The service sector is showing signs it is on the road to recovery, with the sector expanded for two months in a row.
The BNZ Capital - Business NZ Performance of Services Index (PSI) was at 51.3 for August up result is up 1.2 points from July.
It is the highest overall result since February 2008 as well as being the first consecutive monthly expansion since early 2008.
A PSI reading above 50.0 shows a sector is expanding, and below that contracting.
The strongest gains for the sector were seen in the new orders/business category which is firmly in expansionary territory on 57.6.
Employment, while still in contraction, has continued to improve, reaching its highest level since November 2008.
Inventories and deliveries also picked up.
Regionally, the activity levels for all four main areas were in positive territory.
Of the various sub-sectors, accommodation, cagfs and restaurants recorded its highest result since December 2007 to 61.8, followed by cultural, recreational and personal services on 57.4.
"The first signs of spring, a jump in dairy prices, an active government and heaps of Aussies seem to have been the recipe for further optimism in New Zealand's services sector in the month of August," says BNZ Capital head of research Stephen Topliss.
Business NZ CEO Phil O'Reilly says he is encouraged by the result as it suggests the historic low of 43.7 in April looks to be behind the sector.
He also says the upwards movement in New Zealand's service sector is tracking offshore developments which are showing expansion in global PSI.
However, Topliss says "hard evidence" of a recovery will now be needed to "keep confidence headed in the right direction".
