Services Sector Contracts for 18th Month, Signals Economic Strain

The services sector in New Zealand is facing significant challenges, contracting for the 18th consecutive month, according to recent data from BNZ and Business NZ. This sector, which constitutes nearly 75% of the nation’s economy, has struggled to maintain growth, while the manufacturing sector has also slipped back into contraction after experiencing a brief period of growth.

Katherine Rich, Chief Executive of Business NZ, shared insights on this ongoing economic situation during an interview with Mike Hosking. Rich highlighted the contrasting fortunes of different sectors, stating, “We are still seeing a tale of two economies.” She pointed out that while the primary sector continues to perform well, the services sector remains under considerable pressure.

The data reflects a broader trend affecting various industries. The continued contraction in services points to potential challenges ahead, as businesses grapple with evolving market demands and economic uncertainties. Rich emphasized that the resilience of the primary sector offers some hope, but the persistent struggles in services cannot be overlooked.

As the contraction persists, it raises concerns about the overall economic outlook for New Zealand. The services sector includes a wide range of industries such as hospitality, retail, and professional services, all of which are vital to the economy. The ongoing difficulties in this sector could have ripple effects, impacting employment and consumer spending.

In summary, the latest figures reveal a troubling trend for New Zealand’s services sector, which is now on a prolonged decline. While the primary sector shows strength, the challenges faced by services underscore the need for strategic responses to support recovery and growth in this crucial area of the economy.