New Zealand's services sector continued its expansion in August, helped by growth in new orders and supplier deliveries.
The BusinessNZ Performance of Services Index (PSI) rose to 51.2 in August from 50.6 in July, above the 50-mark that indicates expansion but below the survey's long-term average of 52.7.
"It's encouraging to see the PSI post its strongest reading since returning to growth, though at 51.2 this remains a fragile recovery. With three of the five sub-indices still below 50, there's clearly more ground to make up before we can call this a solid turnaround," said BusinessNZ's CEO, Katherine Rich.
The survey showed that cost of living pressures, interest rates, and election uncertainty remain front of mind for many respondents, softening sentiment with 60.8% of negative comments.
New Orders was the strongest sub-index, rising to 55.2 from 52.8 in July, followed by Inventories at 50.8, down from 51.7, while Supplier Deliveries was the weakest at 49. Both Employment and Sales recorded 49.4, showing that the recovery was narrow.
The GDP-weighted BusinessNZ Performance of Composite Index, a combined measure of the services and manufacturing sectors, rose slightly to 51.6 from 51.1 in July, while the free-weighted index was flat at 52.5.
BusinessNZ said that the manufacturing and services index together provide a composite activity indicator consistent with annual GDP growth of around 2%, in line with its GDP growth forecasts for the second half of the year.