KEY POINTS:
Sure it's not much, but positive signs are slowly starting to emerge that could mean we're crawling out of the winter recession.
It's the BNZ Business NZ Performance of Services Index and it was up slightly in July. Admittedly June was the worst result ever and the index is lower than at the same time last year, but it certainly could have worse.
The index for July stood at 48.9, up 3.3 points from June and back to the level recorded in April. However, it was still down 6.3 points from the same time last year. A reading above 50 indicates that the service sector is generally expanding; below 50 that it is declining
It comes a week after the same groups released their Performance of Manufacturing Index, which was also up from dire June results.
Business NZ chief executive Phil O'Reilly said although the two indexes have shown some recovery in July, these two sectors were still in "contraction mode".
"Looking at the positives in the service sector, new orders continue to remain above the 'water level' of 50 points, showing ongoing expansion that will flow through to general activity in the months ahead. Three of the four major regions showed some level of recovery, while Canterbury/Westland remains steady - albeit at a lower level than on average," said O'Reilly.
He said it was interesting to see that even in economically difficult times, some businesses were continuing to grow.
"On the flip side, many of the issues hampering businesses at present persist, with potential customers enquiring but often holding back from ordering, and the high cost of petrol limiting people's additional cash for discretionary spending. Evidence of this can be seen in the retail sector, with four consecutive months of decreased activity."
BNZ senior markets economist Craig Ebert said the squeeze being felt by the service sector was highlighted by last Friday's retail sales figures - which saw June quarter real retail sales fall for the second consecutive quarter, down 1.5 per cent.
"The third quarter looks set to be another tough one for the service sector. Of retailers, in particular, we wouldn't be surprised to see real sales contract again."
For the two North Island regions there was a recovery from the June results, as the Northern region (48.2) increased 4.3 points from June, although still in contraction.
The Central region (54.9) went back into expansion mode to record its highest level of activity since March (largely due to a boost in sales/activity).
In the South Island, the Canterbury/Westland region (51.1) has remained steady in terms of activity, with the July result exactly matching that of June.
- HERALD ONLINE
