SYDNEY--New Zealand's services sector activity slowed in April, with the economy struggling to gain momentum as the Trump administration prompted a collapse in markets and confidence with its global tariffs.

The BNZ-BusinessNZ performance of services index for April was 48.5 points, down 0.4 points from March and well below the average of 53.0 points over the history of the survey.

The sector has fallen back into a pattern of mild contraction, said BusinessNZ's Chief Executive Katherine Rich.

Sales were flat in April although new orders expanded slightly, reaching the highest value since February. Employment contracted while deliveries recorded the lowest level of activity since September 2024, the data showed.

The softness in the services sector of the economy will likely damp expectations of a more solid economic recovery this year, supported by a significant reduction in interest rates.

The proportion of negative comments from service providers for April stood at 61.8%, up from 56.7% in March, according to the report. Businesses noted being negatively impacted by a combination of weak consumer demand, high cost of living and interest rates, and economic and geopolitical uncertainty, as well as seasonal slow-downs and low business confidence.