The BNZ Capital-Business NZ Performance of Services Index for June recorded a reading of 44.8 points for the Otago-Southland region, compared to the "disappointing" May result of 37.
The monthly gain took the region back to the April result, which also sat at 44.8.
"In contrast to the regional outcome, the national index is 45, down 1.2 points against the May result.
"Overall, this is the 15th consecutive month where national contraction trending patterns have been seen," he said.
The national average index reading for 2007 was 58.1 points.
In 2008, it was 49.1A reading above 50 indicated that the service sector is generally expanding and below 50 that it is contracting.
Mr Scandrett said that while June activity across the country continued to remain negative in all four main regions, the South Island delivered some signals of recovery.
BNZ Capital senior economist Craig Ebert said monitoring the service sector was frustrating at the best of times.
"It is such an amorphous beast with as many parts as there are definitions of what comprises the total.
"Yet we do know the service sector tends to grow in proportion to any maturing economy.
"Keeping tabs on it is well recommended, especially when more visible industries can easily grab the limelight in its stead."
By and large, New Zealand's service sector had held up better than many of the higher profile, and more easily defined, sectors around such as manufacturing, the housing market, forestry and, most recently, the dairy sector, he said.
But it had not been immune from the recession.
All was not well in the service sector.
The steady overall results comprised some of the larger components growing very well but with many more of the smaller components going backwards rapidly.
On the positive side, finance and insurance services expanded 2.2% in the June quarter and real estate and business services increased 3.2%.
Those results might well reflect the nursing of an otherwise hard-hit economy by way of maintained lending, distressed property sales and advice on how to deal with business duress, Mr Ebert said.
However, it was a solid performance for that services group.
There was also continued expansion in the public sector with government administration and defence increasing 0.2% to be 4.1% larger than it was at the corresponding time last year.
Included in the areas of the services sector going backwards quickly were retailing, which plunged 2.9%.
Activity in accommodation, cafes and restaurants dipped 3% to be 7.6% below the corresponding period last year.
Wholesaling also continued to plummet to an annual fall of 11.4%.
Some of that was related to slowing vehicle sales, he said.
The bigger acceleration to the down side was in transport and storage.
"The slump reflected falling air transport - understandable in light of the aggressive discounting in the industry - and also a slump in road freight; never a good sign for the economy at large."
Also catching Mr Ebert's attention was the fall in communications activity.
"The recent retreat in communications services might reflect such things as saturation in the mobile phone market.
"But, more generally, it would seem to highlight yet another area of discretionary spending that is giving in, as basic expenditure, as a need to balance budgets takes centre stage."
New Zealand's services sector was well worth watching, especially its higher profile components which were more easily measurable.
Those sectors were likely to indicate some improvement before too much longer, he said.
The service sector
Transport and storage
Communication
Retail trade
Wholesale trade
Health and community services
Accommodation, cafes and restaurants
Finance and insurance
