In January, the BNZ-BusinessNZ Performance of Services Index (PSI) dropped 0.8 points to 50.9, dipping below its long-term average of 52.8.
A reading above 50 signals expansion in the services sector.
BusinessNZ chief executive Katherine Rich noted that, despite January’s slowdown, the sector stayed in expansion territory following its long contraction streak.
Activity/sales was the sole sub-index to increase in January, while new orders/business softened, and stocks/inventories, supplier deliveries, and employment slipped deeper into contraction.
Negative comments surged to 58.7%, as firms cited low confidence, holiday shutdowns, and high operating costs.
BNZ senior economist Doug Steel focused on the data’s overall trend rather than January’s single-month figure, noting that “the big question to end 2025 was whether the economy may be turning.”
“Data since then has given us confidence that recent positive momentum can be sustained. The economy is growing.”
Steel said the combined PSI/PMI activity indicators align with BNZ’s forecast for rising GDP this year. He anticipates the Reserve Bank will hold interest rates steady this week, but a pivotal question for the Bank remains: when will rising economic growth fuel higher inflation?