New Zealand’s services sector went into contraction for the first time since February 2022, according to the BNZ – BusinessNZ Performance of Services Index (PSI).
The PSI for April was 49.8 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). This was down 4.0 points from March and well below the long-term average of 53.6 for the survey.
BusinessNZ chief executive Kirk Hope said that while the April result was only slightly in negative territory, the fact that it dropped 4 points from March may indicate a turning point for the sector. In terms of the sub-index results, Activity/Sales (45.1) displayed the largest decline, falling 10.8 points from March. New Orders/Business (49.1) experienced a 3.5 point decline, while Employment (49.9) was all but in no change mode.
“The fall into contraction for April was also mirrored by the movements in the proportion of negative comments, which increased again to 60.2% in April, compared to 58.6% in March and 51.9% in February. A general lack of customer demand seemed to be the main thread common across the comments”.
BNZ Senior Economist Craig Ebert said that “while April’s result denotes only a tiny fraction of contraction, the PSI has certainly slowed a lot, in the space of a month, to the point of a pause”.
