Some signs of improvement in services sector

Sales and new orders readings improved in a monthly survey of services industries but are not seen as pointing to a turnaround in the sector.

The BNZ Capital - Business NZ performance of services index lifted to 47.1 in March. That was the second consecutive monthly improvement in overall activity and up 0.8 points from February.

But a reading below 50 still indicates the sector is generally declining, with services having been in contraction for 12 consecutive months.

Business NZ chief executive Phil O'Reilly said the sales and new orders sub-indexes had recorded reasonably good values compared to those in the past few months.

Activity/sales had a reading of 47.8, and new orders/business was 51.4, both at their highest values since last July.

The number of negative comments from respondents also continued to drop, Mr O'Reilly said, but employment activity remained historically weak at 44.8.

BNZ senior economist Craig Ebert said the improved figures for sales and new orders did not mean a turnaround in the sector.

"The wider evidence is of widespread softening in the business sector, including services," he said.

"And while there is a lot of fiscal stimulus in the pipeline, there seems little if any room for more."

The index was not yet a long enough series to allow a reliable seasonal adjustment, so part of the less-negative look recently would seem to reflect the time of the year more than anything else.

- NZPA