"Regrettably, we were wrong. The July regional result of 46 points is only marginally ahead of the 44.1 seen in June.
This is disappointing, since we had considered that in the tourism area at least, there would be forward movement around a winter season upswing," Mr Scandrett, the chief executive of the Otago-Southland Employers Association said yesterday.
The BNZ-BusinessNZ performance in services index showed a country of two halves in its latest release.
The northern region increased by 1.4 points to 53.5, recording its highest total since March, while the central region slipped to 54.1. A reading above 50 shows an industry in expansion and below 50, one in contraction.
The Canterbury-Westland region (45.4) experienced a significant drop to its lowest result since March.
Otago-Southland continued to improve slowly but remained in contraction for the seventh consecutive month.
Mr Scandrett said selected tourist operator comments supported seeing stabilisation and a solid winter pick-up.
Others in the industry confirmed visitor numbers remained low and negative global economic factors were biting into projected turnover expectations.
"Sector imbalance, where supply capacities outstrip demand levels, remain in place."
Unfortunately, it seemed that New Zealand was almost two countries with North Island sector activity levels remaining in expansion while the south remained in contraction, he said.
BusinessNZ chief executive Phil O'Reilly said the dip in employment in the sector was disappointing, given it had managed to remain positive for the previous five months.
One particularly pleasing aspect was the ongoing incremental lift in new orders/business, which might continue in the months ahead as increased business came out of earthquake-related recovery work and the Rugby World Cup.
BNZ head of research Stephen Toplis said the July index provided further evidence that the New Zealand economy had plenty of momentum before the financial market volatility of last week.
"Unfortunately, it's likely the global equity rout, in particular, will have a negative impact on confidence next month.
"We will await the next set of indicators with bated breath in the hope that the fall-out is not excessive."
