13 Jul 2010

Business confidence plummets

8:26 pm on 13 July 2010

The BNZ's monthly business confidence survey has fallen for the third consecutive month. Sentiment is now at its lowest level in more than a year.

A net 2% of the 540 respondents expect the economy to get better in the coming year - down from 26% in June and a peak of 56% in September.

Sentiment was bleakest in the legal, real estate, accountancy and transport sectors.

BNZ chief economist Tony Alexander says the decline is due to the economic recovery failing live up to expectations.

He says many businesses are reporting sporadic customer demand, and some believe the economy was better six or nine months ago.

Mr Alexander says he does not expect a second recession because of the recovering dairy, building and forestry industries.

He says this means the Reserve Bank will not hold off on further increases in the Official Cash Rate.