New Zealand’s services sector returned to expansion in June, with the BusinessNZ Performance of Services Index rising from 48.0 to 50.6, its first reading above the 50-point threshold since January. The improvement follows a similarly strong rebound in the Performance of Manufacturing Index, suggesting the economy has regained some momentum after a prolonged period of weakness. New orders provided the strongest support, climbing from 48.2 to 53.0, while supplier deliveries also moved back into expansion at 51.2.
Despite the headline improvement, the underlying details point to a recovery that is still in its early stages. Activity and sales improved from 45.1 to 49.3, employment edged only marginally higher from 48.7 to 48.8, and inventories rose from 47.8 to 49.9, leaving all three components just below the expansion threshold.
BusinessNZ Chief Executive Katherine Rich noted that sectors reliant on discretionary consumer spending, including hospitality and personal services, continue to struggle as households prioritize essential expenses amid persistent cost-of-living pressures. BNZ Head of Research Stephen Toplis said the combined rebound in manufacturing and services suggests economic growth could soon approach 2.0%, reinforcing the view that New Zealand’s pre-oil shock recovery is resuming rather than accelerating.
For the RBNZ, the report is another indication that domestic activity is gradually improving, but it is unlikely to materially alter the central bank’s cautious, data-dependent stance. While the pickup in new orders points to firmer demand ahead, subdued employment and activity measures suggest policymakers still have little reason to contemplate a more restrictive policy path.
| Indicator | Actual | Previous |
|---|---|---|
| BusinessNZ PSI | 50.6 | 48.0 |
| Activity / Sales | 49.3 | 45.1 |
| New Orders / Business | 53.0 | 48.2 |
| Employment | 48.8 | 48.7 |
| Stocks / Inventories | 49.9 | 47.8 |
| Supplier Deliveries | 51.2 | 49.8 |
Market Takeaways
- BusinessNZ PSI returned to expansion for the first time since January 2026, signaling the services sector is stabilizing.
- New Orders was the strongest component, pointing to improving underlying demand.
- Supplier Deliveries also returned to expansion, suggesting business activity is becoming more active.
- Activity, Employment and Inventories all remained below 50, indicating the recovery is still narrow rather than broad-based.
- Together with the strong PMI Manufacturing survey, the data reinforce expectations that New Zealand’s economy is resuming its pre-oil shock recovery.
- The report supports the RBNZ’s view that growth is improving gradually, but is unlikely to change its cautious, data-dependent policy stance.
