Activity in New Zealand’s services sector for July showed some improvement after a horrendous June result, according to the BNZ – BusinessNZ Performance of Services Index (PSI).
The PSI for July was 44.6 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). This was up 3.9 points from June and the highest result since May. However, the PSI has only averaged 46.5 so far for 2024, compared with 53.2 over the history of the survey.
BusinessNZ chief executive Kirk Hope said that while the relative improvement in activity for July was a welcome sight, there’s still a lot of work to go before the sector is back on track. The key index values for Activity/Sales (39.1) still remains under the 40-point mark, although New Orders/Business (45.3) did show a marked improvement compared with June, albeit off a very low base.
Despite the relative positive progress of the July result, the proportion of negative comments for the month (67.0%) was the same as June. Respondents noted the cost of living and interest rates as two key determinants for the current tough economic times.
BNZ’s Senior Economist Doug Steel said that “to get some perspective on how challenging the current environment is for service sector firms, it’s notable the increase in the PSI does not even get the index back to the level it was during the depths of the GFC back in 2008/09”.
