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.