Winter tourism activities are likely to boost service industry growth. Photo supplied.
The Otago-Southland services industries remain buoyant but
indications are emerging of slower economic activity in the
sector than seen previously.
The BNZ-BusinessNZ Performance in Services Index (PSI) showed
Otago-Southland on 56.1 points, down from 56.9 points in June
Northern was on 52.8 points, Central on 58.3 and
Canterbury-Westland on 52.3.
The New Zealand seasonally-adjusted reading was 54.7. A
reading above 50 indicates expansion and the higher the
reading, the stronger the activity.
Otago-Southland Employers Association chief executive John
Scandrett said yesterday while services had been expanding in
the region since May, there were still conflicting reports on
the actual strength of activity experienced by operators in
Some construction and related-industry parties had reported
in positive terms on mild winter conditions and solid
contract commitments driving workload lift.
But others in the same sector were not as buoyant. Across the
tourism, retail and accommodation sectors there were numerous
signals activity levels starting to move off the quieter
''With visitor number growth starting to track well, we can
realistically anticipate continued expansion into the
mainstream winter weeks,'' he said.
BNZ economist Doug Steel said many economic indicators had
been going gangbusters during the past 12 months, pointing to
More recently, there had been a few hinting at some degree of
cooling but to levels still above average.
''This looks to be the case for the service sector, at
The PSI moved higher to 54.7 in June from 54.1 in May.
But combined, those results were a reduction from the 56 to
58 level prevalent over the past year.
During the past year, there had been an occasional softer
month, but it was immediately followed by a strong bounce, he
''It is notable there was not such strong bounce in June
following the slow down in May. This is no cause for alarm.''
Although the PSI had been lower in the past couple of months,
it remained above its long-term average, posting its 18th
consecutive above-average monthly result.
A similar message was detected across the service sector
indicators in the latest Quarterly Survey of Business
Opinion, along with signs of the inevitable inflation
consequences, Mr Steel said.
The issue ahead appeared to be in finding the appropriate
Firms were already reporting more difficulty finding both
skilled and unskilled staff, a natural precursor to higher
wage costs - an important part of overall costs for many
''Without a significant lift in productivity, this will morph
into generalised inflation pressures.''
There were already signs of that occurring with selling price
increases becoming the most widespread since 2008, he said.
The consumer price index result tomorrow would be watched for
any further indications of service sector pricing intentions
Higher price signals should not be a surprise.
It was what tended to happen when the economy grew above
trend, as was currently the case, even if the growth had
cooled slightly in recent months, Mr Steel said.