New Zealand’s BusinessNZ Performance of Services Index reported another slump in August, marking the third consecutive month of declining in the services sector. This downturn saw PSI slip from 48.0 in July to 47.1 in August, notably falling short of long-term average of 53.5.

Looking into the components, while there were marginal improvements in activity/sales, which climbed from 39.7 to 43.4, and employment, which rose from 49.1 to 50.9, other areas did not fare as well. New orders/business made a meager ascent from 44.5 to 47.3. Conversely, stocks/inventories dipped from 54.0 to 52.5, and supplier deliveries took a hit, declining from 52.0 to 49.2.

BusinessNZ’s Chief Executive, Kirk Hope, offered a bleak perspective, highlighting that August’s data provided little hope for a swift recovery.

This sentiment was further cemented by the proportion of negative comments received in the survey. In August, 63.9% of the comments were negative, a slight improvement from July’s 67% but a significant jump from June’s 55.6%. The cloud of uncertainty hanging over the upcoming General Election, combined with persisting challenging economic conditions, were predominant themes among these comments.

BNZ’s Senior Economist Doug Steel noted that the PSI and PMI results resonate with RBNZ’s projections of an impending recession rather than Treasury’s more optimistic forecast of sustained, albeit moderate, growth in the near future.

Full NZ BNZ PSI release here.

New Zealand’s BusinessNZ Performance of Services Index ticked down from 47.2 to 47.1 in April, marking the lowest level since January 2022.

Breaking down the components of the index reveals mixed signals: Activity and sales saw a modest improvement, rising from 44.8 to 46.5. However, employment took a downturn, dropping from 49.9 to 47.1, recording its lowest level since February 2022. New orders and business also declined slightly to 47.1, from 47.9. Stocks and inventories remained unchanged at 46.6, while supplier deliveries worsened, falling from 48.6 to 47.6—the lowest since November 2022.

The feedback from businesses has increasingly skewed negative, with 66.3% of comments in April being pessimistic, up from 63.0% in March and 57.3% in February. Many respondents highlighted the difficult economic environment and persistent inflationary pressures as significant concerns.

Doug Steel, a senior economist at BNZ, commented on the broader implications of these figures, stating, “combining today’s weak PSI with last week’s PMI yields a composite reading that would be consistent with GDP tracking below year earlier levels into the middle of this year.” He further noted that the combined index suggests there could be “some downside risk” to their current economic forecasts.

Full NZ BNZ PSI release here.