Source: Radio New Zealand
123rf
- Services sector expanded in December
- PSI survey posts best result since February 2024
- New orders, sales and inventories rise; employment still falling
- Proportion of negative comments falls for fourth consecutive month.
Services sector activity leapt higher in December, expanding for the first time in nearly two years and raising hopes the worst of the economic downturn may have passed.
The BNZ-BusinessNZ Performance of Services Index (PSI) jumped 4.3 points to 51.5 in December, although it remained below its long‑term average of 52.8.
A reading above 50 indicates the sector, which accounts for nearly three‑quarters of the economy, is expanding.
The sector had not been in expansion since February 2024.
BusinessNZ chief executive Katherine Rich said the December result ended the longest run of contraction in the survey’s history, stretching to 21 months.
Three of the five sub‑indices expanded, led by new orders/business (52.5), which reversed four consecutive months of contraction.
This was followed by activity/sales (52.2) and stocks/inventories (51.9).
Employment (49.6) improved sharply but remained in slight contraction.
The proportion of negative comments fell to 50.4 percent as respondents continued to feel constrained by weak demand and confidence, high living and operating costs, and Christmas‑related shutdowns.
On the flip side, positive comments pointed to seasonal Christmas and summer demand, improving consumer confidence driven by lower interest rates, stronger tourism, new contracts and bookings, and early signs of broader economic recovery and investment activity.
BNZ senior economist Doug Steel was cautiously upbeat, noting the PSI was not strong when viewed in isolation, but the direction of travel was encouraging.
Combined with other recent data, he said, the picture became considerably more positive.
“When the PSI is joined with the large jump in last week’s PMI, the combined index (PCI) signals firmly positive GDP growth into the end of 2025 and establishes forward momentum heading into the new year.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
