The return of big events, with the end of Covid restrictions, continues to boost the domestic economy.

The BNZ-Business New Zealand Performance of Services (PSI) Index for October rose 1.5 points from September to 57.4, which was well above the long-term average of 53.6.

A reading above 50.0 indicates the service sector is generally expanding.

The services sector accounts for the largest part of New Zealand’s economy, (in normal times) around 70 per cent of gross domestic product (GDP).

It includes sectors like tourism and hospitality, transport, technology and entertainment.

“The leading services industry - by a long chalk now - is cultural, recreational and personal,” BNZ senior economist Craig Ebert said.

“As big as this was back in September, with 80.0, it got more gargantuan in October, with 90.6 (points). The removal of gathering limitations is sure bringing in the crowds.”

Accommodation, cafes and restaurants, picked up to 62.4, from the 54.2 it slowed to in September.

That was no doubt underpinned by the now fully opened border, Ebert said.

The only negative for October was in transport and storage which at 42.5 remained below the breakeven 50 mark for the eighth month on the trot.

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“The latest NZ PSI and PMI results chime with the narrative of spending shifting back to services, away from durables. However, they also highlight a divergence to what’s been going on globally, with respect to services industries,” Ebert said.

 “In being so strong in October, the PSI has, once again, importantly offset a soft spot in the PMI, to sustain a robust pulse for economic growth.”

BusinessNZ chief executive Kirk Hope said the survey was above the 55-point mark for three consecutive months, with the two key sub-indexes of new activity/sales (61.0) and New Orders/Business (59.9) remaining in a very healthy position.

In addition, employment at 57 points experienced its highest level of activity in 18 months.