The BusinessNZ Performance of Services Index (PSI) for July posted at a seasonally adjusted 44.6, up from 40.7 in June, but still below the 50-marker that separates growth from contraction, reported BusinessNZ on Monday.
The BusinessNZ PSI is a monthly survey of the service sector, intended to provide early indications of activity levels.
The New Zealand service sector remained challenged in July, said BusinessNZ.
While July's services index reading was a little improved from the "horrendous" June result, "to get some perspective on how challenging the current environment is for service sector firms, it's notable the increase in the PSI does not even get the index back to the level it was during the depths of the Global Financial Crisis back in 2008/09," said Business NZ's Senior Economist Doug Steel.
The malaise in New Zealand's services industries is broad-based, and excludes almost no part of the sector, added NZ Business. "Service sector weakness was widespread. In fact, unadjusted PSI readings were sub-50 across all groupings whether it be by firm size, by region, or by industry. All industries below 50 in the same month has never occurred before outside of Covid lockdowns," said the New Zealand business organization.
Retailers were especially underwater in July, said BusinessNZ.
Retail "trade continues to stand out on the downside. Not only was its unadjusted 31.8 in July the lowest among industries in the month, but it was that industry's worst July result since the PSI survey began (17 years ago)
and by quite some margin," reported BusinessNZ.
The category of accommodation, cafes, and restaurants also recorded its lowest ever July PSI, at 34.1, noted BusinessNZ.
The recent PSI report "provided further evidence the (New Zealand) economy is going backwards, that job losses will mount and that inflation is falling rapidly," said the Bank of New Zealand on Monday, in a report to clients.
The Reserve Bank of New Zealand, the central bank, cut it key interest rate last week by 0.25% to 5.25%, the first reduction in four years, and plotted more rate cuts going forward, citing sluggish economic growth and ebbing inflation.
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