Analysts believe the downturn will prompt the Reserve Bank to take a wait-and-see attitude to any further increases of the interest-driving official cash rate, which was not expected to move until early next year.
Business confidence has moderated across all sectors and regions, following mixed economic news in recent months and sharp declines in commodity prices for some of New Zealand's key exports, the New Zealand Institute of Economic Research's (NZIER) latest quarterly survey of business opinion revealed yesterday.
The NZIER's principal economist, Shamubeel Eaqub, said the economy was ''coming off the boil'' and the moderation from December 2013 to September 2014 was ''widespread across indicators and sectors''.
''When businesses are optimistic they are more likely to hire and invest, but not always.
''In the last six to nine months, intentions have been positive, but actual hiring, investment and sales have not followed,'' Mr Eaqub said yesterday.
He said the moderating confidence and mixed economic news in recent months suggested a more uncertain economic outlook, noting that the actual survey results were weaker than anticipated.
Westpac chief economist Dominick Stephens said aside from the decline of optimists from 50% to 20%, businesses' own-activity measures also fell modestly, as did measures of capacity pressure.
''The survey results suggests that while the economy is continuing to grow at a healthy pace, the rate of growth has taken a step down in the second half of 2014,'' Mr Stephens said.
ASB economist Christina Leung said there was a ''stark difference'' between firms' reported profitability and their expectations for the upcoming quarter.
''A net 9% of businesses reported a deterioration in profitability over the past quarter, but a net 12% expected an improvement in the next quarter,'' she said.
The divergence between reported activity and activity expectations likely reflected the uncertainty that was typical heading into a general election.
''It is quite possible that some businesses put some spending plans back on track in the wake of the relatively clear-cut election result,'' she said.
Mr Eaqub said domestic trading activity, which closely mirrored gross domestic product (GDP) growth, was ''broadly stable'' over the last six months at 14%, and consistent with annual economic growth moderating from 3.8% in the first half of 2014 to a still-healthy 2.8% in the second half of 2014.
''Firms did not anticipate this moderation in our last survey; the outlook remains difficult to predict,'' said.
Mr Stephens said the survey indicated that GDP's pace of growth had taken a step down in the second half of the year.
''This follows the 100 basis points of tightening by the Reserve Bank in recent months, as well as the sharp decline in prices for some of our key exports,'' he said.
However, the survey indicated the economy was continuing to expand at a healthy pace, supported by continuing increases in construction activity; particularly in Auckland and Canterbury, as well as the boost to demand from strong population growth, Mr Stephens said.
While there were strong inflationary pressures in the construction sector, cost pressures in the economy have more generally remained modest.
''This suggests that there is little urgency for the Reserve Bank to resume hiking rates, even given the recent declines in the New Zealand dollar,'' Mr Stephens said.
