New Zealand's services sector fell back into contraction in February, highlighting a slower-than-expected economic recovery, according to a statement by BusinessNZ on Monday.
The BusinessNZ Performance of Services Index (PSI) fell to 48 in February from 50.7 in the previous month. A reading below the 50-point mark points to contraction.
"The sector's rebound into expansion only lasted two months, with a February result similar to levels of contraction seen towards the end of 2025," said Katherine Rich, BusinessNZ's chief executive.
The activity/sales indicator fell to 47.9 in February from 53.8 in January, while the employment measure decreased to 47.2 from 49. Stocks/inventories fell to 46.7 from 49.4, supplier deliveries edged down to 48.7 from 49.4, and new orders/business decreased to 49.3 from 51.6.
The share of negative comments in February was over 56%, down from nearly 59% in January, driven by weak economic conditions, high living costs, inflation, and interest rates, as well as seasonal effects, low confidence, staffing pressures, and broader uncertainty, the report said.
The index suggests that the economy is recovering more slowly than anticipated, which is particularly disappointing in light of the relatively positive performance of the manufacturing sector, said Doug Steel, BusinessNZ's senior economist.
The seasonally adjusted BusinessNZ Performance of Composite Index showed mixed outcomes, with the February GDP-weighted index falling to 48.7, while the free-weighted index remained slightly positive at 50.5.
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