New Zealand’s services sector climbed back into expansion for the start of 2024, according to the BNZ – BusinessNZ Performance of Services Index (PSI).
The PSI for January 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 up 3.3 points from December and the highest level of activity since May 2023. However, it was still below the long-term average of 53.4 for the survey.
BusinessNZ chief executive Kirk Hope said that the PSI had seesawed between expansion and contraction for a number of months. The key sub-index results for both Activity/Sales (53.0) and New Orders/Business (51.8) were both in positive territory, with the former at its highest level since March 2023. The uplift in activity for January also saw a lower proportion of negative comments from businesses, which stood at 53.0%, compared with 58.7% for December and 54.0% for November.
However, any talk of the sector experiencing a solid return to expansion depends on continued momentum in new business and activity over the coming months, along with further easing in matters associated with the cost of living.
BNZ Senior Economist Doug Steel said that “the combined PMI and PSI activity indicator (PCI) suggests that annual GDP growth will soon turn positive. That is great news for an economy that has been under pressure. But it still has to go a lot further before we return to growth rates that would prevent the spare capacity in the economy growing”.
