Chris Small: ABC Business Sales CEO on the service sector's worst performance since May

New data shows the service sector has now dipped in activity for six months in a row. 

The most recent PSI recorded performance at its lowest since May, at 46.9.  

For growth, it needs to sit at 50 or above. 

ABC Business Sales CEO Chris Small told Heather du Plessis-Allan the results were a surprise. 

He says the data had suggested the low point would be during Winter. 

The sector is blaming the weak economic environment for the downturn, Small saying that in comparison, the retail sector saw a boost around Black Friday. 

He says this shows things are turning around and services are just the lagging factor. 

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Episode Transcript

Speaker 1 (00:00):
Got some sober reading for the services sector. New B
and Z Business New Zealand data shows the services index
has slipped to forty six point nine. That's for November.
Anything below fifty means it's contracting. This is at its
worst level in six months. And Chris Small is ABC
Business our CEO and with us morning, Chris Well are
here there, you go, very well, this is a bit
of a surprise. It is a surprise to you.

Speaker 2 (00:21):
Yeah, it really is a surprise. I thought that you know,
the worst, the worst of it been seen in winter
and order new data that we've seen suggested that winter
was our low point and then this sort of just
banged us yesterday all the day before. I think it
was so slightly surprising. But there are I think one
thing that's not covered here is the regional landscape in
New Zealand, and I think if you looked at the
South Island numbers in isolation, you'd probably see they're going

(00:45):
quite well. And then if you look at Auckland and Wellington,
which sort of other service hubs, they aren't going so well.
And obviously the South Island's driven by that. You know,
it's the primary negre sector, which is which is really
flying and helping that part of New Zealand.

Speaker 1 (00:57):
So the PSI for a comedy cafes and restaurants and
looks if you look at it, okay at fifty eight
point eight, but actually that's still below the average of
sixty one point out. Now, what do you put that
down to. Is that simply we don't have the discretionary
cash we used to have.

Speaker 2 (01:12):
Look, that's certainly what it's suggesting. But you know, we've
got a number of clients in that sector, and a
number of them are actually reporting really strong, really strong
run into Christmases. So I think in that sector in particular,
and you probably not yourself together when you're walking down pints, right,
there's there's some operators who are really strong and going well,
and then there's some that are answer there's real winners

(01:33):
and losers in that sector. Probably not too many in
the middle. So there's certainly many operators are going really well,
but if you're not producing something that customers want, you
really are struggling. Soeraps more of a winners and losers
rather than a consistent everyone's down. Yeah.

Speaker 1 (01:46):
Now, now the retail number strongest in eight years down
to Black Friday.

Speaker 2 (01:52):
Look a little bit of that, but also think those
lower interest rates are starting to kick in. And I
think when you think about your own spending, as soon
as you start seeing a little bit of extra money
in your bank account each week, you're probably going to
hit the shops first, and then you might hit your
services second. I think that's a bit of a leading
indicator that actually, you know what, we have hit the
bottom and things are slowly turned around, and services is

(02:12):
just going to be the lagging factor.

Speaker 1 (02:14):
I think does I mean some people have looked at
these numbers I've seen already and they've gone, jees, I
don't know what this is for the outlook for economic
recovery next year? Are you doing that as well?

Speaker 2 (02:24):
Look when you look at there's one number that stands
out there. So the strongest number within that report was
the new order number. So that's the most forward looking
indicator you've got, and that's the heart. It's at forty
nine percent, so it's still it's only just below fifty, which,
as you rightly said, is the sort of midpoint and
anything above that expansion. So I think with all our

(02:45):
customs that we talk to, whether it be childcare, gyms, hospitality,
they're all they're all thinking that they've hit the worst
of it and things are starting to be on the
mpre of in twenty twenty six is going to be
a far better year. So I think if you really
read them between the numbers, most forward looking indicator is
the strongest and regional wise used to be no walk
from them, warning from the struggling, but they will come

(03:06):
back and they'll follow the lead from out from the south,
fall into it, sort of benefiting from the primary and
egg receptors the way we look at it.

Speaker 1 (03:12):
Oh, that's fantastic news, Chris. You look after yourself. It's
always good to talk to you. Chris Small, ABC Business
Sales CEO. For more from the Mic Asking Breakfast, listen
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