New Zealand's services sector registered its highest level of activity since October 2012 in July, led by new orders and strength in the northern region.
The BNZ-Business New Zealand Performance of Services Index rose to 58.1 last month, up three points from June and from 52.2 in July last year. It is the highest reading for July compared to a year earlier since the survey began in 2007. A reading above 50 indicates expansion in activity.
The PSI follows the release last week of its sister survey, the performance of manufacturing index, which rose to a nine-year high in July, with production and new orders leading the charge.
"Combined they point to GDP growth quickening to quite a strong pace," said Craig Ebert, economist at Bank of New Zealand.
BNZ will be revising up its GDP growth view for the third and fourth quarters "quick smart", he said.
The bank is currently predicting a 0.7 per cent expansion in the third quarter and 1 per cent expansion in the fourth quarter.
This is excellent news. Some economists are now predicting that GDP growth for the 2013-14 year could be as high as 5%, which would be an excellent result.
And it's not just the Christchurch rebuild that is driving this growth; read on:
On a regional breakdown, the Northern region led the way with a reading of 62.6, the highest since November 2007, while the Central region declined slightly to 50.5.
The Canterbury/Westland region recorded a slight contraction at 48.4 and Otago/Southland recorded 52.3, a gain after a dip in June.
The combined manufacturing and services index, the BNZ-BusinessNZ Performance of Composite Index improved significantly last month. The GDP-Weighted Index rose 3.1 points to 58.3 and the Free-Weighted Index rose 3.7 points to 59.1.
Whilst the opposition parties flap around the sideshows such as the GCSB Bill, Man-Bans and setting up passport controls at open homes, the Government is getting on with managing our economy on a path of strong growth. That will benefit all New Zealanders.
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