The Otago-Southland services industries, by and large, had a busy September with the Performance of Services Index (PSI) rising more than three points in the month to 57.1.
The regional result was in contrast to the overall New Zealand services sector, which experienced a softening in expansion across all main indicators, according to the BNZ-BusinessNZ PSI.
Otago-Southland Employers Association chief executive Virginia Nicholls said the September result was the highest level the region had achieved in the past five months.
The activity/sales levels and orders and new business were high at 65.4 and 69.2 respectively, but employment levels and stocks/inventory were low.
"Tourist attractions had a very strong month and the associated food wholesalers and retailers supplying food to tourists are also achieving good sales.''
Health and community services had continued to thrive but some in the retail trade had a lacklustre month, she said.
Businesses providing services to the construction industry were in a holding pattern as they waited for some large contracts to come out for tender.
The New Zealand PSI for September was 54.1, 3.8 points down from August, and very similar to the 54.3 recorded in July.
A PSI reading above 50 indicates the service sector is generally expanding; below 50 it is declining.
BusinessNZ chief executive Kirk Hope said while the September result still indicated healthy expansion, comments from respondents tended to show a few seasonal factors at play giving pause to expansion.
Some of those who provided negative comments tended to focus on the weather, as well as school holidays affecting operations. That culminated in the proportion of negative comments rising from 34.8% in August to 39.3% in September.
BNZ senior economist Doug Steel said that looking through the monthly volatility, there had been some slowing in the PSI in recent months.
"It appears firms having difficulty in finding staff is one of the obviously many factors involved. However, as always, we wouldn't read too much into one month's results.''
The weather, particularly in the North Island, combined with school holidays might help explain why the PSI accommodation, cafes and restaurants industry was the weakest in the month, despite the general tourism boom, he said.
Or it could have been the recent moderation in house sales.
It said something about the recent general strength in the service sector when a monthly reading smack on its long-term average brought some sense of disappointment, Mr Steel said.
Combining last week's Performance in Manufacturing Index and the PSI into a composite indicator suggested ongoing robust economic growth into the end of the year.
"But the hint from the composite index growth may be slowing is in contrast to the general strengthening in other recent business and consumer confidence surveys.''
The difference could have something to do with the supply side. Service sector firms in the Quarterly Survey of Business Opinion reported that finding labour was at its most difficult since 2007-08, he said.
That might help explain the average-looking PSI employment index in September, despite other surveys showing extremely strong service sector employment intentions.
Those things would be interesting to watch during the next year or two as economists pondered a situation in which economic growth might be slowing as inflation started to edge higher after today's expected very low third-quarter Consumer Price Index measure of inflation, Mr Steel said.
