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The monthly BNZ-BusinessNZ performance of service index topped 73.2 points, including accommodation, tourism operators, cafes and restaurants, well above the points of upper North Island (on 57.9), central and lower North Island (53.5) and upper South Island-West Coast (52.1).
The 73.2 December services index was similarly well above the year's average of 59.7.
Scores above 50 reflect expansion, while below is contraction.
Just as staff shortages in the construction sector in the South are of mounting concern, the latest services index also reflected staff shortages, mainly in hospitality in Queenstown.
The average across the four regions was 56 points.
Otago Southland Employers' Association chief executive Virginia Nicholls said the Otago-Southland breakdown showed all categories were expanding, with orders/new business, activity/sales levels, employment levels and stocks/inventories all above 60.
''The warm weather helped, and tourist operators were busy in Central Otago, Fiordland and Dunedin, along with accommodation providers, and suppliers to the cafes and restaurants,'' she said.
The cruise ship season was well under way in Dunedin now and cafes and restaurants which opened on Christmas Day were ''exceptionally busy'', she said.
However, there were ''significant'' staff shortages around Queenstown, due in part to high housing costs, Mrs Nicholls said.
''Cafes and hotels are struggling to get front-line staff,'' she said.
She noted now was a particularly busy time of year in Dunedin for the construction sector as the owners of rental properties had maintenance done during the university and polytechnic recess period.
''Services supplying the construction industry continue to be busy across the region,'' Mrs Nicholls said.
The positive results from both the manufacturing and services indices were also reflected in a survey last week, which showed Otago was by far the most optimistic province in the country.
The Westpac McDermott Miller regional economic confidence index showed a net 52% of Otago households expected the local economy to improve in 2018, a jump from 20% in September.
BusinessNZ chief executive Kirk Hope said 2017 ended with services expansion averaging out at 56.9, slightly up on the 56.6 for 2016.
''In addition, a key sub-index of new orders showed strong expansion with an average over 60 points for 2017.''
While the proportion of positive comments for December (60.0%) was down from November (68.7%), there was a heavy seasonal factor at play, with Christmas and the holiday period being a key influence.
BNZ senior economist Craig Ebert said the above-average outcome was doubly significant, considering the manufacturing index had ''decelerated sharply'' in December.
''Had the services index done so too, we would have been much more concerned that the economy might be choking back a bit, following the election,'' he said.