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New Zealand Services Sector Contracts Further in May on Weak Demand

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New Zealand's services sector contracted further in May as weak consumer demand and rising costs continued to weigh on activity, according to a statement by BusinessNZ on Monday.

The BusinessNZ Performance of Services Index (PSI) fell to 47.5 in May from 48.7 in April. A reading below the 50-point mark points to contraction.

Consumer caution continued to weigh heavily on discretionary services in May, with cafes, restaurants, and personal leisure businesses among the weakest as households held back on non-essential spending, said Katherine Rich, BusinessNZ's chief executive.

The activity/sales indicator fell to 44.7 in May from 48.5 in April, while the employment measure inched up to 48.6 from 48.5. Stocks/inventories edged down to 47.5 from 47.6, supplier deliveries increased to 49.5 from 46.8, and new orders/business decreased to 47.6 from 50.9.

Rising fuel costs and weak demand from low consumer confidence continue to weigh on businesses, with just over two-thirds of respondents reporting negative conditions, unchanged from April, the report said.

The PSI has remained in contractionary territory in recent months, reflecting a sector still struggling to regain momentum and move back into expansion, said Doug Steel, BusinessNZ's senior economist.

The seasonally adjusted BusinessNZ Performance of Composite Index declined as ongoing weakness in the PSI persisted, with both the manufacturing and services components remaining in contraction.

The gross domestic product-weighted and free-weighted indexes both contracted further in May, falling to 48 and 48.4, respectively, from 48.5 and 49.2 in April.

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International

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International

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