NZ services PMI falls to 46 amid Middle East uncertainty

New Zealand's services sector contracted further in March, with the BNZ-BusinessNZ Performance of Services Index (PSI) falling to 46.0, down 1.6 points from February.

The PSI stands below its long-run average of 52.8. A combined measure of services and manufacturing produced a composite reading of 48.8 in March, down from 50.5 in February.

All five subindexes were below the 50 mark that separates expansion from contraction. The Activity/Sales component registered 44.6, indicating a sharp drop in demand.

Survey responses identified weak demand in discretionary sectors such as accommodation, hospitality and recreational services. Firms reported reduced travel, lower bookings and weaker consumer spending linked to uncertainty from the Middle East conflict.

Negative comments accounted for 69.1% of respondent feedback in March, up from 56.4% in February. BNZ cut its 2026 growth forecast to reflect softer demand and heightened uncertainty; the bank does not currently expect a formal recession.