Otago has missed out on generally improving employment confidence throughout New Zealand, although confidence levels still remain on the positive side of the ledger.
The Westpac McDermott Miller employment confidence index showed Otago's confidence sliding from 106.6 points in December to 101.6 in March.
In the same period, the national index rose 1.5 points to 105.
A reading above 100 equals more optimists than pessimists.
The Otago-Southland Employers Association chief executive, John Scandrett, said it was disappointing the South could not point to a local sharing in the confidence gains recorded nationwide in March.
"We are seeing sure signs that business confidence has been knocked after the February quake in Christchurch and many employers appear to have yet to come to grips with how the reshaping of the South Island economy will affect their operations.
"Likewise, employees in the region appear to be conscious of the marketplace uncertainties."
Mr Scandrett was not surprised by the fall in the Otago index.
In December the association was "cautiously optimistic" the regional economy was edging forward slowly.
That was supported by the robust manufacturing indicators.
Likewise, Otago-Southland unemployment levels remained well under the national average so worker confidence could be understood to be "somewhat stable", he said.
"The lower Otago March confidence reading may reflect the fact that employees here are closer geographically, and perhaps better connected in the business sense, to their Canterbury colleagues than other workers elsewhere in the country."
The survey did not run a Christchurch component this quarter but it would be a safe bet to say that wide worker anxiety would be the order of the day, Mr Scandrett said.
Once the South Island business communities, in association with Government agencies, unveiled the detail of the Canterbury reconstruction steps, employer confidence in Otago would receive a welcome boost, he said.
Westpac economist Dominick Stephens said employment confidence in Canterbury had strengthened in January and it now led the table in most categories.
However, as with the consumer confidence survey, the latest Canterbury figures needed to be interpreted with extra caution, given the absence of Christchurch from the sample.
It removed those directly affected by the quake but it also gave greater weight to rural and small-town residents, whose labour market perceptions had tended to be relatively less upbeat.
"With that very hefty caveat, one possible reason for the strength in the Canterbury numbers is an expectation that earthquake reconstruction will boost labour demand in the region," Mr Stephens said.
