Improvements in the retail, health and financial services industries have driven a lift in Australia's vast services sector, breaking two months of contraction.
The Australian Industry Group's Performance of Services Index - a measure of activity in services industries - rose 1.8 points to 51.5 points in May.
Results above 50 points indicate expansion in the sector.
Ai Group chief executive Innes Willox said the return of expansion in the large services sector was good news.
"(It is) a sign of the resilience of the economy even as it continues to transition in the wake of falling mining-related investment and lower terms of trade," he said in a statement.
"Sales were higher and importantly new orders grew again in May."
However Mr Willox said despite the positive signs, expansion was notably concentrated in just three of the nine services sub-sectors.
And the ninth consecutive contraction of the employment sub-index - albeit at a slowing rate - and minimal improvement in the wage sub-index indicated a weak labour market in the overall sector.
Growth in the index was led by strong expansion in retail which grew by 8.7 points to 61.5 in May.
Finance and insurance and health and community services also grew solidly, although not as quickly as the previous month.
Respondents to the AiGroup survey said seasonal weather changes may have given a boost to retailers and other services businesses.
Meanwhile softer economic conditions, the upcoming election and the fluctuating Australian dollar dampened the household and tourism-related sectors of accommodation, cafes and restaurants, and personal and recreation services, which contracted quite sharply.
New orders continued to expand in May, while the sales and stocks levels returned to growth.
Respondents noted they were restocking after running down their inventories amid weak demand.
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