Seasonal factors behind index drop

Cardrona Alpine Resort in late May following a 35cm-40cm snowfall. PHOTO: STEF ZEESTRATEN
Cardrona Alpine Resort in late May following a 35cm-40cm snowfall. PHOTO: STEF ZEESTRATEN
The Otago-Southland services sector performance eased during June, eroded by the transitional tourism shoulder season between summer and winter.

School holidays, the cruise ship season, weather patterns and the start to the ski season all played roles in the easing in the BNZ-BusinessNZ performance in service sector index.

Nationally, the index eased just 0.2 points from May to June's 58.6 points, while Otago Southland eased 2.2 points from May to 52.7.

Scores above 50 reflect expansion, and below 50, contraction.

Otago Southland Employers' Association chief executive Virginia Nicholls said while Otago had the benefit of the Lions rugby tour last month - injecting an extra $860,000 in hospitality spending alone for the province - June was considered the autumnal shoulder season.

``In Dunedin, the cruise ship season has finished, which affects us locally.

``In Queenstown and Wanaka the skifields are just starting. Cardrona was open on June 10 and Treble Cone was a little later on July 5 because of the warmer weather,'' she said.

The Otago Southland index at 52.7 points was similar to the previous month, and was up on the same time a year ago.

Mrs Nicholls said the Otago Southland breakdown showed supplier deliveries were at 61.1 points, orders/new business was 58.3, activity/sales levels were at 54.2, stocks/inventories sat on 50, but employment levels were in contraction at 41.7.

``This follows a similar trend from last month, with orders/new business still strong, but employment levels have declined, which is continuing to reflect the difficulty of finding skilled staff.

The service sector index mirrored last week's manufacturing index, in that the lack of skilled staff has been a growing concern for employers during the 18 months.

Mrs Nicholls said the food wholesale trade had a ``mixed month'', with some reporting good sales.

``[However] they are struggling with increased compliance costs, and have expressed concerns around the changes to immigration [affecting staff recruitment],'' she said.

The cost of living was increasing in Central Otago, which in turn was putting pressure on wages, particularly in Queenstown, Mrs Nicholls said.

Food retailers had continued to experience steady sales, while those supplying the construction industry continued to thrive and were in a busy period.

``Those supplying the tourist industry have had a seasonal reduction in business, which is to be expected at this time of the year,'' she said.

BusinessNZ chief executive Kirk Hope said that overall, nationally, the index had remained a ``consistent performer'' in terms of expansion levels.

The main contributors were activity/sales at 59.4 and new orders at 64.1, which ensured overall activity levels were close to the 60-point mark, Mr Hope said.

BNZ senior economist Craig Ebert said ``the big rebound'' in May's index ``pretty much stuck fast'' in June, with the latest robustness spread across all the main sub-indices.

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