New Zealand's services sector returned to growth in June as activity rebounded, but weak consumer demand and cost pressures continued to weigh on the recovery, according to a statement by BusinessNZ on Monday.
The BusinessNZ Performance of Services Index rose to 50.6 in June from 48 in May. A reading above the 50-point mark points to expansion.
The services sector has edged back into growth after a prolonged downturn, but the fragile recovery highlights continued pressure on consumer spending as households remain cautious amid persistent cost-of-living pressures, said Katherine Rich, BusinessNZ's chief executive.
The activity/sales indicator rose to 49.3 in June from 45.1 in May, while the employment measure inched up to 48.8 from 48.7. Stocks/inventories rose to 49.9 from 47.8, supplier deliveries increased to 51.2 from 49.8, and new orders/business climbed to 53 from 48.2.
Economic growth is showing signs of regaining momentum, with improving manufacturing performance suggesting the economy is returning to the recovery path seen before the oil shock and could soon reach growth of around 2%, said Stephen Toplis, BusinessNZ's head of research.
The seasonally adjusted BusinessNZ Performance of Composite Index recorded a solid lift in June, with both the manufacturing and services components moving into expansion territory.
The gross domestic product-weighted and free-weighted indexes both moved back into expansion in June, rising to 51.2 and 53.6, respectively, from 48.4 and 49.9 in May.