New Zealand’s services sector slid deeper into contraction in May, with the BNZ-BusinessNZ Services Performance Index falling from 48.7 to 47.5. The latest reading marks another month below the 50-point threshold that separates expansion from contraction, reinforcing signs that domestic demand remains weak despite broader hopes for an economic recovery.
This weakness was caused by a sharp deterioration in activity and sales, which fell from 48.5 to 44.7, while new orders/business fell from 50.9 to 47.6. The employment rate rose marginally from 48.5 to 48.6 but remained in contraction territory. Inventories fell from 47.6 to 47.5, while supplier deliveries improved from 46.8 to 49.5, suggesting that companies may be able to respond quickly if demand eventually recovers.
BusinessNZ chief executive Catherine Rich said sectors reliant on discretionary spending, including cafes, restaurants and leisure services, were among the weakest performers as consumers remained cautious about spending. More than two-thirds of survey respondents reported negative business conditions, citing rising costs – especially fuel – and weak demand linked to weak consumer confidence. The PSI continues to hover in contraction territory, suggesting the services sector is still struggling to regain its footing, BNZ chief economist Doug Steele said.
| index | April 2026 | May 2026 | It changes |
|---|---|---|---|
| BNZ-BusinessNZ PSI | 48.7 | 47.5 | -1.2 points |
| Activity/Sales | 48.5 | 44.7 | -3.8 points |
| employment | 48.5 | 48.6 | +0.1 pip |
| New orders/business | 50.9 | 47.6 | -3.3 points |
| Stocks/Stocks | 47.6 | 47.5 | -0.1 point |
| Supplier deliveries | 46.8 | 49.5 | +2.7 points |
