped 1.1 per cent in April, in part driven by a drop in consumer’s retail spending. Meanwhile, first-quarter retail trade rose 2.7 per cent, as cheaper fuel and a higher exchange rate boosted spending, Craig Ebert, Bank of New Zealand senior economist said. Ebert expects a slowdown in second-quarter retail trade, given the drop in spending on electronic cards.

Today’s PSI showed stock/inventories slipped to a reading of 52.7 last month, from March’s reading of 57.6. Supplier deliveries declined to 50.1 from 53.6, while employment slipped to 53.6 from 54.8. Activity/sales edged up to 60.4 from 60.1, while new orders/business increased to 62.6 from 60.9 in March.

(BusinessDesk)