21 May 2013

Service sector expanding, index shows

7:18 am on 21 May 2013

The services side of the economy seems set on a sustained growth path.

The latest Bank of New Zealand/Business NZ performances of services index rose 0.5 points in April to 56.1 points.

Any reading above 50 indicates the services sector is expanding.

Business NZ chief executive Phil O'Reilly says the April reading was the highest for that month since the survey began in 2007.

The outcome for the three months to April was also the strongest quarter since the last quarter of 2007.

"The good thing about the numbers is this is now a sustained period of growth over three or four months. What we've been seeing over the last few years has often been this bouncy growth where you might see the index go into growth for a month or two and then go back again.

"That hasn't happened in the first quarter of this year - which is very good news," he says.

Mr O'Reilly says the strength of the services sector is driven by the overall growth in the economy.

"The economy's growing along pretty well compared to many OECD counterparts.

"Secondly, you can't ignore the impact of Christchurch on the domestic economy and services will be following those manufacturing businesses doing well as a result of the Canterbury re-build."

He says business has also got used to the "new normal" which he says is operating profitably and competitively in a high New Zealand dollar environment.