Tourist attractions like Otago Peninsula yellow-eyed penguins have helped lift the region's service industry activity. Photo by Craig Baxter.
It has proved a sensational summer for the Otago-Southland
service industry which led the country for activity in
January, following on from the success last week of its
The BNZ-BusinessNZ Performance in Services Index showed
Otago-Southland had a reading of 60.2 points in January - the
highest-ranked region in the country.
At the corresponding time last year, the region bottom-ranked
on 42 points.
The New Zealand PSI reading was 58.1 in January.
A reading above 50 indicates expansion; the higher the number
the stronger the expansion; below 50 indicates contraction.
Last week, the Performance in Manufacturing Index had
Otago-Southland well ahead of its nearest rival on 56.4
Otago-Southland Employers Association chief executive John
Scandrett, who contributes to the survey, said the positive
start to the year was built on expansion levels not seen for
''We're continuing to see strong ongoing expansionary-based
tracking on our regional services sector activity levels and,
across the January result, it was actually quite difficult to
pinpoint areas of negativity.''
The home services and recruitment sub-sectors indicated their
January performance was sluggish. But on balance, that
usually occurred in the summer holiday period, he said.
The heavily-weighted positive comments coming forward carried
references to activity level stability and with the
sub-indices, there were bullish figures on sales, new orders
and employment outcomes.
''Interestingly, many operators are carrying low stock levels
so we might expect to see a fall-off in sales next month
depending on how quickly service provision shortfalls can be
regenerated,'' Mr Scandrett said.
BNZ senior economist Craig Ebert said the index maintained
major momentum in January.
''And the increasingly strongest element of it remained new
orders - they are going nuts.''
A seasonally-adjusted index of 66.1 suggested people had not
only come back from holidays full of confidence, but were now
making things happen.
The surge in new orders fitted with the other story of the
latest PSI of inventory slimming at a rate of knots, he said.
''In short, service-sector firms look to be caught short on
this account. The stocks variable in January staggered to a
seasonally adjusted 45.6. This is the lowest since the Global
Financial Crisis was doing its thing back in 2009.
''But far from signalling another time of distress, the
latest shrivelling in inventory clearly signals a
surprisingly strong upswing in demand.''
Production was running faster to keep up, Mr Ebert said.
The activity/sales reading for January accelerated to 63.2
from 60.1 in December. That was faster than the production
index of January's manufacturing index, which was strong
enough itself at 59.5.
Together, both indices continued to suggest strong GDP growth
was on the way at probably above an annual pace of 4%.
However, that was simply another indicator of how forceful
New Zealand's economic momentum was becoming - with other
surveys suggesting GDP growth closer to 5%, or even 6%,
perhaps being closer to the truth.
The Canterbury-Westland figure of 50.1 came as a surprise, he
said. There were abundant signs activity in Christchurch had
ramped up. But ever increasing levels might be becoming
harder to come by, something that would naturally slow
Central sagged to 48.6, inferring the growth pulse was still
coming mainly from the northern region which posted 57.9.
But Otago-Southland was the real mover in January, Mr Ebert
The other intriguing element of weakness in an otherwise
''gung-ho'' PSI for January was communications. While usually
seen as a fundamentally progressive sector, the
communications sub-index plunged to an unadjusted 26.7, from
35 in December.
Mr Ebert was not sure what drove the result but it did not
look to be the time of the year as the sub-index had a
reading of 58.8 in January last year.