Service Sector Sees First Growth in Nearly Two Years: Positive GDP Outlook

When looked at in combination with last week’s large jump in Performance of Manufacturing Index (PMI), this signalled “firmly positive GDP growth into the end of 2025″ and “establishes forward momentum heading into the New Year”, Steel said. “It has been a long, dark tunnel for many in the service sector over the past couple of years. But light has appeared,” he said. BusinessNZ CEO Katherine Rich said that the December result ended the longest run of contraction for the sector since the survey began, stretching to 21 months. Three of the five sub-index values were in expansion, with new Orders/Business (52.5) leading the way after four months of consecutive contraction. This was followed by Activity/Sales (52.2) and Stocks/Inventories (51.9). Despite the return to overall expansion, Employment (49.6) still remained in slight contraction. The proportion of negative comments for December stood at 50.4%, but this was still below November (52.9%) and October (54.1%). Negative comments received showed the services sector was still constrained by weak demand and confidence, high living and operating costs and Christmas-related shutdowns. “On the flip side, positive comments saw the services sector supported by seasonal Christmas and summer demand, improving consumer confidence driven by lower interest rates, stronger tourism, new contracts and bookings, and early signs of broader economic recovery and investment activity,” Rich said. Liam Dann is business editor-at-large for the NZ Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.