‘Alas the here and now ain’t great’: Business surveys suggest economic struggles continue
Monday, 15 June 2026
Businesses in both the services and manufacturing sectors of the economy were downbeat in May, and more gloomy than they had been in April, according to surveys released by BusinessNZ.
That was despite a conflicting signal from Stats NZ data on bank card transactions, which indicated a bounce in retail spending.
BusinessNZ’s Performance of Services Index, released today, slipped to 1.2 points to 47.5, while its equivalent measure for manufacturing businesses just dipped into negative territory on Friday by falling 0.5 points to 49.9.
In both cases, a score below 50 suggests the sector is declining, with an index level above 50 indicating growth.
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BusinessNZ chief executive Katherine Rich said it was frustrating to see the services sector struggle, but it was “difficult to see how the sector’s fortunes will turn around quickly”.
“The industries within the sector that were weakest in May were those such as cafes and restaurants, and recreational and personal services, that rely heavily on discretionary expenditure by consumers.
“People are still very wary of spending unless it cannot be avoided,” she said.
Stats NZ’s bank card data appeared to paint a slightly different story.
Retail NZ chief executive Carolyn Young said that showed “core retail spending” rising by 2.8% in May compared with a year earlier.
That was the highest increase in more than two years and retailers would be ‘buoyed’, she said.
“Most impressively, the durables sector, which includes furniture, hardware, electronics, and pharmacies, jumped 4.8% on 2025 figures,” Young said.
“Kiwis are still being strategic with day-to-day budgets. Overall, it is highly encouraging to see retail seeing some growth despite recent international turbulence.”
BNZ research head Stephen Toplis put more weight on the BusinessNZ surveys as a guide to current activity, however, and advised against drawing too many conclusions from “one month’s” spending card data, given that tended to jump around a lot.
“The drop in April was surprisingly large and the way we’ve chosen to look at it is basically to put ‘April and May’ together,” he said, noting April had been an unusual month because of the timing of public and school holidays and an autumn storm.
A drop in the price of fuel may have helped improve the May figures, but “common sense tells you that the pressure on household budgets from inflation was problematic”, he said.
Stats NZ is expected to report a significant jump in GDP in the three months to the end of March, but Toplis said the BusinessNZ survey data said more about the “here and now”.
“Alas, the here and now ain’t great,” he said.
“Moreover, there is every reason to believe the already sub-50 activity indicators could fall further, particularly in the manufacturing sector where an apparent inventory build-up — against a backdrop of falling new orders — implies future production will be under pressure.”
The mixed data was released at the same time as an apparent agreement in talks between the United States and Iran.
“Of course, everyone is now pondering what the alleged end to the Iran war means,” Toplis said.
BusinessNZ advocacy director Catherine Beard said it was disappointing to see its manufacturing index slip back into negative territory, albeit only slightly.
“Manufacturers are obviously struggling in the face of a combination of adverse influences, including lack of customer demand, high fuel prices and the conflict in the Middle East,” she said.