A reasonable growth in the New Zealand's service sector and expansion of all subgroups for third time in the last month was recorded, ensuring country's gradual recovery from recession.

A dip of 1.3 points to 53.1 on a scale measuring 50 different contractions from the growth in the BNZ-Business New Zealand Performance of Service Index (PSI) was reported. For the very first time since October, a rise of new orders to 56.1 was recorded.

Business NZ Chief Executive Phil O'Reilly said, "Service businesses faced a number of seasonal factors at this time of year. Those reporting negative outcomes mainly encountered issues mainly around cash flow and lack of orders".

According to the Government figures that came out yesterday, a slight rise in volume and value of retail sales to 1% in the fourth quarter was recorded.

Although the expansion in comparison of that in December declined, there was a gain of all five of the diffusion indexes in the PSI last month. Transport and storage sector received a push of 2.2 points to 56.9, trading for retail was
55. Property and business services remained low at 48.6 while accommodations, cafes and restaurants descended to 50.6.

BNZ senior economist Craig Ebert said, "Discounting obviously helped boost sales volumes and cull inventories, but there's still some catching up to do to reach the optimistic expectation levels shown in market polls. The gain in January's PSI fell disappointingly short of soaring consumer confidence".