Slight increase in demand for services

John Scandrett
John Scandrett
Otago-Southland has improved marginally on its May result in a services industry activity index released yesterday, but remains in contraction for the sixth consecutive month.

The BNZ Business New Zealand Performance in Services index (PSI) showed Otago-Southland still languishing at the bottom of the country with 44.1 points in June, up from 39.3 in May and up from 38.7 in June last year.

Readings over 50 denote expansion and below 50 contraction.

The main driver of the downturn, in simple terms, was that visitor numbers had remained substantially below targeted levels, Otago-Southland Employers Association chief executive John Scandrett said.

Coming from those low tourist numbers was the "widespread regional sluggishness" seen in accommodation, transport, catering and retail activities.

However, now the winter holiday season was gathering momentum, the imbalance between the supply and demand of service sector offerings in the region would surely be closing quickly.

A "robust upswing" in PSI outcomes was expected from the July index, Mr Scandrett said in a statement.

Nationally, the index for June was 54.7, up from 53 in May but down from 54.8 in June last year.

BNZ senior economist Craig Ebert said the PSI and the performance of manufacturing index (PMI) held up through a turbulent and uncertain 2010.

After an understandable soft point immediately after the February earthquake in Christchurch, they had maintained a "firm tone" over recent months.

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