BNZ’s senior economist Doug Steel says there are signs of an improving economy, though there are risks any ensuing bounce will take longer than expected.
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The services sector continues to shrink with another dismal reading alongside an increase in negative comments.
The BNZ BusinessNZ Performance of Services Index (PSI) fell 1.4 points to 47.5 in August, marking 18 consecutive months of contraction.
A reading below 50 points indicates the service sector was contracting.
BusinessNZ’s CEO Katherine Rich said the sector had endured tough times for a year and a half, representing a very difficult period for many.
Key subsectors were in contraction including activity/sales (46.2), new orders/business (47.8) and employment (48.3).
The proportion of negative comments for August (60 percent) was up slightly on July (59 percent) but down from June (66 percent).
Service sector businesses reported widespread pressures from inflation, high interest rates, cost-of-living impacts and weak consumer confidence all contributing to reduced demand and spending.
Other concerns included seasonal slowdowns, rising operating costs, supply chain disruptions and government policy uncertainty.
BNZ’s senior economist Doug Steel said there were signs of an improving economy, though there was risks any ensuing bounce would take longer than expected.
“Yes, the three-month moving average for the PSI lifted from 46.9 to 48.0, but it is hardly reason to celebrate,” Steel said.
“We believe the tide in the economy is slowly turning, albeit not in a uniform fashion as indicated by the latest monthly PSI movement.”
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