Business confidence eased in June, the National Bank says, with investment intentions falling below the historic average and concerns over access to credit rising.
(Update adds detail including investment intentions and JP Morgan economist's comments).
A net 40% of respondents expect general business conditions to improve in 12 months' time, down 8 points from May, the National Bank says.
Confidence in the construction sector fell 14 points, more than in any other sector.
"Whichever way you cut it, confidence has eased," the National Bank says.
"But stepping back we need to acknowledge the level, which is still well above its historical average. We would characterise this month's move as shifting from a gallop to a canter."
JP Morgan Chase Bank economist Ben Jarman said despite the fall, optimists remained a decisive majority within the survey group. Jarman added the headline index could withstand further declines without testing the long-run average of approximately 25.
The National Bank noted, however, that the overall level of investment intentions has fallen below its historical average and doesn't suggest a strong rebound in business investment anytime soon.
"We also note that only a net 3% of respondents expect it to be easier to get credit in the year ahead, down 11 points. This is an area worth watching, as the ability for firms to invest is dependent on getting access to credit."
A sustained increase in investment remains the missing ingredient for a broadening of the economic recovery, and a critical part of expanding productive capacity, the survey added.
Meanwhile, a net 39% of those surveyed expect activity for their own business to be better over the coming 12 months, down from 45% in May.
Profit expectations slipped 5 points to a net 19% expecting an improvement in the year ahead.Investment intentions fell 4 points to a net 10% and employment intentions fell 3% to a net 13%.
"The employment intentions reading, where a net 13% expect to be hiring in the year ahead, is still indicative of a healthy appetite by firms to take on staff, which should be reflected in ongoing employment growth," the National Bank said.
Inflation expectations rose to 3.1% from 2.7%, the highest since December 2008. A net 39% of respondents expect intend to put their prices up , an increase of 11 points with the increase coming across all sectors surveyed.
"The increase in GST from October 1 is clearly behind these movements, and should not unduly alarm the Reserve Bank of New Zealand."
The bank said its composite growth indicator from the survey is pointing towards year-on-year growth of above 4% by the end of the year. This is "respectable" but doesn't suggest a sizeable cyclical rebound given the extend of the 2008-2009 downturn.
Jarman said provided the Eurozone's sovereign concerns continued to diminish, healthy global trade flows would continue supporting New Zealand’s export growth.
"This dynamic, along with the associated feedback to other sectors in the economy, should put a floor under business confidence and support the gradual recovery in the investment cycle and labour market," said Jarman.