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New Zealand’s BusinessNZ Performance of Services Index rose to 47.3 in June 2025, up from 44.1 in May. Despite the improvement, the index remained in contraction territory for the fifth straight month and continued to trend well below its long-term average of 52.9. The services sector continues to face significant headwinds, including weak consumer confidence, high living costs, and ongoing economic uncertainty. Reduced household spending, persistent inflation, elevated interest rates, and government cutbacks are weighing heavily on activity. Seasonal factors such as winter and a decline in tourist arrivals have further dampened demand. Among the sub-indexes, Activity/Sales (44.5) and New Orders/Business (48.8) remained in contraction. Notably, Stocks/Inventories (50.6) showed expansion for the first time since November 2024. However, Employment (47.2) stayed in negative territory for the 19th consecutive month, reflecting continued labor market weakness in the sector.