The monthly BNZ-Business New Zealand performance of services index for Otago and Southland remained in contraction for its third consecutive month at 48.5, an index below 50 being contraction.
Nationally, the index went into contraction for the first time since July 2010, at 49.6 points.
Otago Southland Employers' Association chief executive John Scandrett said the September sub-indices again delivered a "clear message that in plain economic terms, supply mechanisms outpace demand levels".
"The regional services sector activity levels have been in flat contraction mode for the last three months," he said.
During that period, the sector results for Otago and Southland ranged within a narrow 2.4 point band.
"With this marginally negative stability evident, it's hard to become too enthusiastic about forward momentum being just around the corner," Mr Scandrett said.
A BNZ economist said the "soggy" September services index added to recent indicators which suggested slower economic growth in the second half of 2012, following "a very solid" first-half performance.
"We are more convinced that growth has slowed. The question remains whether it can bounce back through 2013, as generally positive consumer and business expectations suggest it will," the BNZ said.
Last week, in the separate manufacturing index results, Otago and Southland dipped from slight expansion the previous month into contraction during September, in line with the national index result, which booked its fourth consecutive month in contraction.
