The November BNZ-BusinessNZ Performance of Services Index (PSI) showed the region leading the rest of New Zealand, following on from the manufacturing index figures released last week, which showed Canterbury-Westland and Otago-Southland leading the country in activity.
Otago-Southland had a services index reading of 65.3 points where above 50 shows expansion and below 50 contraction.
The higher the reading the greater the expansion. In November last year, Otago-Southland had 72.4 points.
The low in recent years was November 2010 with 44.7.
Canterbury-Westland was second-highest on 56.8, followed by central on 57.1 and northern on 55.5.
The New Zealand seasonally adjusted reading was 54.8.
Otago-Southland Employers Association chief executive John Scandrett said there had been some ''strongly positive sentiment'' in the regional November survey with operators citing market benefits spinning off seasonal and generally buoyant economic factors.
While there were some service providers in a clearly positive mood moving into Christmas, there were mixed views from property and business operators who had not experienced the usual anticipated activity for this time of the year.
''It appears variable weather conditions may have impacted negatively in some areas.''
Across the board, the sub-indices were in positive territory with particularly robust readings being seen around general sales levels and new business indicators, he said.
BNZ economist Doug Steel said sometimes demand for services was just about the number of people.
''On this score, demand is absolutely booming. This follows from net immigration that has been truly massive over the past year and still heading higher as more people arrive and fewer people leave.''
The actual net inflow over the past year had been about 48,000 which was large but the latest monthly counts suggested a number of 60,000 or higher during next year, he said.
Also, the number of tourist arrivals continued to rise - up 5% on average over the past year which would support spending, even as spending per visit was constrained by the strength of the New Zealand dollar.
The heat had increased in the housing market following the election result, Mr Steel said.
Even adjusting for the usual spring influence, November house sales were up a ''whopping'' 14% in the month following a 5% gain in October - pointing to more house price inflation ahead.
Weekly mortgage approval data suggested December had started strongly, he said.
''The supply side is a plus for services sector growth too, with the number of residential building consents up around 12% on a year ago and the value of non-residential building consents up 21%.''
Fonterra had lowered its forecast milk price to dairy farmers to $4.70 per kilogram of milk solids for the season, down from the $5.30/kg of milk solids previously announced and well down on $8.40 paid last season.
The lower payout suggested dairy industry revenue would be more than $6 billion lower than the previous season.
''The cash impact is only starting now and will tighten considerably through 2015. This will be a drag on rural service industries.''
It was worth noting farmers appeared to have saved much of last season's record payments which could be drawn on to support spending, Mr Steel said.
Domestic spending was going at a solid clip. Although November's value of electronic card transactions eased 0.3% in November, it needed to be seen in the context of the 1.5% gain in October and a drop in fuel prices.
Overall transactions were 4.4% higher than a year ago with the services component a standout at 6.8%, close to its average annual growth all year, he said.
