New Zealand's services sector continued to expand in January, but growth slowed amid post-holiday softness and rising costs, according to a statement by BusinessNZ on Monday.

The BusinessNZ Performance of Services Index (PSI) fell to 50.9 in January from 51.7 in the previous month. A reading above the 50-point mark points to expansion.

"Despite the January result showing a lower level of activity than December 2025, at least the sector remains on the right side of the ledger after such a lengthy period of contraction," said Katherine Rich, BusinessNZ's chief executive.

The activity/sales indicator rose to 54.2 in January from 52.5 in December 2025, while the employment measure fell to 49.1 from 49.6. Stocks/inventories decreased to 49.7 from 52, supplier deliveries fell to 49.4 from 49.8, and new orders/business decreased to 51.8 from 52.7.

The share of negative comments in January was nearly 59%, up from over 50% in December 2025, reflecting continued low confidence in the services sector amid post-holiday slowdowns, fewer enquiries, and the pressures of high living and operating costs, the report said.

Recent data has strengthened our confidence that the economy's recent positive momentum is sustainable, indicating continued growth, said Doug Steel, BusinessNZ's senior economist.

The seasonally adjusted BusinessNZ Performance of Composite Index showed both its GDP-weighted and free-weighted indices in expansion in January, standing at 51.4 and 52.5, respectively.