New Zealand Services Sector Contracts in February: PSI Drops to 48.0
The BusinessNZ Performance of Services Index (PSI) for New Zealand registered a notable decline in February 2026, signaling renewed contraction in the country’s vital services sector. Released March 15, the latest reading underscores persistent headwinds for domestic demand and business confidence.
Table of Contents
Big-Picture Snapshot
Drivers this month
- Activity/Sales: -2.1 points MoM
- New Orders: -1.6 points MoM
- Employment: +0.3 points MoM
- Supplier Deliveries: -0.7 points MoM
Policy pulse
The PSI’s 48.0 print sits below the 50.0 threshold that signals expansion, and well under the Reserve Bank of New Zealand’s (RBNZ) preferred zone for robust growth. The central bank continues to monitor services activity as a key input for monetary policy calibration.
Market lens
NZD weakened modestly on the release, reflecting renewed growth concerns. Market participants interpreted the sub-50 reading as a sign that domestic demand remains fragile, with some analysts reassessing expectations for near-term economic momentum.
Foundational Indicators
Historical context
- February 2026: 48.0
- January 2026: 50.9
- December 2025: 46.9
- November 2025: 48.7
- 12-month average: 48.7
- Lowest in last 9 months: 44.0 (June 2025)
Comparative trend
February’s reading reversed January’s brief expansion, falling 2.9 points MoM. The index remains below the 12-month average, and is 0.7 points lower than the same month a year earlier (February 2025: 48.7).
Methodology
The PSI is compiled by BusinessNZ and BNZ, surveying firms across services industries. A reading above 50.0 signals expansion; below 50.0 indicates contraction. The survey covers activity/sales, new orders, employment, supplier deliveries, and inventories[1].
Chart Dynamics
What This Chart Tells Us: The PSI’s return to sub-50 territory after a brief expansion highlights the sector’s vulnerability to weak demand and cost pressures. The lack of sustained upward momentum since mid-2025 suggests ongoing caution among service providers, with little evidence of a decisive recovery.
Forward Outlook
Scenario analysis
- Bullish: A rebound above 50.0 in March, driven by improved consumer sentiment and tourism, has a 25–35% probability.
- Base: Continued readings near 48–49 through Q2 2026, as demand remains subdued, is the most probable scenario (50–60%).
- Bearish: Further declines below 47.0, triggered by external shocks or tighter financial conditions, carry a 10–20% risk.
Risks and opportunities
Upside risks include a faster-than-expected recovery in inbound travel and easing input costs. Downside risks center on persistent inflation, soft labor market conditions, and global economic uncertainty.
Data source
All figures are sourced from BusinessNZ, BNZ, and the Sigmanomics database[1].
Closing Thoughts
Market lens
NZD/USD and NZX indices saw muted but negative moves post-release. Investors remain cautious, with the PSI’s contraction reinforcing a defensive stance on New Zealand assets. The services sector’s trajectory will be closely watched for signs of stabilization or further weakness in the coming months.
Key Markets Reacting to Services NZ PSI
The Services NZ PSI’s contraction has immediate implications for currency and equity markets. The NZD/USD pair often responds to shifts in domestic economic momentum, while New Zealand’s main stock index reflects sentiment in consumer and business services. Global investors also monitor these signals for broader Asia-Pacific risk appetite.
- AAPL: Indirect exposure via global supply chains and Asia-Pacific demand.
- NZDUSD: Directly impacted by PSI releases; weaker readings tend to pressure the kiwi lower.
- BTCUSD: Used as a risk sentiment barometer; NZ economic softness can correlate with crypto inflows during risk-off periods.
| Month | Services NZ PSI | NZDUSD |
|---|---|---|
| Jan 2024 | 49.2 | 0.634 |
| Jul 2024 | 47.3 | 0.613 |
| Jan 2025 | 51.5 | 0.651 |
| Feb 2026 | 48.0 | 0.608 |
Since 2020, NZDUSD has shown a moderate positive correlation with the Services NZ PSI, with the currency tending to strengthen during periods of services sector expansion and weaken during contractions.
FAQ
- What is the current value of the New Zealand Services PSI?
- The Services NZ PSI registered 48.0 in February 2026, indicating contraction in the sector.
- How does the latest Services NZ PSI reading compare to recent months?
- February’s 48.0 is down from January’s 50.9 and below the 12-month average of 48.7, reversing last month’s expansion.
- Why is the Services NZ PSI important for New Zealand’s economy?
- The Services NZ PSI tracks activity in the country’s largest economic sector, providing a timely gauge of domestic demand and business confidence.
New Zealand’s services sector faces renewed headwinds as the PSI slips back into contraction.
Updated 3/15/26
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
- [1] BusinessNZ, BNZ, Sigmanomics database. “Performance of Services Index (PSI) Historical Data.” Accessed March 15, 2026.
February’s PSI fell to 48.0, down from January’s 50.9 and below the 12-month average of 48.7. The index has oscillated between contraction and mild expansion since mid-2025, with only one month above 51.0 in the past nine months. The latest drop erases January’s gains and brings the sector back into contraction territory.
Compared to August 2025’s 48.9 and October’s 48.3, the current figure reflects persistent softness. The sector’s best recent performance was in January 2026 at 51.5, but that momentum proved short-lived.