The NZIER's principal economist says its business confidence survey does not capture key events including New Zealand's recent credit downgrades, a more bearish outlook on global economic prospects from the Reserve Bank, and the deteriorating global economy.
The New Zealand Institute of Economic Research's quarterly survey of business opinion released on Tuesday shows a net 25% of firms expect general business conditions to improve in the next six months. That compares with a net 27% optimism in the previous quarter.
Principal economist Shamubeel Eaqub says the Rugby World Cup appears to be behind a big increase in confidence in the retail sector, but there is a question mark over whether it will really lift sales for the final quarter of 2011.
However, Mr Eaqub says on Tuesday that manufacturing is a concern, as the improvement in domestic sales and exports that had been a bright spot in the economy until three months ago is easing.
"It' seems like all the engines that were firing are starting to slow down again."
Mr Eaqub says the Canterbury region is rebounding from the worst impacts of recession after the earthquakes, with investment intentions and retail spending rising. However, he says the economy is flat otherwise, and limping along on the single crutch of quake rebuilding.
He says the biggest constraint on firms is lack of sales. "We're not buying enough stuff is what firms are telling us."
