New Zealand’s services industry remained in contraction for the 18th consecutive month as of August, signaling that the anticipated economic rebound in the third quarter may be weaker than previously projected. According to data released Monday in Wellington by Bank of New Zealand and Business NZ, the Performance of Services Index dropped to 47.5 from 48.9 in July. A reading below 50 indicates contraction, and the index has not surpassed this threshold since February of the previous year, highlighting persistent challenges in the sector.
This prolonged downturn suggests underlying fragility in the broader economy, despite hopes for a recovery driven by consumer demand or policy adjustments. The services sector, which includes industries such as retail, hospitality, and professional services, plays a crucial role in employment and GDP contribution. Its continued weakness raises concerns about inflationary pressures, labor market dynamics, and overall business confidence.
Economists note that while external factors like global demand and interest rate policies may influence performance, domestic conditions—including household spending habits and business investment—are also contributing to the sluggish outlook. With no clear sign of expansion on the horizon, policymakers may face increasing pressure to reassess fiscal and monetary strategies to stimulate growth.
The lack of improvement over nearly a year and a half underscores structural issues that may require more than short-term fixes. Analysts suggest that without a significant shift in consumer behavior or renewed business optimism, the path to recovery could extend well into the next year.
— news from Bloomberg.com
— News Original —
The Performance of Services Index fell to 47.5 from 48.9 in July, Bank of New Zealand and Business NZ said Monday in Wellington. The gauge hasn’t been above 50 — which signals expansion — since February last year.