Manufacturing in Otago is faring slightly better than the national outlook, which has registered a record sixth consecutive rating decline, mirroring the worst global manufacturing reports of the past 10 years.
Globally, it appears job numbers are in the forefront of cost-savings being achieved by businesses.
Nationally, the monthly Bank of New Zealand-Business New Zealand Performance of Manufacturing Index is lowest it has been since its inception in 2002, falling 3.2 points to 43.5 on the index, while, globally, index results from 20 countries are the lowest in the past decade.
The Otago Southland Employers Association chief executive Duncan Simpson said, nationally, 67% of respondent manufacturers made negative comments on current conditions and forward prospects, while in Otago the negative sentiment was around 52%.
"There's a definite South Island-North Island flavour in the results," Mr Simpson said.
Otago's manufacturing index for October was up slightly from September's levels of 53.9, at 54.2, and well ahead of the national 43.5 result, compared with October last year when Otago was on a healthy 65.7 points.
Above 50 points shows some expansion but below 50 points is contraction.
The manufacturing results are underpinned by surveys released earlier in the week recording deep despondency and pessimism in business circles.
The BNZ confidence survey recorded a doubling, from 20% to 40% of respondents expecting the New Zealand economy to get worse, while the Otago Chamber of Commerce returned one of its most negative surveys in a decade, with respondents who believe there would be further business deterioration, leaping from 10% a year ago to 30%.
BNZ economist Mark Walton said falling job numbers were an "obvious and predictable" outcome of businesses globally which are showing an increasing willingness to rationalise their workplaces, noting the global employment index had three consecutive sub-50 index ratings - at present down to 42.2"Equally predictable is that manufacturing firms will continue to shed staff for some months to come," Mr Walton said in a statement yesterday.
All of the activity-based sub-indexes, of output, new orders and employment, worsened over the previous months with further declines possible, he said.
"Manufacturers are clearly suffering from excess capacity, a situation that will continue to prevail as long as global demand is in the doldrums," Mr Walton said.
The new orders sub-index in New Zealand mirrored the global trend, which plunged from 41.4 in September to 36.2 - an all-time low, Mr Walton said.
"At the very least, recovery is nowhere in sight, suggesting tough times ahead for New Zealand firms in the business of supplying intermediate inputs offshore," Mr Walton said.
Mr Simpson said southern forward orders were better than those of manufacturers' North Island counterparts, but he also issued a note of caution.
"As seasonally driven demand tapers off, as it tends to in the December to January period, local manufacturers will need to find viable export markets to sustain progress."
