The latest BNZ–BusinessNZ Performance of Services Index shows New Zealand’s services sector expanding in December for the first time in nearly two years, with a PSI reading of 51.5.
The sector, covering retail, hospitality, real estate and IT, had faced a 21-month contraction. BusinessNZ CEO Katherine Rich said: “It has been a long, dark tunnel for many in the service sector over the past couple of years. But light has appeared.”
December’s PSI was up 4.3 points from November, though still slightly below the historical average of 52.8.
Three sub-indexes pointed to growth: New Orders/Business climbed to 52.5, its first rise in four months; Activity/Sales reached 52.2; and Stocks/Inventories hit 51.9. Employment remained below 50 at 49.6, indicating that hiring is still cautious.
“The PSI is not strong, but the positive direction of travel is important to acknowledge. When looked at in combination with last week’s large jump in Performance of Manufacturing Index (PMI), this signalled ‘firmly positive GDP growth into the end of 2025’ and ‘establishes forward momentum heading into the New Year,’” BNZ senior economist Doug Steel said.
Negative commentary in December fell to 50.4% from 52.9% in November, signalling improved sentiment but ongoing caution. Analysts note that while sales and orders are rising, businesses may continue to be conservative in recruitment.
The December PSI points to steady, market-driven momentum heading into 2026. Gains across services and manufacturing suggest a modest lift in GDP, with incremental improvements likely to underpin investment decisions and gradual labour market recovery.