New Zealand Services Sector Expands for Fourth Straight Month

New Zealand's services sector expanded for a fourth consecutive month in September, according to the BNZ-BusinessNZ Performance of Services Index. The index registered 50.9, a slight decrease from August's 51.0, remaining just above the 50-point threshold that separates expansion from contraction.

While new orders and inventories showed strength, the recovery remains uneven. Employment and supplier deliveries continued to contract, and the retail industry emerged as the weakest segment with a reading of 47.4. This modest growth contrasts with the manufacturing sector, which performed significantly stronger with an index of 56.5.

Doug Steel, a senior economist at the Bank of New Zealand, noted that this growth follows two years of contraction. However, he characterized the services sector's performance as weak compared to manufacturing. Business leaders attribute the sluggish recovery to high interest rates, fuel prices, cost-of-living challenges, and uncertainty surrounding the general election scheduled for November 7.

Approximately 60% of survey respondents reported negative views, indicating a cautious environment. BusinessNZ leadership noted that while the four-month growth trend is encouraging, deeply embedded caution is likely to limit a stronger recovery until election results provide more certainty.