A retailer checking out a sale at the counter. Photo: Unsplash/ Simon Kadula
New Zealand's services sector is stuck in a rut though the pace of contraction is slowing.
The BNZ - BusinessNZ Performance of Services Index (PSI) for October was 46 points, which was well below the long-term average of 53.1 points.
A PSI reading above 50.0 indicates the service sector is generally expanding, while a reading below 50.0 indicates contraction.
While the latest reading was up 0.3 points from September, the sector remained within a tight band of contraction.
BusinessNZ chief executive Katherine Rich said the October result was mixed with new orders at 48.1 points, which was the highest level since February.
Activity/sales were at 44.3 points, indicating a loss in momentum during October, though employment recovered a bit of ground to 46.4 points after a sizeable drop in September.
The proportion of negative comments last month was 59 percent, which was a bit more than in September but down from August, July and June.
"The cost of living and the general economic climate continued to dominate comments from respondents," she said.
BNZ senior economist Doug Steel said the activity outlook for the sector had improved in recent business surveys, but remained "extremely challenging."
He said the small movement did not materially change the message of a services sector firmly in reverse.
"Combining the PMI and PSI, the Composite Index (PCI) suggests GDP is still tracking below year earlier levels. Our economic forecasts are for GDP to contract again in Q3 before starting to gradually recover."
