New Zealand’s economy looks to be still expanding, with the services sector at its most buoyant level in 11 months.
The BNZ-BusinessNZ performance of services index rose 0.1 point to a seasonally-adjusted 58.2 in June, its highest level since July 2014, extending a run of continuous expansion since October 2009.
All of the five subindices were above the 50 reading that separates contraction from expansion.
The improved performance in the services sector comes after a similarly upbeat gauge of the manufacturing sector last week. The BNZ-BusinessNZ performance of manufacturing index rose to a seasonally-adjusted 55.2, the highest level since February, with all components in expansion.
“Whether parsed by region, industry type, or firm size, every bit of the PSI was in expansion mode, which is rare,” Bank of NZ senior economist, Craig Ebert, said on Monday.
“Combined with the improved PMI reading for June, the latest PSI paints a picture of an economy expanding robustly, probably a little better than average.”
The performance of the composite index, which combines the two measures, increased 0.6 of a point to 57.8 on a GDP-weighted basis, and rose 1.5 points to 57.2 on a free-weighted basis, the closest the two measures have been to each other since last December.
Still, economists expect NZ’s economic growth to slow as weaker commodity prices weigh on the country’s main exports and earnings.
The Reserve Bank is expected to reduce the benchmark interest by 25 basis points this week to bolster the economy, with further cuts predicted before the end of the year.
