Skip to content

Services sector falls back into contraction

Services sector falls back into contraction

Navigation for News Categories

The services sector has fallen back into contraction after two solid months of growth as the resumption of lockdowns hit hospitality businesses.

23062016 Photo: RNZ / Rebekah Parsons-King. Busy streets in Wellington.

Photo: RNZ / Rebekah Parsons-King

The BNZ-Business NZ Performance of Services Index (PSI) fell 7.5 points on July to 46.9 points.

A reading below 50 indicates contraction.

The employment sub-index also took a step back on July and remains below 50 for the sixth month running, which points to jobs being lost in the sector.

“[The result] is probably more understandable given the new restrictions that came into place 12 August, and of course these restrictions have a lot of impact on services industries because they depend on people meeting up and mingling,” BNZ senior economist, Craig Ebert said.

He said despite the August slump, the result was still consistent with an underlying improvement in the economy.

“Now if you look at the headline index for August… [it] would normally indicate the economy is going backwards, and to a point that’s true. But the context is the June quarter, where we saw probably the worst of the lockdown effects was contracting all that more.”

Ebert said he expected the PSI and its companion survey, the Performance of Manufacturing Index (PMI), to bounce back in September.

Hospitality businesses were the most affected by the latest restrictions, as its reading on the sector specific PSI index fell to 26.9 from 65.9 in July.

The services industry in the Otago-Southland region was the worst performing in August, as the reimposition of travel restrictions put a lid on domestic tourism.

Covid 19 logo

Get the RNZ app

for ad-free news and current affairs
Download from Apple App StoreDownload from Google Play Store


XL subscribe to our newsletter banner

Get the latest news and advice on COVID-19, direct from the experts in your inbox. Join hundreds of thousands who trust experts by subscribing to our newsletter.

Send your news and stories to us news@climaxradio.co.uk or newstories@climaxnewsroom.com and WhatsApp: +447747873668.

Before you go...

Democratic norms are being stress-tested all over the world, and the past few years have thrown up all kinds of questions we didn't know needed clarifying – how long is too long for a parliamentary prorogation? How far should politicians be allowed to intervene in court cases? To monitor these issues as closely as we have in the past we need your support, so please consider donating to The Climax News Room.

Privacy Policy Designed using Unos Premium. Powered by WordPress.

Live Updates COVID-19 CASES