Activity levels in New Zealand’s services sector saw increased levels of contraction during the start of 2022, according to the BNZ – BusinessNZ Performance of Services Index (PSI).
The PSI for January was 45.9 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). This was down 3.9 points from December, and the lowest result since October 2021.
BusinessNZ chief executive Kirk Hope said that despite the last two months of 2021 steadily building towards the no change mark of 50.0, the January result puts the sector squarely back in contraction that has now been the case for six consecutive months. Such a time series of contraction last occurred in 2008 at the height of the Global Financial Crisis.
“The key sub-indexes of New Orders/Business (41.8) and Activity/Sales (44.1) both experienced a significant drop in activity levels, while Employment (48.1) was at its lowest point since January 2021.”
BNZ Senior Economist Craig Ebert said that “the PSI can jag around quite a lot from month to month – upwards and downwards. However, it’s also worth pointing out that the long-term average of the PSI is 53.6, which is starting to feel some distance away. So much for the new traffic light system releasing the brakes on activity.”
