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Commenting on the four-point drop in September's "performance of service'' index, Ms Nicholls said the association didn't consider that too bad, considering the current economic cycle.
"Tourist operators have experienced steady sales across the shoulder season, we've had generally positive commentary from employers and the construction sector seems pretty happy with the level of work on their books as they head into their busy period.
"So the transition between the winter snow season and the start of the summer tourist season is progressing well,'' she said.
The Otago and Southland services sector showed a drop in overall activity to 50.7 points, below the average for the past year of 54.6.
Overall, the regional breakdown in categories had activity and sales levels at 55.9, with orders and new business, inventories and supplier deliveries at the same level.
Employment levels, however, had declined to 47.1, which "wasn't surprising, given well-documented issues around having enough skilled and unskilled labour aligned with ever increasing costs mainly related to the minimum wage''.
"It does depend how labour-intensive the business is.''