Expansion levels for New Zealand’s services sector continued to lower in December, according to the BNZ – BusinessNZ Performance of Services Index (PSI).
The PSI for December was 52.1 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). This was down 1.7 points from November, and below the long-term average of 53.6 for the survey.
BusinessNZ chief executive Kirk Hope said that while the sector remained in expansion for the last month of 2022, the December result saw the key sub-index of Activity/Sales (52.1) down to its lowest level since February 2022, which was also the case for Employment (47.1) and Stocks (51.7). New Orders/Business (58.4) did lift from November, while Deliveries (53.4) reverted back to expansion for December.
“Despite the Index remaining in expansion mode, the proportion of negative comments lifted and dominated for December (58.2%), compared with only 47.3% in November. While seasonal factors such as Christmas and holidays were discussed, the shortage of labour continues to have a strong mark on negative comments made, along with a number of businesses pointing to general uncertainty in the market”.
BNZ Senior Economist Craig Ebert said that “December marked a significant slowdown in a short space of time for the PSI, although the maintained loftiness in New Orders/Business suggested there was still a lot of demand-side pressure at play”.
