Overall activity was 38.2 points, down from 50.3 the previous month. A PSI reading above 50 indicates that services are generally expanding, below 50 that they are declining.
In the regional breakdown in categories, supplier deliveries were the same and all other categories were in decline, including activity/sales levels, employment levels, orders/new business and stocks/inventories.
The tourism sector was busy with domestic visitors at the weekends, or during large events, but not as busy during the week, Mrs Nicholls said.
The Queenstown Marathon and the Tour of Southland were examples of the positive effect of significant events for the tourism and hospitality sectors, while the absence of cruise ships in Dunedin was affecting local tourism operators.
Construction service providers were busy and had good forward orders but skill shortages were a key issue across the sector.
There were serious supply chain issues, and importers were hampered by a container backlog at the Ports of Auckland, and the timing could not be worse, just before Christmas, she said.
International student providers would like to see a plan for opening the border safely. Apart from the financial implications, those students add considerable cultural richness to educational institutions.
"A risk mitigation and management approach to a smart border is needed to enable people to move within a constrained environment including skilled workers, investors and international students.
"Businesses are frustrated with the border exemption process with the changing of rules and communication from officials," she said.
Businesses would like to see a safe plan around opening the transtasman bubble.
There are concerns around hospitality and tourism staff shortages across the Christmas holidays and also concern about the impact of a resurgence of Covid-19, she said.
