The retail industry expects more job cuts as lagging consumer spending crimps sales in the sector.
Pumpkin Patch laid off 30 staff two weeks ago as its sales falter in the Northern Hemisphere.
Economists expect unemployment to reach 5% next year. They are forecasting job losses will hit the retail sector, before filtering into manufacturing.
Retailers are reporting lower profits this year as consumers tighten their belts.
Profits at Pumpkin Patch dropped 28% in the July year compared with the previous year as sales slowed. Managing director Maurice Prendergast says no retailer is immune to the slowdown.
Forsyth Barr analyst Guy Hallwright says all retailers will be clamping down on their wage bills.
However, not all retailers will need to lay off staff. Briscoes Group says it is running a lean team and has shed staff by natural attrition rather than redundancies.
Retail sales flat
Retail sales remained flat in August with a $21 million drop in fuel sales being a major factor.
Statistics New Zealand says overall retail sales for August were up 0.4% from the previous month.
Following a fall in July, supermarkets and grocery stores were up 1.4%.
The trend in total retail sales has been flat since December 2007.
UBS Investment Bank senior economist Robin Clements says the flat headline figure does not bode well for the rest of the year.
