The Manufacturers and Exporters Association expects more jobs to be lost as sales continue to fall.
Its latest survey of business conditions shows total sales in December fell 6% compared to the same month a year earlier. Staff numbers in December were down 17% on the same month in 2008.
The association's chief executive, John Walley, says staff numbers will continue to fall, and will not recover until sales demand picks up. December export sales were down 7% and domestic sales down 4%.
Mr Walley says people are buying smaller quantities of goods, creating uncertainty for business owners and leading many to operate on a month-to-month basis.
Unemployment figures released on Thursday showed the rate had jumped to 7.3%, meaning 168,000 New Zealanders were recorded as out of work in the December quarter.