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Service sector continues solid expansion

Service sector continues solid expansion

(16 June 2015 – New Zealand) New Zealand’s services sector has continued a strong five-year run with expansion in again in May, according to the Bank of New Zealand (BNZ)-BusinessNZ Performance of Services Index (PSI).

The latest monthly survey showed services companies have experienced high levels of activity and sales and new business, with the best hiring levels since 2007.

The Index was 58.0 for May, up 1.5 points from April, the highest level for the services index since the middle of 2014.

An index above 50 indicates the sector is expanding, while below 50 it is shrinking.

Tourism and an influx of international students helped boost the services sector, while the construction industry, which has shown signs of a slowdown, remained important for the service sector’s next moves.

BNZ senior economist Doug Steel said that the service sector has been a standout performer for some time.

"May's PSI results simply reinforce this narrative," he said.

“Not only has the index shown continuous expansion for almost five years, but it has been at a good pace, too,” Steel said.

"We think the service sector will be a positive contributor to economic growth in the March quarter,” he said.

Steel said the construction industry was an important for the service sector's outlook.

The recent evidence of a slowing, "even stalling", in the building industry might seem important.

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