Analyst Eamonn Sheridan noted that at the beginning of 2026, New Zealand's service sector continued to expand, although the pace of growth slowed slightly compared to the previous month. The Performance of Services Index (PSI) for New Zealand showed a marginal decline to 50.9 in January, down from 51.5 in December. While the index remained above the 50-point threshold that separates expansion from contraction, it fell by 0.8 points month-on-month and remained below the long-term survey average of 52.8. The data suggests that while the sector is growing, the pace is modest and falls short of a strong recovery. A breakdown of the data revealed a mixed performance across different segments. Two of the five key sub-indices remained in expansion territory. Activity/sales led the way at 54.2, indicating sustained business volume for some firms. The new orders index also stayed in expansion at 51.8, pointing to a degree of forward demand. However, the inventory index dropped into contraction at 49.7, and the employment index weakened further to 49.1, reflecting continued caution among businesses regarding hiring.