New Zealand’s services sector experienced a decline in expansion during June, according to the BNZ – BusinessNZ Performance of Services Index (PSI).
The PSI for June was 50.1 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). This was down 3.0 points from May, and all but at the level of no change in activity. It was also well below the long-term average of 53.6 for the survey.
BusinessNZ chief executive Kirk Hope said that while the sector just managed to keep its head above water during June, overall activity levels for the last three months have all been below the long-term average. In terms of the sub-index results, three of the five measures showed some degree of expansion for June, including Activity/Sales (51.8) and New Orders/Business (51.3). However, Employment (49.1) showed contraction for the first time since December 2022.
“The drop in expansion during June also saw a pick up in the proportion of negative comments, which rose to 55.6%, compared with 49.4% in May. Overall, comments received by businesses noted a combination of economic challenges, including inflation, high costs, labor shortages, and declining market demand. These factors are contributing to slower business activity, reduced customer confidence and difficulties in attracting new clients”.
BNZ Senior Economist Craig Ebert said that “together, the NZ PSI and PMI paint a picture of flat GDP, slightly declining employment, and an order book that does not offer much, if anything, in the way of encouragement”.
