A reading barely above 50 does little to shift the outlook for the New Zealand dollar, which takes its lead from global risk sentiment and rate expectations more than from second-tier surveys. A soft employment component and persistent concern over interest rates point to an economy still sensitive to borrowing costs, which supports the case for the Reserve Bank of New Zealand to stay cautious. The gap between strong manufacturing and sluggish services also suggests the recovery is not yet broad enough to drive domestic inflation. Election uncertainty is likely to keep local data in this subdued range until the result is known.--New Zealand’s services sector is growing again, but only just, as businesses keep their wallets shut until voters have had their say.Summary:The BNZ-BusinessNZ Performance of Services Index was 50.9 in September, from 51.0 in August and 50.5 in JulyIt’s the fourth consecutive month of expansion, following two years of contractionNew orders (52.6) and inventories (52.3) were the strongest components; supplier deliveries (49.4) and employment (49.8) were below 50Around 60% of respondent comments were negative, little changed from AugustCost of living, fuel prices, interest rates and election uncertainty dominate business concernsServices growth continues to lag manufacturing, which has been well above 50 for some timeNew Zealand’s services sector expanded for a fourth straight month in September, though only modestly, according to the BNZ-BusinessNZ Performance of Services Index (PSI), with businesses holding back ahead of the general election.The index registered 50.9, fractionally below August’s 51.0 but above July’s 50.5. A reading above 50 indicates expansion and below 50 contraction, so the sector remains in growth territory, but only just.The four-month run marks a meaningful turnaround after two years in which the index sat in contraction. The pace of growth, however, remains subdued, and it continues to lag well behind manufacturing, where the equivalent Performance of Manufacturing Index has held comfortably above 50 for some time, economists noted.Beneath the headline, the picture was uneven. New orders and inventories were the strongest components, at 52.6 and 52.3 respectively, pointing to some forward momentum in demand. Supplier deliveries were the weakest at 49.4, and employment also sat just below 50 at 49.8, a sign that firms are not yet confident enough to add staff and that the recovery remains narrowly based.Business sentiment was little changed from August, with around 60% of respondents’ comments negative. Cost of living pressures, fuel prices, interest rates and uncertainty around the election were the dominant concerns.BusinessNZ chief executive Katherine Rich described four consecutive months above the breakeven line as an encouraging run despite the slight easing in September. She said caution remained deeply embedded across the sector, with many businesses adopting a wait-and-see stance ahead of the election, and suggested that hesitancy was likely to cap any stronger pickup until the political outlook becomes clearer.The result leaves the services sector on a fragile footing. With the election approaching, the coming months will show whether firms’ caution lifts once the outcome is known, or whether cost pressures and high borrowing costs continue to restrain the recovery regardless of who forms the next government. This article was written by Eamonn Sheridan at investinglive.com.