Katherine Rich: Business NZ CEO on the services sector contracting for the 18th consecutive month

Our largest sector is continuing to do it tough. 

Latest data from BNZ and Business NZ shows our services sector —which makes up almost three quarters of the economy— has contracted for the 18th consecutive month. 

Our manufacturing sector is also back in contraction after a period of growth. 

Business NZ Chief Executive Katherine Rich told Mike Hosking we're still seeing a tale of two economies. 

She says the primary sector is doing quite well, but the services sector is continuing to face challenges. 

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Episode Transcript

Speaker 1 (00:00):
A lot of focus on our economy this week. We

(00:01):
got the Q two GDP numbers out Thursday. Alongside those,
the latest services sector read down a number one point
four points. We're sitting at forty seven point five in August.
That is eighteen straight months of contraction. Catherine Rich's the
Business New Zealand c Owners with us. Catherine, morning to you,
good morning. We saw a little bit of life in
retail up zero point nine percent, driven by apparel and hospitality.

(00:22):
How would you describe it, patche worried problematic? What do
we got?

Speaker 2 (00:27):
It is patchy. I think what we're facing as a
tail of two economies. Really we know the primary sector
is doing quite well, but of course major part of
the economy is a services sector and we're still seeing
that part of the economy really facing challenges. And that's
what our PSI result shows eighteen months of contraction. But

(00:47):
on the other side, we're seeing from the Business New
Zealand Sentiment Survey a bit of an uptick in the
way firms are considering investment, particularly for next year. So
that's positive.

Speaker 1 (00:57):
So we had those numbers just before seven o'clock. The
intent is driven by what is it driven by? Hope
or is it driven by some tills actually rung and
I've got some money to spend.

Speaker 2 (01:09):
I think it's a combination of hope. But for those
people who follow the news closely, they do see that
the government's trying to pull every single economic growth lever
it possibly can with changes to immigration and tax and
the RMA, and I could list out the rest of them.
People know what they are, but I think also some
understand it's an incredibly long lead time and so while

(01:33):
some of those changes aren't immediately obvious for twenty twenty six,
a lot of those changes will come to fruition.

Speaker 1 (01:40):
Yeah, you how much weight do you place on consumer
confidence in the sense that how many people do you
think are in a funk because they've decided to be
in a funk as opposed to they could probably have
a different attitude if they wanted.

Speaker 2 (01:54):
I think there is an element of being a small
country where we can talk ourselves into a bit of
a funk. But that's why I think the Business New
Zealand data about both our Performance of Manufacturing Index and
our Performance of Services Index are good leading indicators because

(02:14):
they show economists what businesses are thinking today and the
future The issue with the primary sector is that yes,
it's doing well, but there's not a lot of indication
that it's flowing through to spending. And I think some consumers,
even with changes to the ocr and other more upbeat indicators,

(02:37):
they're still saying, Look, I'm not one hundred percent sure
I trust that, yet I'm still going to keep my
hand in my pockets.

Speaker 1 (02:43):
Yeah, all right, okay, I appreciate it. Catherine Catherine Rich,
who's the Business New Zealand CEO, bit worried about what
Andrew Keller has said earlier on in the program that
you know, we've talked ourselves into the potential of something
happening this year economically and it hasn't and whether or
not it may not actually come to pass. But as
I say, the GDP numbers out on Thursday.

Speaker 2 (03:00):
More from the Mic Asking Breakfast.

Speaker 1 (03:01):
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