Otago-Southland tourism operators are starting to feel the pinch, leading to a fall in the regional reading on the BNZ-BusinessNZ performance of services index (PSI).
The region's rating fell to 46.8 points in October from 58.2 in September and 55.6 in October last year.
Otago-Southland Employers Association chief executive John Scandrett, who contributes to the PSI, said the September reading was a ''stand-out'' and was based largely on significant movement seen across construction, property services and utilities growth.
''However, in October we have been brought back to earth with a weak regional outcome. This is clearly based on headwinds widely experienced by operators in the tourism sector.''
Sluggish shoulder season signals and unfavourable weather conditions had negatively affected visitor movements and overall spend. As a result, the accommodation sector had also seen a downturn in activity, he said.
Across the October sub-indices, weak sales results were apparent at only 35 points and it seemed the new business indicators, at 50 points, did not quite know which way to go, Mr Scandrett said.
The New Zealand PSI reading was 58.2 (seasonally adjusted), the highest level of activity since 2007. Northern was on 60.8, central on 52.6 and Canterbury-Westland on 54.9.
BNZ senior economist Craig Ebert said the economy was ''on fire'' in 2007.
''But, unlike in 2007, we don't see any seeds of natural demise. Back then, it was only a matter of time before the economy came back down to earth, having spent and borrowed its way to all manner of imbalances and overstretch.
''A domestic recession was eventually made worse by a collapsing global economy.''
Now, there was only reason to think the strong growth portrayed in the latest PSI would keep going against the backdrop of a positive, albeit mixed, global economic outlook, he said.
