The proportion of negative comments by those in the activity and sales sector has risen to 67 percent, the index showed. Photo: 123RF
The services sector has contracted for the second month in a row as the level of new orders fell to its lowest point since August 2021, when the country was last in lockdown.
The BNZ-Business New Zealand Performance of Services Index (PSI) for July was 47.8, down 1.8 points from the month prior and well below the survey's long-term average of 53.5.
A reading below 50 indicated the sector was contracting.
BusinessNZ chief executive Kirk Hope said the two key indicators of activity and sales, and new orders and business, saw sharp declines, with the former at its lowest point since August 2021.
"In fact, it is the lowest result for activity and sales that was not lockdown related since the survey began in 2007," he said.
Hope said the proportion of negative comments by those in the sector rose to 67 percent in July, compared to 55.6 percent in June and 49.4 percent in May.
"Overall, negative comments received were strongly dominated by a general downturn in the economic conditions and a slowing economy, as well as ongoing increased costs," he said.
BNZ senior economist Doug Steel said activity in the sector took a clear hit in July.
"The results all point to a sharp drop in demand in July, significantly accelerating the slowing trend that had been evident for many months," he said.
Paired with last week's weak manufacturing survey, it showed the sectors were slowing, he said.
"That is not a good look for GDP heading into the second half of the year," he said.
"We think GDP managed some growth in Q2 but see that as the economy bumping along the bottom."
