Job losses at the Tiwai aluminium smelter lowered Economic confidence in Southland

Economic confidence in Southland has plummeted since June with the threat of job losses at the Tiwai Point aluminium smelter presumed to be behind the change.

The Westpac McDermott Miller regional economic confidence survey for the September quarter shows confidence in Southland has nose-dived from positive 32 per cent to negative 35 per cent.

Westpac suspects the threat of job losses at the Tiwai Point aluminium smelter is behind the change.

Confidence in the Otago region had fallen from negative 22 per cent three months ago to negative 26 per cent.

Otago Southland Employers' Association chief executive John Scandrett said the scale of the drop was "quite unbelievable". Survey results had been tracking at a low level for some time, and generally the economic situation was quite sluggish, he said.

The disappointing confidence levels aligned with manufacturing and service sector survey results.

Earlier this month New Zealand Aluminium Smelters management announced it would lay off about 65 staff during the next two months - streamlining operations to help return the smelter to viability in increasingly difficult economic conditions.

NZAS had planned to shed 100 jobs over five years through natural attrition, 35 of which had already gone.

In October Rio Tinto announced the smelter would be transferred into a new business unit called Pacific Aluminium and sold "at an appropriate point in the future".

Last year the smelter contributed $525 million to the Southland economy (9 per cent of the region's gross domestic product).