The services sector is back in expansion for the first time in five months.

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The BNZ-Business NZ Performance of Services Index (PSI) for March was 52.4 points, which was up 2.7 points from February and the strongest result since July.

However it was below the long-term average of 53.8, with a reading above 50.0 indicating the service sector was generally expanding.

The move back into expansion was in line with last month’s manufacturing sector activity, which soared to record levels, towering over the long-term averages for production and new orders.

New orders, sales and employment also led the services sector back into expansion, while supplier deliveries and inventories remained in contraction.

“Any sustained shift towards the services sector exhibiting ongoing expansion will need to see activity/sales and new orders remaining near or above their long term average results to continue momentum,” Business NZ chief executive Kirk Hope said.

Activity expanded in the central regions, while the top half of the North Island, including Auckland, remained in contraction along with the bottom of the South Island.

BNZ Senior Economist Craig Ebert said the latest PSI was shy of the global PSI of 54.7 points.

“Of course, it’s all relative to recent history, which for many countries abroad has meant a lift out of a hole rather than onto a podium”.