The ANZ Business Outlook said uncertainty about changing government policy, a softer housing market and difficulty getting credit were the likely culprits for the lowest business confidence reading since early 2009.
ANZ chief economist Sharon Zollner said weakness was apparent across all activity indicators, but pricing intentions, inflation expectations and interest-rate expectations all increased.
"There is a non-trivial risk, given an economy at a delicate juncture, the fall in activity expectations could prove to be self-fulfilling. Outcomes will depend crucially on how prolonged the apprehension proves to be."
A net 39% of businesses were pessimistic about the year ahead, a fall of 29 points from the previous month.
Headline business confidence was negative across all the five subsectors. It was weakest among agricultural firms but the sharpest fall was in the retail sector, which was down 35 points, she said.
National Party finance spokesman Steven Joyce said it was time for Finance Minister Grant Robertson to show New Zealanders some ideas of his real economic plan and the actual costs of the new coalition Government.
Six weeks on from the announcement of the new Government, Mr Robertson was making his first major speech today.
It was important for him to provide some meaningful details on what the coalition would do and how it would pay for it, Mr Joyce said.
"There has been a lack of detail on many aspects of the finance portfolio since the election. We’ve had no costings released for anything except the paid parental leave changes. The Reserve Bank has confirmed it is in the dark on most of the coalition’s policies. Even the Treasury had been told very little."
Ms Zollner said although the survey responses were received after the final government make-up was decided, it would be too simplistic to ascribe the full move to the change of government.
There was a lot else going on. The softening in house-price inflation was one factor, as was the reported difficulty of getting credit. A net 41% of businesses expected it to be tougher to get credit, up from 31%. It was the highest percentage since the question was first asked in mid-2009.
Other activity indicators fell across the board, she said.
A net 7% of businesses expected better times ahead for their own business, down 15 points on October. The historical average was 28.A net 4% of firms were expecting to lift investment, down from 12%.
Employment intentions plunged from 14 to -3. Profit expectations did likewise, from 12 to -13.
Export intentions eased from 20 to 13, despite a fall in the New Zealand dollar and solid global growth.
Residential construction intentions fell from 31 to 17 and commercial construction intentions fell from 43 to zero, Ms Zollner said.
"We suspect there may well be a political protest vote element in this month’s results. There is evidence the gap between headline business confidence and firms’ own activity varies across the political cycle. The latter tends to align better with overall economic growth."
It was crucial the policy landscape was clarified as soon as possible to give firms and consumers the certainty they needed to make the best economic decisions, she said.
