New Zealand’s services sector saw performance slip for the third month in a row, according to BusinessNZ’s performance of services index (PSI) for April.

The PSI was measured at the end of the April period at 51.8 – 0.5 points down from March, and the lowest since September 2012.

The result remains below the long-term average of 54.4, though remains above the threshold of 50, indicating the sector is still expanding – albeit at a slowed rate.

Activity and sales were at its lowest point since July 2012 (51.1), while employment dropped to its lowest point since August 2012 (48.6). However, new orders and business managed to increase over the month to 55.1, up from the 54.9 seen in March.

BusinessNZ chief executive Kirk Hope said that the ongoing expansion decline is a concern, and was exacerbated by a few factors during April.

“The proportion of positive comments for April (43.9 per cent) decreased significantly from March (55.8 per cent),” Hope said.

“The decline was partly due to a number of comments centred on the ANZAC/Easter break disrupting usual business activity. Others noted a general economic downturn and slowing demand.”

BNZ senior economist Craig Ebert noted that unless there is a sizable increase during May’s PSI, it will be fair to view New Zealand’s services sector as “slowing”.

“This is all the more significant as the services sector has been the backbone to New Zealand’s economic growth since the 2008/09 recession,” Ebert said, noting that on the demand side of things the PSI was not too bad.

“As for the dip in the PSI’s employment index, at 48.6, it could reflect a shrinking demand for staff or a forced consolidation driven by cost pressure (bearing in mind the services sector is more sensitive to increases in the minimum wage than other sectors of the economy).”