Immediately after publication of the survey results, which included the worst own activity figures since at least 1970, economists and market watchers started calling for more official cash rate cuts by the Reserve Bank at the end of the month.
NZIER said the Reserve Bank had an opportunity to make another cut to the OCR on April 30 to bolster consumer spending.
That would, in turn, encourage firms to maintain their labour and capital stocks in readiness for meeting growing demand once the domestic and global economies started to pick up.
The survey showed deadline business confidence had stabilised at depressed levels but that was where the good news ended.
A net 65% of firms expected the general business situation to deteriorate over the next six months.
On a seasonally-adjusted basis, a net 47% of firms reported a fall in their own activity, the worst result since 1970.
The result implied another contraction in gross domestic product activity, potentially bigger than the 0.9% fall recorded in December.
The expected domestic trading activity reading for the next three months showed a slight improvement from December's record low, but was still the second worst on record.
Confidence remained at very low levels across all regions.
Merchants were less pessimistic than before but they had been one of the hardest hit so far. Their level of activity remained very low.
Service firms are starting to feel the brunt of the recession with a net 46% reporting a decrease in activity in the March quarter and a net 36% expecting further deterioration in the coming quarter. Both those numbers were record lows.
"Interestingly, architects reported a sharp drop off in work from the Government over the next 12 to 24 months.
"Given that we are relying on government spending to provide a base level of support for the economy, this is not a welcome development," ANZ-National Bank chief economist Cameron Bagrie said.
Bank of New Zealand economist Craig Ebert said the dire warnings in the survey results were widespread and detailed.
Manufacturers and exporters recorded the biggest slump in confidence, a clear warning New Zealand was not immune to the effects of the collapsing global economy, as the recent trade statistics might have been interpreted.
Employment and investment intentions warned of even bigger retrenchment than currently presumed and profits remained under heavy downward pressure.
"It's not until profits turn up that we can presume the business sector is genuinely on the mend. In the meantime, brace for bad profit reports which obviously won't be good news for the New Zealand equity market."
Spare capacity utilisation was opening up at a stunning rate - plunging to 86.3% in March, the lowest since 1992, he said.
Cost pressures were waning and pricing intentions had turned slightly more negative.
"It's a serious chorus of distressed twittering from the canaries at the coal face."
Households would seem to have little understanding of what was about to hit them - directly through the labour market and indirectly through the wider ongoing slowdown, Mr Ebert said.
Even if household spending held up, and the housing market was supported by lower interest rates, there were serious questions being raised about the durability of it all.
He sounded similar concerns about fiscal policy.
"Although there have been flutters of optimism around the global economy and markets, we're not presuming any sustained upturn with such deep-seated economic and financial ills at play.
"It's hard to get rosy on the United States economy when one in every four mortgage holders is heading into 'negative equity' and the commercial property crash has yet to be accounted for," Mr Ebert said.
