Activity levels in New Zealand's services sector failed to rebound last month despite an easing of Covid-19 restrictions.
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The BNZ - BusinessNZ Performance of Services Index (PSI) for April was little changed from March, with a reading of 51.4 points - down 0.1pts from March, and below the long-term average of 53.6 for the survey.
Despite a similar overall result to the previous month, the proportion of negative comments increased to 61.9 percent in April from 57.5 percent in March .
BusinessNZ chief executive Kirk Hope said traditional expansion seemed some way off.
The two key sub-indexes of new orders/business was 53.6pts and activity/sales at 52.7, were down, while employment at 51.2pts saw its first expansionary result since November 2021. Supplier deliveries at 40.1pts remained entrenched in contraction.
A PSI reading above 50.0 indicates that the service sector is generally expanding.
BNZ senior economist Doug Steel said some industries rebounded strongly, with an easing of Covid restrictions in time for Easter and the school holidays, combined with some border reopening.
Accommodation, cafes, and restaurants moved up to 53.8pts -- its first reading above-50 result since March last year.
"Cultural, recreational, and personal stood out among industries, with its unadjusted PSI leaping from a truly dismal 15.6 in March to a record high of 85.8 in April, aided by a reboot of travel and events," Steel said.
"But, more broadly, challenges remain, illustrated by nearly all other industries posting an unadjusted PSI below 50 in the month.
"This is not a good sign for underlying growth."
Steel said supply chain issues remained a major headache for service sector firms - with the supplier deliveries
index languishing around 40pts, more than 10 full index points below its historical average.
"Other components like activity/sales, new orders/business, and stocks were comfortably above 50 and closer to their long-term norms.
"Employment lifted to 51.2, nearly smack on average, and its first above-50 reading since November."