As per the media reports, for a 14th consecutive month in May, the services sector continued to plunge, however slower than that during April.

BNZ Capital and Business NZ produced the performance of services index (PSI), which was 2.5 points higher from April to be at 46.2 last month. If the reading is lower than 50, it points that services activity is shrinking.

The month of May also saw contraction in all indices that make up the PSI; however most of them displayed betterment from April.

"Employment at 46.3 had its highest value since December, new orders/business recorded 49.7, stocks/inventories were 44.7, deliveries also 44.7, and activity/sales 43.9," said the report by BNZ.

Property and business services were at 54.6, among the service sectors, displaying expansion for the first time since last October.

It was put forward by BNZ senior economist Craig Ebert that the drop in car sales had hit the economy hard, despite having little impact on production.

"Throughput had been lessened for the wholesale distribution sector, the vehicle retailing industry had been pruned, and the servicing and repairs business had slipped to some degree," he continued.

A fall by 1.95 was noticed in the year to March in real retail sales, when auto categories were excluded. The fall was 5.8%, when the auto categories were included.

Ebert added, "This highlights how instrumental collapsing expenditure on cars has been to the retail sector and its broad statistics."

(via TopNews New Zealand. Contributed by Omaka Nelson)