The ANZ Business Outlook shows the growth side of the economy still looked to be in good shape but optimism was progressively being tempered.
ANZ chief economist Cameron Bagrie said there were risks to the economy and the falls in confidence were looking more trend-like.
However, the indicators were receding from high levels and everything should be kept in perspective.
''Diagnostics remain healthy. Most Business Outlook survey indicators still sit north of historical averages. But the economic pulse is not beating quite as strongly.''
On many levels, that was not surprising, he said.
The economy was moving into a more modest pace of expansion but there were risks around the transition.
Headline business confidence was on the retreat, falling 15 points in May.
A net 16% of businesses were optimistic about the general economy.
Firms' own activity expectations, the best growth indicator, eased to a two-year low of 33 points - still high but waning.
Employment intentions fell from 22 to 17 and profit expectations went from 26 to 20.
More respondents, a net 30%, expected the next movement in interest rates to be down, Mr Bagrie said.
Business inflation expectations fell to a historical low of 1.62% in April and hit new lows across agriculture, construction and services. Pricing intentions were flat at 23.
The agriculture sector dominated the falls. The sector had the lowest level of confidence, activity expectations, profitability (or lack of it) and investment, he said.
''There are few surprises here. The New Zealand dollar is still high and it's not just dairy prices that have been receding of late.''
The economic impact of a low dairy payout in the current season was masked by previous season top-ups, with left cash flow for dairy farmers at reasonable levels. But the kitty jar had been raided.
The impact on cash flow was about to be felt in the coming season and dairy farmers were coming around to the reality of falling prices, Mr Bagrie said.
Last week, Fonterra set its 2015-16 opening milk price forecast at $5.25 a kilogram of milksolids, at the high end of expectations.
But, at the same time, it trimmed its current season forecast by 10c to $4.40 kg/ms.
ASB rural economist Nathan Penny said Fonterra expected to prices to recover over the 2015-16 season.
Although $5.25 kg/ms represented an increase on the 2014-15 season, several risks to the outlook remained.
''Generally, we share Fonterra's outlook, although we stick with our slightly more optimistic forecast the milk price will lift to $5.70 kg/ms by the end of the season. Our forecast is contingent on global dairy prices recovering over the season.''
