New Zealand's services sector continued to expand in August, extending its growth streak to three consecutive months, according to a statement by BusinessNZ on Monday.

The BusinessNZ Performance of Services Index (PSI) rose to 51.2 in August from 50.6 in July. A reading above the 50-point mark points to expansion.

New Zealand's services sector has posted its strongest reading since returning to growth, although the recovery remains fragile with three of five sub-indices still below 50, said Katherine Rich, BusinessNZ's chief executive.

The activity/sales indicator fell to 49.4 in August from 50.4 in July, while the employment measure inched up to 49.4 from 48.5. Stocks/inventories fell to 50.8 from 51.7, supplier deliveries increased to 49 from 48.4, and new orders/business climbed to 55.2 from 52.8.

Respondent comments highlighted ongoing concerns around cost-of-living pressures, interest rates and election uncertainty, with sentiment softening from July as nearly 61% of comments were negative.

The PSI's three-month moving average rose to nearly 51, its highest level since July 2023, suggesting a gradual upward trend despite the recovery remaining fragile, said Doug Steel, BusinessNZ's senior economist.

The seasonally adjusted BusinessNZ Performance of Composite Index remained in expansion territory in August, extending its run of growth.

The gross domestic product-weighted index rose slightly to 51.6 in August from 51.1 in July, while the free-weighted index remained unchanged at 52.5.