According to the BNZ – BusinessNZ Performance of Services Index (PSI), the services sector in New Zealand returned to expansion in June, having spent recent months in contraction.
The PSI for June was 50.6 (where a reading above 50.0 indicates the sector is generally expanding, and a reading below 50.0 indicates the sector is in contraction). The PSI reading for May was 48.0 and for April it was 48.9. June’s result lifts the index back above the breakeven mark for the first time since January 2026.
BusinessNZ’s CEO, Katherine Rich said “It is heartening to see the PSI edge back above 50.0 after such a prolonged stretch of contraction, though at 50.6 the recovery is tentative rather than the strong bounce we saw in the PMI this month. The parts of the sector doing it hardest remain those most exposed to discretionary spending, like hospitality and personal services, where households are still holding onto their money for fuel, food and other essentials. A return to sustained growth depends on consumer confidence rebuilding, and that is unlikely while cost-of-living pressures remain this prominent.”
New Orders was the strongest sub-index, at 53.0 and Deliveries also moved into expansion, at 51.2. The remaining three stayed just below the line with Stocks/Inventories at 49.9, Activity/Sales at 49.3, and Employment (the weakest) at 48.8. This is a reminder that the return to growth is still narrowly based.
BNZ Head of Research, Stephen Toplis, said “The direction of travel is positive and the uplift, when combined with the surge in the Performance of Manufacturing Index, is enough to suggest economic growth should soon climb to around 2.0%. This is hardly a spectacular number but further confirmation that the trend in growth prior to the oil shock is resuming.”
