New Zealand Services Sector Slumps to 46.0, Heightening Recession Fears

New Zealand’s Performance of Services Index (PSI) fell to 46.0, signaling a deepening contraction, while the Manufacturing PMI recorded 53.2 in March, down from 54.8 in February. Although manufacturing remains in expansionary territory, business sentiment has deteriorated significantly, with the proportion of firms reporting negative conditions surging to 62% from 44.5% the previous month. Firms cited the conflict in Iran as a key source of uncertainty, alongside rising energy costs and supply chain risks. This persistent weakness in services and losing momentum in manufacturing pose significant headwinds for the New Zealand Dollar (NZD). Market participants are now closely monitoring the Reserve Bank of New Zealand (RBNZ) for any potential dovish shifts in response to the deteriorating economic outlook and geopolitical tensions.