‘Underwhelming’: No green shoots for NZ services sector as decline continues

Monday, 15 September 2025

BNZ says the Performance of Services Index covers slightly more than two thirds of the economy, and has labelled the August result disappointing.

The services sector — which accounts for the lion’s share of the economy — continued to decline in August, according to a survey released by BusinessNZ, casting further doubt on the existence or strength of an economic recovery.

The sector has now been contracting for the past 18 months, the business lobby group said.

The most significant piece of economic data that is due to be released this week is the GDP figure for the three months to the end of June, which Stats NZ will release on Thursday.

Bank economists expect that will show economic activity declined by between 0.3% and 0.5% during the quarter.

But Westpac said attention would then turn to whether the economy had been able to regain its momentum subsequently.

It said earlier today there were “some reasonably positive growth signals” in sectors such as agriculture, electricity and retailing.

But BusinessNZ’s monthly survey of the services sector that was conducted by BNZ and released mid-morning appears to run counter to that optimism.

Its Performance of Services Index stood at 47.5 points in August. A reading below 50 signals activity in the sector is declining.

'I think we've got the right economic plan for the future for New Zealand,' Christopher Luxon said.

The August reading was 1.4 points lower than July, and “well below the average of 52.9 over the history of the survey”, BusinessNZ said.

BusinessNZ chief executive Katherine Rich said the past 18 months had been a very difficult period for many.

Services businesses reported widespread pressures from inflation, high interest rates, cost-of-living impacts and weak consumer confidence, all contributing to reduced demand and spending, BusinessNZ said.

Other concerns included “seasonal slowdowns”, rising operating costs, supply chain disruptions and uncertainty over government policy, it said.

BNZ senior economist Doug Steel said the services sector accounted for slightly more than two thirds of the economy and described the results of its latest survey as “underwhelming”.

“We're looking for signs of recovery. This month isn't it.”

“If there is some positive in it, the three-month moving average is becoming less negative. But in itself, the month of August — disappointing,” he said.