Bad weather blamed for May service sector softening

Poor weather was partly to blame for a softening in the services sector last month, says the latest BNZ - BusinessNZ Performance of Services Index (PSI).

The index for May was 53.3. This was 0.6 points down from April, but up 5.2 points from May 2009. A PSI reading above 50 indicates that the service sector is generally expanding; below 50 that it is declining.

The average PSI value for 2009 was 48.8. So far, the average score for 2010 is 54.4.

BusinessNZ chief executive Phil O'Reilly said while March showed a significant boost in overall activity, the other six months of expansion since November had been fairly consistent.

"Any hope of stronger expansion in May after the dip in April was always going to be difficult given recent weather conditions," he said. "Weather is often a double edged sword for the service sector, as some businesses depend on fine weather while others enjoy better trading during winter."

On balance, though, the strong concentration of negative comments from respondents showed the May weather "led to a less than ideal month for day-to-day activity for many."

BNZ economist Doug Steel said May's result had "an air of growth consolidation."


-HERALD ONLINE