New Zealand firms seem resigned to a further contraction in business as the December ANZ-National Bank business confidence survey collapses to a record low.
The own activity expectations of companies fell again, with a net 22% of firms expecting worse times for their own business in the year ahead.
That surpassed the previous record low seen in April 1988.
Activity expectations in retailing fell a staggering 21%, with a net 49% of retailers expecting worse times ahead for their own business.
That is not only a record low but it is 19% below the previous low recorded in March 1991.
November's record lows in employment intentions, profit expectations and investment intentions were surpassed this month.
They were much worse.
A net 22% expected fewer staff over the year ahead, 43% expected lower profits and a net 13% expected to invest less.
ANZ-National Bank chief economist Cameron Bagrie said retailing and construction stood out across all sectors, despite policy-makers taking aggressive action such as interest rates cuts.
"Our composite growth indicator for 2009 from the survey can be summed up in one word: awful.
"If there is a bright spot to put on this month's survey it is that inflation is rapidly becoming yesterday's story."
Inflation expectations had fallen from 3.7% to 3.2%.
Pricing intentions had tumbled.
A net 14% expected to raise prices in the year ahead, down from a net 23% last month, he said.
The survey results were released the day after Finance Minister Bill English delivered his first budget policy statement and economic update as part of the new National-led Government.
The update showed a deteriorating position for the new Government as global financial turmoil and a domestic slowdown took its toll.
The New Zealand Manufacturers and Exporters Association said the budget policy statement demonstrated the need for major changes in the country's policy framework.
"Business as usual will not encourage investment in productive activity. Making more or spending less are the only solutions to the projected sovereign debt blowout," association chief executive John Walley said.
He urged the Reserve Bank to make a further 1% cut in its official cash rate in January to support an export-led recovery.
The United States Federal Reserve cutting rates down to nearly zero was an extreme measure and made the New Zealand Reserve Bank's last cut look timid.
"We have heard confident prediction from our Reserve Bank that we are now out of recession, but with the US in such bad condition and Europe, Australia and Asia slowing, it is difficult to see where exporters are going to find new markets."
The New Zealand dollar had moved up against the US currency on the back of widening interest rate spreads and a small confidence gain in America, yet again leaving returns to exporters in a difficult situation, Mr Walley said.
The speculative pressure needed to come off the exchange rate sooner rather than later to give exporters the margins they needed to drag the country out of recession.
"There is no reason why we would be delaying these cuts. The sooner we make them the sooner they help our exporters," he said.
Bank of New Zealand senior economist Craig Ebert said it was obvious from the survey results that the Reserve Bank and Treasury remained far too optimistic about economic growth prospects.
Recent claims by Reserve Bank governor Alan Bollard that the recession was probably over appeared out of touch with the reality businesses were conveying.
"To make our position clearer, we're in the throes of revising down, even further, our economic projections."
