You are not permitted to download, save or email this image. Visit image gallery to purchase the image.
The BNZ-BusinessNZ service sector index showed Otago Southland still in expansion, on 51.7points, but otherwise was well below the 57.2 average.
Points above 50 denote sector expansion and below 50, contraction.
Nationally, the index declined 0.4 points to 53, the upper North Island on 57.7, lower North Island on 54, Otago-Southland on 51.7 and the upper South Island at 50.5.
BusinessNZ chief executive Kirk Hope said the national 53 was the lowest level of expansion since June and meant the overall average rate for 2018 was 54.9, slightly ahead of the long-term average of 54.5 for the survey.
Otago Southland Employers' Association chief executive Virginia Nicholls said labour and skill shortages were continuing, particularly in accommodation and hospitality but also in construction and tourism.
''There was a good start to the summer season with solid tourist numbers.
''Employers would like to see a quicker processing time with working holiday visas, particularly due to the short-term nature of these visas,'' Mrs Nicholls said.
Last week, the Madam Woo restaurant in Dunedin, which opened in 2015, closed its doors, citing difficulties in finding and retaining skilled chefs.
The separate BNZ-BusinessNZ manufacturing index, released last week, also highlighted skill shortages in the South as a ''significant concern'' for several sectors.
''More employers are retraining existing staff and are employing people with basic skills and are upskilling them to meet their requirements,'' Mrs Nicholls said.
She said service providers to the construction industry were busy with house alterations and maintenance.
Accommodation shortages continue in Central Otago, in part due to Airbnb catering to tourists and taking up long-term rental housing stock.
''There is also an urgent need for affordable housing,'' she said.
While 61% of respondents' comments were positive, Mrs Nicholls said increased costs were a concern to business, as well as changes to employment legislation.
It was ''encouraging'' that the regional breakdown in categories showed orders/new business and activity/sales levels in expansion, but employment levels were declining, she said.
Mr Hope said the December result was influenced by several factors.
Although the sub-index of new orders improved from November, the other key sub-index of activity/sales continued to decline, reaching its lowest level of expansion since May 2014.
The employment index returned to levels experienced for much of 2018, while supplier deliveries returned to expansion.
''Both Christmas and holidays were the standout reason for negative comments, although a number of positive comments also focused in this space,'' he said.
The further dip in expansion also had a drop in positive comments received, the proportion of positive comments in December, at 54.4%, being lower than both November's 60.1% and October's 56.5%.