A seasonally adjusted net 18% of firms surveyed in the New Zealand Institute of Economic Research’s quarterly survey of business opinion anticipate better economic conditions in the coming year, unchanged from the March quarter.
Westpac senior economist Satish Ranchhod described the data as "firm", while ASB chief economist Nick Tuffley called it "steady".
Mr Tuffley said the general business confidence was quite steady on the first quarter survey results.
"Firms’ domestic trading activity views eased slightly, both for the quarter just experienced, as well as expectations for the quarter ahead.
"All key activity indicators remain above long-term averages and point to good underlying momentum," Mr Tuffley said.
A seasonally adjusted net 18% experienced stronger trading in the second three months of 2017 versus 20% in the March quarter while 23% are picking more expansion to come in the next quarter down from 25% in the March quarter.
Within the building sector, confidence dropped from 31% in March to 18% in June.
Westpac’s Mr Ranchhod said the improved trading conditions and expectations of improvement were down a little from the levels seen earlier this year.
"Nevertheless, trading conditions remain healthy, consistent with solid economic growth through mid-2017," he said.
"We’re continuing to see very positive conditions in the building industry," Mr Ranchhod said.
Despite softening in June, the number of construction firms reporting activity had increased in recent months remained, he said.
"In addition, construction firms are reporting solid forward orders, and that they have been increasing staff numbers," Mr Ranchhod said.
NZIER senior economist Christina Leung told a briefing in Wellington the decline in construction probably reflected softer activity earlier this year.
However, a rebound in architects’ work in their own offices across residential, non-residential and government work points to solid growth in the pipeline.
"This indicates a recovery in construction activity from the softness seen in the March quarter," Ms Leung said.
Firms experienced a dip in earnings with 1% showing worse profitability in the June quarter, compared with 2% that saw better profitability in the March quarter. Only a net 6% expect better profitability in the coming quarter, versus 8% in the prior quarter.
Profitability was particularly weak in the retail sector.
"Cost pressures in the sector have intensified and, with pricing power still relatively limited, this is having a negative effect on profitability," Ms Leung said.
Firms continued to struggle to find labour in the June quarter, with a net 47% saying it was hard to find skilled workers and a net 23% struggling with unskilled staff.
