What will growth reach?

Stuff reports:

New Zealand’s strongest service sector performance since October last year could signal falling unemployment and of as much as 5 per cent in the next year, according to the latest BNZ-BusinessNZ survey.

The Performance of Services Index (PSI) for July was 58.1, up three points from June and the highest level of activity since October 2012.

A result above 50 indicates services activity is expanding, while an index below 50 is indicative of a contraction.

July’s value was the highest recorded for the month since the survey began in 2007, and the most positive overall since October last year.

New orders in the services sector, a category of the PSI, were particularly strong, increasing 3.2 points from June to 63.1.

This was the highest level since November 2007, and was reinforced by strong activity and sales results, which were up 4.2 points to 61.8.

BNZ economists said the PSI results added to the story of accelerating economic growth.

“Indeed, the chances of getting 5 per cent GDP growth over the coming 12 months cannot be taken lightly,” BNZ said.

 That is probably too optimistic, but it has to be said most of the key indicators are now pointing towards strong growth in the next year or so. If that occurs, then we should see unemployment drop down also.

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