The NZ Business Services Index rose to 48.9, up from a revised 46 to 47.3.
by VT Markets
/
Aug 17, 2025
In July 2025, the New Zealand Business Services Index (BSI) reached 48.9, up from the previous figure of 46.
The June 2025 figure was also adjusted upward from 46 to 47.3, indicating better performance in business services during this time.
Index Improvement Suggests Easing Downturn
The latest New Zealand Business Services Index, now at 48.9 for July 2025, indicates that the downturn in the services sector is slowing. Although the index is still below 50, which signals contraction, the rise from the revised 47.3 shows a slowing decline. This may mean the sector is nearing a bottom after a long period of weakness.
This positive news lessens the urgency for the Reserve Bank of New Zealand to reduce the Official Cash Rate from its current level of 5.50%. Since the Q2 2025 inflation rate remains at 3.4%, the RBNZ will likely wait for more clear signs of a slowdown before making any changes to its policy. Therefore, expectations for rate cuts may need to be pushed back, possibly looking at the first cut in Q1 2026 instead of late 2025.
For the New Zealand dollar, this news is somewhat supportive, especially against currencies with more dovish central banks. A delay in RBNZ rate cuts enhances the NZD’s yield advantage. It makes sense to consider buying short-dated NZD/AUD call options since the currency pair has been steady around 0.9250, and this data may help push it higher.
Economic Stability Indicated by Services and Manufacturing Data
This small improvement in services, along with the manufacturing PMI also showing a modest rise to 47.8 last month, suggests a stabilizing economy. While it doesn’t indicate strong growth, it reduces the risk of a deep recession that the market anticipated earlier in 2025. This may mean it’s a good time to cautiously sell out-of-the-money put options on the NZX 50 index, as underlying corporate conditions seem to be reaching their lowest point.
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by VT Markets
Aug 17, 2025
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