New Zealand's services sector expanded in July for a second consecutive month, with the BNZ-BusinessNZ Performance of Services Index rising to 50.6, but employment continued to deteriorate, falling for the 32nd straight month with the employment index stuck at 48.5.

BusinessNZ chief executive Katherine Rich said firms remained cautious about hiring despite the sector's modest growth. Negative sentiment jumped to 64 percent of respondents' comments, with cost-of-living pressures, fuel prices and interest rates cited as main concerns. BNZ senior economist Doug Steel said employment was the services sector's "Achilles' heel" and that the unemployment rate was unlikely to fall until meaningful hiring returned to the sector, which accounts for nearly three-quarters of the economy, RNZ business (NZ) reports.