September’s result for New Zealand’s services sector remained the same as August, although still firmly in contraction mode, according to the BNZ – BusinessNZ Performance of Services Index (PSI).
The PSI for September was 45.7 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). This was the same as August, and shows the results in a tight band for the last three months. However, this is still well below the average of 53.1 over the history of the survey.
BusinessNZ’s CEO, Katherine Rich said that after seven consecutive months in contraction, the sector seems to be stuck in a rut and struggling to get out of contraction. Looking at the key sub-index values for September, it is encouraging to see the Activity/Sales Index (45.6) continue to improve, although the New Orders/Business Index (46.7) stagnated and the Employment Index (45.7) reversed back to its lowest result since February 2022.
On a brighter note, the proportion of negative comments for September stood at 58.5%, compared with 60.8% in August and 67.0% in both July and June. A significant proportion of respondents noted the overall economy as a key negative influence on activity levels.
BNZ’s Senior Economist Doug Steel said that “movements in the PSI sub-indices were mixed in September, but all of them have been below 50 for seven consecutive months. While falling interest rates will be supportive in time, the sector continues to face significant headwinds at present”.
