New Zealand services PSI eased to 50.6 in July from 50.9 in June, but it stayed above the 50.0 mark for a second straight month, BusinessNZ data showed.
The reading was also higher than May’s 48.1. As a result, the sector remained in expansion, though the pace slowed slightly from June. BusinessNZ said the result pointed to a recovery that is still in place, but not yet broad.
New Zealand Services PSI Shows Narrow Growth
Among the five sub-indexes, New Orders/Business led at 52.6. Stocks/Inventories came in at 51.6, while Activity/Sales stood at 50.5. However, Employment and Supplier Deliveries both lagged at 48.5, showing the weak spots in the survey.
BusinessNZ chief executive Katherine Rich said it was encouraging to see the index stay above breakeven for a second month. However, she said employment remained a persistent soft point. She added that firms still looked reluctant to make new hires.
Rich also said the recovery was likely to remain modest until consumer confidence improved further. Meanwhile, she said manufacturing had already shown a stronger rebound.
Weak Hiring Tempers the New Zealand Services PSI
Comments from respondents also showed a cautious mood. Cost of living pressures, fuel and petrol prices, and rising interest rates were among the main concerns. In addition, respondents pointed to uncertainty linked to the upcoming election.
Sentiment was weaker than in the manufacturing survey. Notably, 64% of comments were negative. That added to the view that the recovery remains fragile despite two months above the breakeven level.
BNZ senior economist Doug Steel took a more upbeat view. He said the last two months produced the best PSI readings in about three years. He also noted that the Activity/Sales sub-index moved back above 50 for the first time in six months.
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Source: InvestingLive
