Source: Radio New Zealand
BusinessNZ says it is still tough times for the services sector. File photo. 123rf
- Services sector PSI rises for second month, but still in contraction territory
- Sales and employment rise, while new orders fall
- Proportion of negative comments falls for third consecutive month
The services sector is still contracting – but at a slower pace.
BNZ – BusinessNZ Performance of Services Index (PSI) for October rose 0.4 points to 48.7, which is still below the long-term average of 53.
A reading below 50 points indicates the services sector – which makes up about three-quarters of the economy – was contracting.
The October result was also still well below the survey’s historical average of 52.8.
BusinessNZ chief executive Katherine Rich said despite the level of activity rising for the second consecutive month, the fact that no sub-index results got above 50.0 during meant it was still tough times for the sector.
Activity/Sales (48.9) recorded its highest value since January 2025, new orders/business (49.5) slipped slightly from September, and employment (48.8) rose 0.9 points from September, its highest value since March 2025.
The proportion of negative comments for October (54.1 percent) was down from September (58.0 percent) and August (59.6 percent).
Service sector business continued to report weak demand and reduced customer spending due to the economic downturn, cost-of-living pressures, and low confidence.
Other concerns included rising operating costs, delays, competition, and project cancellations which reduced sales.
BNZ senior economist Doug Steel said the better-looking Performance of Manufacturing Index (PMI) last week might have started thoughts of a quick economic recovery, but Monday’s PSI result pushed against that.
Steel said the news was not all bad, as combined activity showed small improvement.
“It is getting closer to a level that would be consistent with the modest economic growth rates we are forecasting,” he said.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand