Two surveys suggest the economy is struggling to get traction from its recent slide. Photo: 123RF
- Surveys show economy struggling for traction, but rays of recovery
- Services sector marginally better but still contracting
- But freight movements the best in more than a year
- Migration gains settling around 10,500 a year, barely a fifth of a year ago
- Kiwis leave in record numbers, about half to Australia.
Two surveys suggest the economy is struggling to get traction from its recent slide, but some signs of an improvement in the offing, although New Zealanders continued to leave the country in record numbers.
The BNZ - BusinessNZ Performance of Services Index (PSI) edged marginally higher to 48.3 in September, but a reading below 50.
The services sector accounts for more than two-thirds of the economy, but has been in contraction for the past 19 months in a row.
BNZ senior economist Doug Steel said the sector was still doing it tough.
"The PSI continues to suggest downside risk to New Zealand's forecast economic recovery. Yes, the PSI nudged up... but such a level is hardly reason to celebrate."
He said the activity/sales, and new orders/business sub-indices lifted but were still going backwards in the face of subdued demand, while the employment indicator fell further.
"Slow population growth, linked to low net immigration, is one factor behind subdued demand... The soft labour market is weighing on consumer confidence," Steel said.
He said combining the services survey and the companion manufacturing survey from last week show an economy going nowhere.
"The combined PMI/PSI activity indicator warns of economic growth struggling to gain traction."
Getting out of economic first gear
However, the monthly look at freight movements from ANZ suggested the economy trying to shift out of the slow lane.
ANZ's Truckometer showed light traffic movements - a measure of consumer behaviour six months ahead - rose by 0.5 percent in September to be 2.6 percent higher than a year ago, its best showing since March 2024.
The more volatile heavy traffic movements - an indicator of current activity - rose 0.9 percent on August, to be 1.7 percent higher on last year.
ANZ chief economist Sharon Zollner said the trend in light traffic had also picked up on a per capita basis.
"September brought the strongest quarterly increase since September 2023 as well as the strongest annual lift since early 2024," Zollner said.
"Traffic data can be volatile, so we'll have to see if it's sustained, but it's a welcome sign."
Zollner said the heavy truck data had lost some momentum, which could be seasonal effects, but Truckometer gains were consistent with other recent data.
Immigration slows to a trickle
Migration numbers from Stats NZ showed an annual net gain of about 10,600 in the year ended August, in the broad range where it has been in recent months, but down 80 percent from the 51,600 gain a year ago.
However, New Zealanders continued to leave the country in record numbers with 73,900 citizens departing in the year ended July, while the net loss, taking into account New Zealanders returning, was 47,900.
About half of those leaving headed to Australia.
ASB senior economist Jane Turner said the slump in immigration was an important factor in overall economic sluggishness.
"The subdued pace of net immigration reflects the weak state of the New Zealand labour market and is likely to be slow to improve over the coming year."
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