New Zealand's services sector remained in contraction in April 2026. The BNZ-BusinessNZ Performance of Services Index rose 2.7 points to 48.9 from a revised 46.2 in March.
The reading marked the third consecutive month below the 50 breakeven point that separates expansion from contraction. New orders edged into expansion at 51.2. Employment, sales, stocks and supplier deliveries all stayed below 50.
Employment has now sat below the breakeven mark for 29 straight months. The services sector accounts for nearly three-quarters of the New Zealand economy.
Higher fuel prices drove much of the weakness. Petrol prices jumped 13 percent and diesel surged 37 percent in April. The increases stemmed from disruptions to shipping through the Strait of Hormuz amid the Middle East conflict.
With the continuing conflict affecting shipping through the Strait of Hormuz, it is difficult to foresee a quick return to expansion in the sector.
BusinessNZ chief executive Katherine Rich noted the impact. More than two-thirds of survey comments were negative. Many respondents pointed to fuel prices. Smaller firms with fewer than 10 employees reported tougher conditions than larger operators.
BNZ head of research Stephen Toplis said the results align with expectations. The data alongside the weak manufacturing survey is consistent with BNZ's forecast that Q2 GDP will struggle to climb above zero.
The long-term average PSI reading stands at 52.8. The current run of sub-50 readings represents a significant deviation from historical norms.
The Reserve Bank of New Zealand's May 2026 Financial Stability Report noted that economic growth had begun to recover prior to the conflict. Recent events now point to a slower recovery.
