Services sector contraction in January

The economic performance of Otago-Southland's services sector during January has ''flattened considerably'' into contraction, after three previous months of expansion.

Otago-Southland has been running counter to national results: the BNZ Business New Zealand performance of services index for January recorded a national gain of 1.1 points to 52.6 from December, following points declines of 3.6 and 2.7 during the previous two months. A reading above 50 indicates expansion and below that, contraction.

The northern and central North Island regions were at 50.9 and 54.4 respectively.

Canterbury Westland sat at 49.8, with Otago-Southland trailing at 42 points; having almost led the four regions at 63.2 a year ago. Otago-Southland Employers' Association chief executive John Scandrett said it had been many months since such strongly negative survey comments had been recorded across the wholesale trades.

If the associated orders, stocks and deliveries sub-indices provide an indication of forward direction, the sector ''will remain flat for some time''.

''In the lead-up to the festive season the regional trading patterns were, as expected, on the right side of the expansion versus contraction fence, but clearly economic performance in the sector flattened considerably in January,'' Mr Scandrett said.

- simon.hartley@odt.co.nz

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