Confidence within the Otago-Southland service sector is stuck firmly in negative territory for the third constitutive month, but it might not be as bad as the overall figures suggest.
The BNZ-BusinessNZ Performance in Services Index showed the area south of the Waitaki River with a rating of 46.1 points, where below 50 is a sector in decline and above 50 one of growth. The New Zealand index was exactly 50, down 2.4 points from July and the fourth consecutive fall.
Otago-Southland Employers Association chief executive John Scandrett noted that the survey cast a wide net over firms in similar industry niches.
"We often see selective sentiment where various operators are performing to expectation but where some are not. This mixed bag of responses is then weighted to measure overall performance in the sector. What we are now seeing is a situation where negative comments and experiences exceed the positive feedback."
Delving into the tourism and construction sub-indices of the PSI made it clear that the dividing line between contraction and expansion was finely tuned, he said.
There were examples where selected tourism operators were happy with the winter season visitor flow. But likewise, there was negative feedback which confirmed some in the sector were missing the connection with targeted market activity, for whatever reason. The same could be said for the construction industry where there were positive comments around forward movement in local residential building but also some sluggishness due to winter season constraints, Mr Scandrett said.
A review of the August sub-indices confirmed ongoing negativity across activity and employment levels and also provided additional information that inventory levels remained on the high side and that new orders were tracking under ideal levels, he said.
BNZ senior economist Craig Ebert said the degree of slowdown in the August PSI, along with the seizure in its employment component, asked questions about the momentum of the economy.
