Otago-Southland was again at the bottom of the country in the PSI, having an April reading of 49.4, well down on the 59.1 in March and the 59.5 recorded in April last year.
An activity level of 50 or higher indicates expansion, and below 50 contraction.
The Southern region was bottom of the Performance in Manufacturing Index (PMI) released last week.
Business Central was top of the country in the PSI on 55.5, followed by the Canterbury Employers and Chamber of Commerce on 54.4 and EMA on 51.5.
Otago-Southland Employers Association chief executive Virginia Nicholls said the sudden decline in the fortunes of the southern service sector's fortunes was unusual and the result of several adverse factors occurring at the same time.
Those supplying the construction sector reported positive sales but there were still concerns around skilled labour shortages.
The food wholesale trade and the retail trade reported a positive month, she said.
''Tourist operators reported the start of a seasonal drop in tourists, along with cooler weather and some cancelled cruise ships in Dunedin.''
Health and community services were affected by the shorter weeks due to Easter and Anzac Day affecting patient numbers.
Supplier deliveries in the South were 53.8, followed by orders/new business at 53.3 and employment levels at 50. Activity/sales were 46.7 and stocks/inventories were 38.5.
''I am encouraged that orders/new business are expanding, which is positive for the months ahead,'' Mrs Nicholls said.
The national PSI was 52.8, down six points from March.
BusinessNZ chief executive Kirk Hope said it was evident school holidays, public holidays and severe weather conditions combined to create impediments to expansion in April.
New orders were still healthy and he was hopeful expansion would increase in months ahead.
BNZ senior economist Doug Steel said if there was a slowing in underlying economic momentum under way, the PSI overstated it.
