Business confidence in New Zealand has fallen to its lowest level since the depths of the global financial crisis.
The ANZ Business Outlook Survey for July painted an unhappy picture, ANZ chief economist Sharon Zollner said yesterday.
Headline business confidence dropped to a net 45% of the 340 respondents reporting they expected general business conditions to deteriorate in the year ahead, down five points.
Firms' perceptions of their own prospects were a better gauge of economic outcomes. But the news was not upbeat there either, dropping five points to a net 4% expecting an improvement, she said.
''This is the lowest reading since May 2009 and well below the long-term average of 27.''
By industry, retailers remained the least positive about their own activity (-4%), despite still-robust consumer confidence, Ms Zollner said.
The composite GDP growth indicator combined business expectations and intentions with consumer confidence. The composite indicator remained expansionary, thanks only to resilience in consumer confidence.
The economy felt increasingly late in the cycle. Fiscal stimulus and the still-strong terms of trade would support growth.
However, sustained low business confidence increased the risk firms would delay investment and hiring decisions in what could become something of a self-fulfilling prophecy, she said.
Former prime minister Sir John Key warned at the weekend the global economy was starting to splutter and in the event of a downturn, the parties in power in New Zealand were not the ones to set it right.
Sir John, who was now on the boards of ANZ and Air New Zealand, made the comments at the National Party annual conference in Auckland.
National Party finance spokeswoman Amy Adams released figures at the conference which showed New Zealand had the second-lowest business confidence in the developed world.
Sir John told reporters the economy appeared to be at the end of an economic cycle.
Ms Zollner said yesterday it was difficult to take a glass-half-full view of July's survey results.
Firms were grappling with low expected profitability without any meaningful lift in pricing intentions. It seemed squeezed margins were expected to persist.
The retail sector was the least optimistic about its own activity and profitability. Not surprisingly, it had the lowest employment intentions, she said.
On the activity side, high household debt, strong competition and an ongoing shift to online - including offshore - spending were suppressing turnover. On the profitability side, higher anticipated costs might also be at play, she said.
Relatively unskilled labour was a key input for the retail sector, meaning exposure to the minimum wage was significant. Expected costs were not surveyed but anecdotal evidence suggested a degree of concern.
''The New Zealand economy is delicately placed. Fiscal stimulus and the high terms of trade will provide impetus to growth. And the external environment remains favourable.
''But with businesses in a funk, it's fair to say the road ahead is looking less assured and risks of a stall have increased,'' Ms Zollner said.
National Party leader Simon Bridges said businesses were becoming increasingly unlikely to hire more workers or increase wages, meaning fewer opportunities for Kiwi families to get ahead.
''The fact these numbers are at their worst levels in 10 years show just how worried businesses are and the Government must take responsibility.''
