KEY POINTS:
Not even Christmas could save New Zealand's service sector from a weak 2008, according to the Bank of New Zealand Business NZ Performance of Services Index (PSI).
The PSI for December stood at 48, which was up 0.7 points from November but down 5.9 points from December 2007.
The average PSI value for 2008 was 49.1, down from 58.1 in 2007.
A PSI reading above 50 indicates that the service sector is generally expanding; below 50 indicates that it is declining.
It is drawn from data from employers' associations, chambers of commerce, the Hospitality Association of New Zealand, the New Zealand Retailers Association and the Tourism Industry Association.
Results remained in a consistent band showing contraction, which would probably continue through to 2009, said Business NZ chief executive Phil O'Reilly.
"2008 ended with nine of the 12 months in contraction, and overall a year that most businesses would like to forget," he said.
"While there were seasonal factors at work for many businesses, comments received from some showed that Christmas did not bring the cheer they may have expected."
Tourism Industry Association chief executive Tim Cosser said holiday parks and backpackers were experiencing stronger than normal bookings this summer but long-haul arrivals were expected to be down 10 to 15 per cent.
Forward bookings for March are weak and operators with exposure to long-haul markets will be the most affected.
December's survey results suggested the 2008 slowdown in the service sector was consistent with the general recessionary environment, said Bank of New Zealand Markets economist Mark Walton.
Four of the five diffusion indices that make up the PSI again contracted during December.
Activity and sales (45.2) fell further from November, while employment (46.4) dropped 3.1 points from the previous month.
New orders and business (49.8) recovered from its worst result in November, although still not showing signs of expansion.
Stocks and inventories (49.2) dipped slightly, while deliveries (51.4) continued to seesaw between expansion and decline.
Activity by region was generally positive, with the obvious exception of the northern region (45.6).
The northern region has now been in contraction for seven consecutive months.
The central region (50.8) experienced a minor lift in expansion for December, although still close to the no-change mark.
In the South Island, the Canterbury and Westland region (54.6) continued to show favourable expansion, while the Otago and Southland region (53.8) recovered from a series of poor results to show expansion for the first time since March 2008.
- NZPA
