Activity in New Zealand's services sector continued to contract for the fifth consecutive month in June, albeit at a lower rate, with most indicators in the negative territory due to headwinds, according to the latest survey by BusinessNZ published Monday.

The BusinessNZ Performance of Services Index (PSI) rose to 47.3 in June from 44 in May. A reading below the 50-point mark points to contraction.

"While the headline PSI measure did lift from 44.1 to 47.3, every month it remains below 50 suggests service sector conditions are getting worse, not better," said BNZ's senior economist Doug Steel.

"The timeline for New Zealand's long-awaited economic recovery just keeps getting pushed further and further out", Steel added.

The activity/sales indicator rose to 44.5 from 40.1, while the employment rose to 47.4 from 47.1. New orders/business increased to 48.8 from 43.2, while supplier deliveries rose to 46.8 from 45.7.

The only indicator that showed expansion was stocks/inventories, which ticked up to 50.6 from 49.

Meanwhile, the proportion of negative comments from respondents remained almost unchanged at about 66%. Businesses cited weak consumer confidence, high living costs, and economic uncertainty. Reduced spending, inflation, rising interest rates, and public sector cutbacks are key pressures, with winter and fewer tourists further dampening demand, the report said.

The Business NZ Performance of Composite Index (PCI), which comprised the manufacturing and services indexes, rose to 47.5 in June from 44.4 on a GDP-weighted index basis and rose to 48.3 from 45.4 on a free-weighted index basis.