Kirk Hope: Business NZ Chief Executive on the service sector being at its lowest level since Covid

Service sector activity has plummeted to its lowest level outside the Covid lockdowns. 

The BNZ-Business New Zealand Performance of Services Index (PSI) fell 3.6 points in May to 43.0. 

Business NZ Chief Executive Kirk Hope told Heather du Plessis-Allan “It’s consistent with other data – like profit margins being below pre-Covid rates.” 

Hope said “Corporate insolvencies are around the same level as during the GFC – it's a pretty tough time.” 

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Episode Transcript

Speaker 1 (00:00):
Now, the service sector has been contracting further. The latest
Performance of Services Index shows that activity levels fell three
point six percent in May. That is the lowest level
since the survey began seventeen years ago, with the exception
of the COVID Lockdown's Kirk Hope is the chief executive
of Business New Zealand.

Speaker 2 (00:15):
Hey, Kirk, good evening. Well it's not that good an evening, But.

Speaker 1 (00:20):
Put us in context for me, how worried you about this?

Speaker 2 (00:24):
Well, I mean, I think you just said it's the
worst result monthly results since the saivey began in two
thousand and seven a minute. It's consistent with other data
which we saw for May, which is certainly the spin
down across the board and particularly in the services sector.
It's consistent with other data that it's out there as well,

(00:46):
more generally in business with profit margins below below pre
COVID rates, and then you're looking at corporate insolvencies that
are around about the same level as during GC. So
this is this is a pretty tough time.

Speaker 1 (01:02):
Not only is the size worrying but the speed as well. Right,
what does that tell us?

Speaker 2 (01:07):
Yeah, well, I'm mean I think that's that's one of
the biggest challenges is the very speedy contraction. And look,
the reality is if you think about the pace at
which the breaks when on the economy with interest rate rises,
that's that's starting to flow through in a fairly significant way. Now,
that's really what we're seeing. I think in a lot

(01:27):
of the data.

Speaker 1 (01:28):
Do you think, Kirk. I mean, we're waiting for the figures,
the GDP figures to come out on Thursday. Is this
going to tell us that we're still in recession if
you look at these kinds of numbers.

Speaker 2 (01:36):
Well, well I think so. But even if it doesn't,
it will it will it will say we're flat as
opposed to growing. I suspect, which which again you know,
really reflects the challenging set of circumstances. I mean, I
was talking to a business leader on Friday and you know,
I said, how you're feeling and he says, the mentor
in this industry has survived till twenty five. So that's

(01:58):
how they're feeling in general about the stay of play.

Speaker 1 (02:03):
Kirk, thank you so much, man, and hope hopefully things
get better. That's Kirk Hope, Chief Executive Business New Zealand.
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