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Nationally, the BNZ-BusinessNZ performance of services index for March gained 0.3 points to hit 59, while Otago Southland eased from 59.8 in February to 59.1 in March.
Scores above 50 reflect expansion and below 50 contraction in the service sector, which represents about about two-thirds of the economy.
Otago Southland's 59.1 was third to central and lower North Island's 64.6 and the upper North Island's 59.7. Canterbury West Coast was on 58 points.
Otago Southland Employers' Association chief executive Virginia Nicholls said the region's tourism services had reported another positive month, along with health and community service providers.
''The service sector is in good heart and is growing at a steady pace with 69% reporting positive comments,'' she said.
However, she sounded a note of caution that while construction services had also reported good sales, those service providers were continuing to report concerns with skill shortages.
Last week's separate BNZ-BusinessNZ manufacturing index had Otago Southland relatively flat on 51.8 points but still in expansion with new orders at a ''conservative'' level.
Around Otago Southland, the orders/new business sub-index of the services index stood at 65.6 and activity/sales levels were 62.5, followed closely by supplier/deliveries at 58.3 and stocks/inventories at 57.7.
The last sub-index, employment levels, was ''neutral'' at 50, Ms Nicholls said.
''The activity/sales levels [at 62.5] are leading the charge and this is encouraging.''
BusinessNZ chief executive Kirk Hope said the strong national result for orders/new business contributed to the higher March figure.
''The [59 points overall] was 0.3 points higher than February and the second-highest level of expansion over the last 18 months,'' he said.
At 66.4 points, orders/new business was at its highest level since June 2007, Mr Hope said.
''Combined with 65.6% of respondents providing positive comments, the service sector is currently in a solid and positive place,'' he said.