Radio New Zealand reported that the service sector has contracted for the first time in more than two years, a further sign that economic growth is slowing in the second half of 2012.

The BusinessNZ Performances of Services Index, which comprises more than two thirds of the economy, slid a fraction of a point to 49.6 from August's seasonally adjusted reading of 50.

A reading below 50 indicates the sector, which includes all service industries like banks, accommodation, hospitality, transport and health, is shrinking.

Although the decline was small, it hit a broad sector of the economy. The services sector, which includes health, education, transport, banking, comprises almost 70% of the economy.

BNZ economist Mr Doug Steel said the index is the latest in a series of indicators pointing to slower growth.

He said BNZ has cut its GDP growth forecast from 0.5% to 0.3%, raising the chances of a cut in the official cash rate.

Source - Radio New Zealand

(www.steelguru.com)