The economy and business confidence are both waning as economic growth takes hits from several directions, two surveys released yesterday show.
National Bank chief economist Cameron Bagrie said in the business outlook for August that while business confidence was still in positive territory, confidence levels were down 34 points from a peak reached in February.
"We've referred to the last few months as seeing momentum wane from a gallop, to a canter, to a trot.
The risk is building that we take a further step, down to a mere walk," Mr Bagrie said in a statement yesterday.
Alongside waning confidence, firms own activity expectations continued to soften, as did profit expectations.
The levels of companies expecting to invest more and hire staff had declined to below long-run averages, he said.
Retailers, and the commercial construction sector in particular, were highlighted by the New Zealand Institute of Economic Research (NZIER) report, with retailers cautioned to plan for disappointing sales and the commercial construction sector told up to 20,000 jobs are at risk.
The NZIER quarterly predictions to September said it expected economic growth to almost halve from 2010's calendar year of 2.2% to 1.2% during 2011, before rebounding to 2.9% in 2012.
The recovery was slowing and while there was sufficient momentum and stimulus to avoid a repeat recession, the economy would be soft during the next six months, NZIER's principal economist Shamubeel Eaqub said in a statement.
"Households remain cautious with spending, net migration will slow further, and non-residential construction work is now running dry," Mr Eaqub said.
The non-residential construction sector was "at the precipice of a collapse" because work usually lags consents by a year, and a year ago the level of consented floor area fell by a third.
"This alone may put around 20,000 construction sector jobs at risk."
Retailers should plan for a disappointing pre-GST hike spend-up and Christmas shopping as households remain cautious, making do with less than before, because of the slow recovery in jobs and wages and debt repayment which will dampen spending for some time.
"For retailers it will feel like a recession for some time."
Mr Eaqub said he was less optimistic than other forecasters who on average expected growth of 2.6% this year, 3.2% in 2011, and 2.7% in 2012.
"Businesses are not yet ready to pay higher wages or invest in new capital and employees.
"Profit margins are skinny and business borrowing continues to contract, indicating that a very low official cash rate has not yet encouraged investment in the economy," Mr Eaqub said.
