New Zealand\u2019s BusinessNZ Performance of Services Index (PSI) rose to 48.9 in April, up from 46 in the previous month.<\/p>\n
Despite the increase, the index remained below the 50 mark, which indicates contraction rather than expansion in the services sector.<\/p>\n
New Zealand’s services sector showed a marked improvement in April, with the index rising to 48.9. While this figure is still below the 50-point mark that separates contraction from growth, it signals the slowdown is losing momentum. This suggests the economic floor might be forming, which we have been anticipating.<\/p>\n
This data complicates the outlook for the Reserve Bank of New Zealand’s (RBNZ) next meeting on May 29, 2026. We’ve seen first-quarter inflation this year cool to 3.8%, but that is still well above the RBNZ’s target range. With activity now looking less weak, traders should consider reducing bets on imminent interest rate cuts, possibly by selling interest rate futures.<\/p>\n
For currency traders, this development provides a supportive backdrop for the New Zealand dollar. A less dovish RBNZ would make the NZD more attractive, especially against currencies where rate cuts are more certain. We could see traders using options strategies to position for potential NZD\/USD strength in the weeks ahead.<\/p>\n
This improvement aligns with other recent data, such as the 5% year-on-year increase in international visitor arrivals for the first quarter of 2026. Looking back at 2025, the economy was bracing for a harder landing after the RBNZ held the cash rate at 5.50% for the entire year. This new activity data suggests the economy is proving more resilient than we previously thought.<\/p>\n
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