Activity levels in New Zealand's services sector have picked up steam, following a surge in sales and new orders.
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The BNZ - BusinessNZ Performance of Services Index (PSI) rose 3 points in May to 55.2, which is above the long-term average of 53.6 for the survey.
Any reading above 50 suggests expansion, while anything below indicates contraction.
"While the improvement was far from universal across components, reflecting many ongoing challenges across segments of the service sector, the overall outcome was the first above average result since the outbreak of Delta in August last year," BNZ senior economist Doug Steel said.
The index was led higher by growth in sales and new orders, with the latter rising close to 7 points to 62.
Steel said that at least some of the gains reflect a degree of bounce back from Omicron's initial hit, as well as increased demand associated with the reopening of the border.
However, the employment and supplier deliveries sub-measures were below the 50 mark.
Steel said respondent's comments suggested that firms were still struggling with higher levels of staff turnover and difficulty finding new staff.
"That fits with the idea of limited employment growth and a low unemployment rate persisting."
Looking ahead, Steel said it remains to be seen how durable the May bounce in the PSI would be.
"But along with last week's solid PMI reading, a lift in the combined index (PCI) adds weight to our long-held view that GDP (gross domestic product) will bounce strongly in Q2 (second quarter) following its weakness in Q1 (first quarter)."
However, he said he was of the view that economic growth would struggle heading into and through next year, as the headwinds from slower global growth, rising costs and tighter monetary policy, and lower asset prices took their toll.
