The sector that accounts for two-thirds of the nation's economy has slowed to its lowest levels of expansion since December 2012.
The BNZ-BusinessNZ performance of services index (PSI) showed that activity in the services sector slowed across all major categories - a trend Bank of New Zealand senior economist Doug Steel finds more worrying than measures of business sentiment, which has also dropped to a seven-year low.
"While some have discounted weak business confidence readings of late, the PSI and PMI [manufacturing] results are not so easily dismissed as these are surveys of business outcomes not based on sentiment, outlooks, or expectations. In this sense, they are arguably more worrying from a growth perspective," Steel said in a note.
New Zealand's PSI for June was 52.8, which was 4.3 points lower than the May reading. A PSI reading above 50 indicates that the service sector is generally expanding; below 50 that it is contracting. The last time it fell below 50 was July 2010.
All five PSI sub-indices fell in the month, with activity/sales dropping 3.2 points to 54.7, and supplier deliveries down 4.8 points to 48.3. Stocks/inventories dropped 3.5 points to 50.9 and new orders/business fell 5.5 points to 58.6. Employment fell 3 points to 50.
