PSI rises in September but concerns remain

NEW Zealand’s services sector might have experienced a slight increase in expansion during September but it remains below its longterm average.

The BNZBusinessNZ Performance of Services Index showed a PSI of 53.9 for the month, which was 0.6 points higher than August but below the longrun average of 54.5.

While the slight pickup was obviously welcome, the sub index results showed some areas for concern, BusinessNZ chief executive Kirk Hope said.

New orders/business decreased to its lowest level since April 2017 while employment fell further into contraction to its lowest result since September 2012.

The proportion of positive comments in September also dropped by a fair margin compared to August.

BNZ senior economist Craig Ebert said that, generally speaking, the NZ PSI, much like the Quarterly Survey of Business Opinion, suggested the services industry was settling down into a trendlike pace.

However, there was a risk that the third quarter could be ‘‘a bit bumpy’’ regarding output and employment.

OtagoSouthland Employers Association chief executive Virginia Nicholls said overall activ ity in Otago and Southland’s services sector for September was 53.4, which was similar to the previous month, but still sat below last year’s average of 59.5.

Orders/new business showed no change and activity/sales levels were in decline at 46.2. Employment levels were in expansion at 53.8.

Late snow meant more skifields stayed open longer, which had been good for the end of the winter tourism season.

Tourism operators were reporting a solid season which lined up with increased passenger arrivals at Queenstown Airport.

However, some hotel and hospitality providers had reported a downturn compared to previous winters. Some bad weather events had affected some operators, Mrs Nicholls said.

There were concerns around business costs rising with the wage pressures due to continu ing tight labour markets and increases to the minimum wage impacting wages through relativities. Increasing fuel prices were also a concern.

With skill shortages in the region, the association would like to see an option to make the immigration remuneration threshold appropriate for the regions.

For instance, making the existing $55,000 remuneration threshold applicable to Auck land and remuneration thresholds for the regions linked to average wage and the cost of living.

There were continuing concerns with the employment relations bill, which businesses felt was ‘‘taking a step backwards’’.

The removal of the 90day trial for businesses and multiemployer collective agreements were a significant concern, Mrs Nicholls said.