Solid tourism numbers underpinned a good December for Otago and Southland's service sector - but labour shortages continue to rankle many employers.
The BNZ-BusinessNZ service sector index saw Otago Southland still in expansion, with 51.7 points, but otherwise was well below the 57.2 average. Points above 50 denote expansion, and below, sector contraction.
Nationally, the index declined 0.4 points to 53, with the upper North Island on 57.7, lower North island on 54, Otago Southland on 51.7 and upper South Island 50.5.
BusinessNZ chief executive Kirk Hope said the national 53 reading was the lowest level of expansion since June and meant the overall average rate for 2018 was 54.9, which was slightly ahead of the long term average of 54.5.
Otago Southland Employers' Association chief executive Virginia Nicholls said the labour and skill shortages were continuing, particularly in accommodation and hospitality, but also in the construction and tourism sectors.
“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.
The separate BNZ-BusinessNZ manufacturing index, released last week, also highlighted skill shortages in the south were also a “significant concern” for several sectors.
Mrs Nicholls said: “More employers are re-training existing staff, and are employing people with basic skills and are up-skilling them to meet their requirements.” 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, which were taking up the long-term rental housing stock.
While 61% of respondents' comments were positive, Mrs Nicholls said increased costs were also a concern to business, as well as changes to employment legislation. It was encouraging that the regional breakdown in categories has orders/new business and activity/sales levels in expansion, but employment levels were declining.
Hope said the December result was influenced by several factors. Despite the sub-index of new orders improving 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 stand-out reason for negative comments, though a number of positive comments also focused in this space,” he said.
The further dip in expansion also saw a drop in positive comments received, with the proportion of positive comments in December, at 54.4%, lower than both November's 60.1% and October's 56.5%.
*Simon Hartley is senior business reporter and assistant chief reporter for the Otago Daily Times.