Otago-Southland service sector leads the way

Tourism operators were among those to benefit from increased activity. Photo supplied.
Tourism operators were among those to benefit from increased activity. Photo supplied.
The Otago-Southland service industries left the rest of New Zealand in the dust of summer last month, easily topping the Performance in Services Index, released yesterday.

The BNZ-BusinessNZ index showed Otago with 65.4 points in December, well ahead of the national average of 56.5, northern on 57.6, central on 50 and Canterbury-Westland on 51.5.

The Otago-Southland reading was also well ahead of the December reading last year of 55.1 points, the 2012 reading of 53.5 and the 2011 reading of 50.5.

In the last six years, the only other time the sector has reached above 60 in December was in 2010.

Otago-Southland Employers Association chief executive John Scandrett told the Otago Daily Times solid seasonal business expansion, accompanied by some agreeable pre-Christmas weather patterns, had come together to positively drive regional services sector activity.

''Tourism-connected operators, the wholesale trade in general and property and business services providers have all experienced expansionary performance outcomes.

"However, there are those in the financial and painting and decorating sectors who have not seen the same level of buoyancy.''

All the December sub-indices were tracking in positive territory, but the stand-out indicator was orders and new business, he said.

''This suggests we will continue to experience a solid service sector into the new year,'' Mr Scandrett said.

BusinessNZ chief executive Phil O'Reilly said 2014 represented a positive and solid year for the services sector in New Zealand.

With the sector averaging 56.5 over 2014, it was the highest yearly average score for a full calendar year since the survey began in 2007.

Also, comments received had remained mostly more than 60% positive, and there was nothing to suggest the good news should not continue into 2015, he said.

BNZ senior economist Craig Ebert said there was a strong theme of service-sector expansion keeping solid pace with the overall economy.

Along with the robust services sector index reported for December, the latest NZIER quarterly survey of business opinion also showed an upbeat New Zealand services sector.

Its level of confidence in the general economic outlook was much in line with the nationwide average and was well above long-term averages.

''The service sector's expectations for its own activity were also very much keeping pace with the national pulse.

"This goes to show it's not just about the construction industry with Canterbury's rebuild and merchants, with reports of bumper fourth-quarter retail spending driving the expansion.''

The services category of the business opinion survey was also in the thick of the employment gains seemingly on offer across the economy, he said.

A net 17% of services-defined respondents reported they had increased employment over the last three months and a net 23% expected to increase staff over the next three. Each of those was the strongest since 2007.

Given those figures, Mr Ebert said he was not worried to see the PSI indicator for employment in December slow to 51.9, from 53.2.

Chances were it would pick up again, given the PSI production index was solid at 57.3 while the new orders index got back to a ''scorching'' 60.3.

The property market had resurfaced as a source of strong activity for the services sector, he said.

The Real Estate Institute of New Zealand figures for December registered a 24.2% increase in national house sales compared to the previous corresponding period.

''When we seasonally adjust the sales figure, we estimate a 6% increase for December compared to November, following on from the 11% jump in November and a 5% lift in October.

''Levels are consistent with annual house price inflation moving back up towards 10% by mid-year. That's twice as much as the 5% upper tolerance the Reserve Bank has talked about recently.''

 

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