New Zealand Services Index Rises to 51.7 in October, Highest in More Than Three and a Half Years
Key Facts
New Zealand’s Performance of Services Index rose to 51.7 in October, its highest reading in more than three and a half years, according to a BusinessNZ statement. The sector extended its growth to five consecutive months. The reading was above the 50 level that separates expansion from contraction. BusinessNZ said the sector continued to expand in October, noting that the index posted its highest level over that period. The reading put services at the forefront of activity indicators that showed improvement during the month.
New orders and business were the index’s strongest components, at 53.0, followed by activity and sales at 52.6. The supplier deliveries index stood at 52.1, pointing to a broader improvement across more than one services component. By contrast, the employment index was 49.9, making it the only component below 50, albeit by a narrow margin. Inventories registered 50.1, close to the contraction threshold. These readings show that stronger demand and activity have not yet been accompanied by a return of the employment index to expansion territory.
The October reading followed 50.9 in September, compared with 51.0 in August and 50.5 in July. The index remained above 50 in all three months, but October’s reading was its highest in more than three and a half years. This movement is consistent with the expansion streak extending to five months, while employment remained weaker than the other components. The GDP-weighted composite index, which combines manufacturing and services, also rose to 52.2 in October from 51.5 in September. The unweighted composite index climbed to 53.4 from 53.3.
BusinessNZ Chief Executive Katherine Rich said many companies had held off on decisions ahead of the election. She added that deferred spending and investment could begin to emerge toward the end of the year if a new government is formed soon. She said, "There is a possibility that some of that deferred spending and investment could start to emerge as we approach the end of the year." BusinessNZ said fuel prices, the cost of living, interest rates and election uncertainty remained concerns. However, the share of negative comments from respondents fell to 57.9% in October from 59.9% in September.
Bank of New Zealand Chief Economist Doug Steel said continued improvement in services activity would support evidence that the economic recovery is broadening and becoming more entrenched. He said, "If this movement continues, it will provide further evidence that the economic recovery is broadening and becoming more entrenched." The employment reading below 50 remains a factor limiting the strength of the signal from demand and sales indicators. The general election was held on November 7, while the Electoral Commission set November 27 as the date for announcing the official results. Rich said the formation of a new government soon could allow the effects of deferred spending and investment to emerge before the end of the year.
The Reserve Bank of New Zealand is scheduled to release its Financial Stability Report on November 17 at 9 a.m. Stats NZ lists October goods trade data for November 19. It also set November 23 as the date for the September quarter 2026 retail trade survey. These dates follow October’s reading, which showed services expanding for a fifth month, and provide subsequent updates on trade and consumer spending. The available information did not include details on the market reaction to the index release.