New Zealand’s services sector stayed in expansion in July, although momentum eased slightly. BNZ–BusinessNZ PSI slipped from 50.9 in June to 50.6 in July, marking a second consecutive month above 50 breakeven. Encouragingly, Activity/Sales improved from 49.7 to 50.5, moving into expansion for first time in six months, while Stocks/Inventories strengthened from 50.3 to 51.6.
Details nevertheless point to a recovery that remains narrow. New Orders/Business stayed strongest component despite easing from 53.3 to 52.6, while Employment slipped from 48.8 to 48.5 and Supplier Deliveries fell from 51.2 to 48.5. BusinessNZ said firms remain cautious about hiring, while respondent sentiment was notably weak, with 64% of comments negative amid concerns over living costs, fuel prices, interest rates and election uncertainty.
Overall, July PSI reinforces signs that New Zealand services activity is stabilizing rather than entering a strong rebound. Return of Activity/Sales above 50 is a meaningful improvement, but persistent employment contraction and subdued business sentiment argue against reading two months of headline expansion as broad recovery. For markets, mixed composition provides little reason by itself to overturn last week’s tension between RBNZ’s still-hawkish expected OCR path and sharply lower near-term inflation expectations.
Data Summary
| Component | Current | Previous | Trend |
|---|---|---|---|
| BNZ–BusinessNZ PSI | 50.6 | 50.9 | Expansion eased slightly |
| Activity/Sales | 50.5 | 49.7 | Returned to expansion |
| Employment | 48.5 | 48.8 | Contraction deepened slightly |
| New Orders/Business | 52.6 | 53.3 | Expansion moderated |
| Stocks/Inventories | 51.6 | 50.3 | Expansion strengthened |
| Supplier Deliveries | 48.5 | 51.2 | Fell into contraction |
Key Takeaways
- Services remained in expansion for second straight month, with PSI easing only slightly from 50.9 to 50.6.
- Activity/Sales provided strongest sign of improvement, rising from 49.7 to 50.5 and moving above 50 for first time in six months.
- Recovery remains narrow, as Employment stayed in contraction at 48.5 and Supplier Deliveries dropped sharply below 50.
- New Orders remained relatively firm at 52.6, suggesting demand has not rolled over despite cautious business sentiment.
- 64% of respondent comments were negative, with cost-of-living pressures, fuel prices, higher interest rates and election uncertainty weighing on confidence.
