However, staffing issues continue to be a thorn for the sector and ImmigrationNZ is being asked to redefine categories to allow more people to take on work in Otago and Southland.
Otago Southland’s score in the BNZ-BusinessNZ monthly performance of services index rose from 59.3 in October to 65.8 in November, points above 50 denoting expansion, and below, contraction.
Nationally, the index average eased back from October, falling from 55.4 points to 53.5. Otago headed up the four regions surveyed with its 65.8 score, followed by northern North Island on 59.9, lower North Island at 58.5 and upper South Island, Canterbury-West Coast at 52.9.
Otago Southland Employers’ Association chief executive Virginia Nicholls said November’s 65.8 score was more than the average from the past year and was only just below the corresponding time last year.
The regional breakdown of sub-categories has orders/new business, activity/sales levels and employment levels all scoring above 60.
Businesses providing services to the construction industry continued to be busy and 59% of comments from survey respondents were positive, she said.
"[However] finding staff with suitable skill levels has reached a critical level in our region," Mrs Nicholls said.
As with recent reports on the southern manufacturing sector, services, too, are finding it difficult to recruit qualified employees.
"There are calls for Immigration NZ to add some new categories for the essential skills work visa in our region, and allowing some of the staff to stay for longer," Mrs Nicholls said.
She also reiterated concerns about how long it was taking to process some of the work visas. The service sector, which amounts to almost two-thirds of the economy, includes suppliers to construction, all facets of hospitality and tourism and financial services providers.
The Queenstown marathon was once again a "significant event" for the hospitality and tourism sectors in Central Otago, Mrs Nicholls said.
"In the hospitality industry at this time of year there is a significant increase in preparation for the peak summer season."
Otago guest nights in October rose by 7.6% on a year ago to 473,000, second only to Auckland’s 644,000 guest nights, according to separate data from Statistics New Zealand yesterday.
Nationally, total guest nights reached record levels at 40.2 million for the year to October, up 2.6% from a year ago.
Hotels, motels, and holiday parks recorded increases of 3.9%, 0.8% and 5.8% respectively.
However, in the Queenstown Lakes district the high cost of living and accommodation availability continued to be a concern, Mrs Nicholls said. The area was one of the least affordable in the country and median house prices were up 14.5% to $985,000 on a year ago.
She said unseasonably wet weather in November also took its toll and was an issue for some tourist operators.
BusinessNZ chief executive Kirk Hope said the lower national activity levels were due to several factors.
While the sub-index of employment was at its highest since December 2017, activity/sales returned to levels last experienced in February and stock/inventories dropped back to levels last seen in April 2017. While new orders/business still remained "in healthy territory", supplier deliveries went into contraction at 48.5 points, the first time in the past five months a sub-index had produced a negative result.
"Christmas is playing a large part in activity, although there’s also a number of comments around the end-of-year rush to complete projects," Mr Kirk said.
Pre-Christmas spending across Otago for the second week of December rose 3.1% on a year ago to $69.4 million, while nationally, underlying spending, not including fuel, rose 2.9% to $1.27 billion, according to Paymark card transaction data released yesterday. National spending in the second week rose 6% on the first week.
The service sector
Encompasses the wholesale and retail trade, accommodation, cafes and restaurants, transport and storage, communication services, finance and insurance, property and business services, health and community services and also cultural, recreational and personal services. Represents about two-thirds of the economy.
