Business confidence in Otago experienced a major reversal of fortune in the three months ending March, and no improvement has been seen in the region for at least six months.
The Otago Chamber of Commerce survey results this week revealed confidence in the New Zealand business sector has fallen into negative territory (net -42.25%) for the first time since the September 2005 quarter.
The dip this time is much greater than the blip of 2005.
Expectations for their own business situation also plunged among the nearly 200 respondents to the chamber survey, falling from a net 66.25% in December to 44.92% in March.
Chamber chief executive John Christie said the survey was taken immediately after Fisher and Paykel Appliances and Tamahine Knitwear announced they were closing their operations in the city.
Mr Christie had always regarded surveys about New Zealand business confidence as a chance for his members to register protest about the way the country was going.
But he was concerned at the level of negative sentiment being shown in the latest survey.
The fall in confidence in own expectations was a worry for the region, he said.
"Things in New Zealand are far worse than gloomy. Businesses usually look for the good out there in the marketplace but sentiment has gone backward. The bells of caution are starting to ring."
The survey showed things such as high fuel costs, staff costs and climate change issues were affecting sentiment, he said.
"With this being an election year, there will be a lot more of this stuff thrown in the mix. It's not great out there."
There were some bright spots, Mr Christie said.
Some respondents had "reasonably good" forward-order books for the next eight to 10 months and it was becoming easier to hire skilled staff.
Some companies were looking at better business prospects in a downturn because of the sectors in which they operated.
Other businesses had seen their orders drop sharply and were facing a quiet time.
Investment intentions were well down, which spoke loudly about how prepared businesses were to gear up for any future upturn.
Sales were flat-lining, not a bad thing as long as they stayed the same and did not fall, he said.
Decreasing profitability was starting to emerge in the survey results, something that was never on the agenda of any company.
Publicly listed companies had recently announced profit downgrades.
That was now being seen in privately owned companies, from small and medium enterprises through to the largest of private companies.
In some cases, people were starting to reduce their staff numbers rather than look for new people.
That would mean that although some employers were still looking for skilled staff, people could take longer to find the most suitable job for them, Mr Christie said.
Wage inflation was starting to bite for some employers but staff expected a rise in wages to deal with the higher costs of living.
Inflation might be about 4% but the prices at the petrol pump and grocery checkouts were the ones affecting people the most.
"The discussions people have sitting around the kitchen table about rising costs are the same discussions that are held around the business table - fuel costs, wages and interest rates."
Mr Christie said the golden economic period of the past five years meant it was difficult for some companies to deal with anything less.
"There is no question some businesses will struggle to meet the current economic climate."
