The service sector of New Zealand reported impressive performance, recording the highest level of activity since November 2007. The growth is attributed to rise in new orders and business proliferation in the lead-up to Christmas.

Performance of Services Index (PSI) surged 6.1 points on October's result to 56 according to the BNZ Capital-Business NZ. However, the figures are still 6.6 points down as compared to the level in November 2007. Level above 50.0 indicates rise across the sector while below that indicates contraction in the respective sector.

Business NZ Chief Executive Phil O'Reilly added that that rise in service sector is not something unexpected. The index expanded across all levels regardless region or business size.

O'Reilly further said, "On the negative side, comments from some respondents continue to focus on key phrases such as 'recession', lack of demand' and 'smaller margins'. There are still many businesses that will experience another quiet Christmas like 2008."

Bank of New Zealand's head of research Stephen Toplis, however, asked for adopting conservative business approach in the coming year despite initial forecasts of 2.5% growth in the economy in 2010.