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NZ Services Still in Contraction as Fuel Costs, Hormuz Disruption Bite
PSI improved to 48.9 in April but remains sub-50. Fuel costs and Strait of Hormuz disruption delay recovery. Micro-business sub-index at 44.4 signals pressure.
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New Zealand’s services sector moved closer to the expansion line in April but remained in contraction territory, with the BusinessNZ Performance of Services Index climbing to 48.9 from 46.2. The 50’s 50-point threshold marks the boundary between growth and shrinkage. The improvement beats in the headline improvement belie a fractured recovery in the services sector.
Underlying components showed a largely broad-based improvement. Activity/sales rose from 44.7 to 48.9, while Employment firmed from 46.6 to 48. New orders/business crossed back into expansion, jumping from 46.0 to 51. That reading offers the first in the category since January. Supplier deliveries slipped from 47.2 to 46.6, while stocks/inventories edged up from 46.2 to 47.
BusinessNZ Chief Executive Katherine Rich said over two-thirds of respondents continued to report negative conditions. Many cited fuel prices as a major pressure point. She warned that ongoing disruption to shipping through the Strait of Hormuz makes a quick return to sector-wide expansion difficult to envision. Fuel costs ingested along supply chains, with the supplier deliveries component weakening further despite the overall index improvement. The logistics drag from Red Sea and Strait of Hormuz chokepoints is material for a small open economy like New Zealand’s.