By James Glynn
SYDNEY--An extended contraction in New Zealand's services activity deepened in August, highlighting the malaise in the economy and stoking the case for further interest rate cuts in coming months.
The BNZ-BusinessNZ Performance of Services Index was 47.5, down 1.4 points from July, and well below the average of 52.9 over the history of the survey.
The sector has now been in ongoing contraction for 18 months.
Data on Thursday is expected to show New Zealand GDP growth contracted in the second quarter, despite several interest rate cuts over the past year.
The Reserve Bank of New Zealand has already indicated that further interest rate cuts are likely, with the economy buffeted badly in the quarter by the global tariff war.
The sector has now endured tough times for a year and a half, representing a very difficult period for many, said BusinessNZ CEO Katherine Rich.
Withi the sub-index results, both activity, sales and new orders slipped from July. Employment was at a higher value than July, although still in long-term contraction.
The proportion of negative comments for August stood at 59.6% in August, up from 58.5% in July, but down from June.
Services sector businesses reported widespread pressures from inflation, high interest rates, cost-of-living impacts, and weak consumer confidence. These contributed to reduced demand and spending, the data showed.
Other concerns included seasonal slowdowns, rising operating costs, supply chain disruptions, and government policy uncertainty.
-Write to James Glynn at james.glynn@wsj.com
(END) Dow Jones Newswires
September 14, 2025 19:11 ET (23:11 GMT)
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