ANZ economist says seasonally adjusted sentiment is encouraging considering rising concern about drought.
Business confidence slipped in this month's ANZ Business Outlook survey, though it remains high by the standards of the survey's 25-year history.
A net 35 per cent of firms expect general business conditions to improve over the year ahead, down from 39 per cent last month but well above the historical average of 8 per cent.
The bank's chief economist, Cameron Bagrie, said confidence usually faded in March as summer waned and the reality of work reasserted itself. Seasonally adjusted, sentiment improved, he said, which was encouraging when set against rising concerns about drought.
A net 32 per cent of firms are optimistic about their own prospects, down six points on February but above the long-term average of 26 per cent.
Profitability expectations and investment intentions eased marginally.
Employment intentions recorded a more marked fall, from a net 11 per cent expecting to increase staff last month to a net 8 per cent in the latest survey.
The construction sector stands out on that score, with a net 45 per cent expecting to increase staffing, and also in its intentions to raise prices, with a net 36 per cent of firms expecting to do so, as against as net 22 per cent economy-wide.
Export intentions continued to languish, Bagrie said, with confidence sapped by a high dollar.
That was not going away any time soon, he said, though he noted that the cross rate with the Australian dollar - critical for both manufacturers and the tourism sector - had eased back below A80c. The survey showed only a mild impact from the drought so far, Bagrie said.
Confidence tanked in Northland, the first region officially declared to be in drought, but other regions like Hawkes Bay and Waikato showed few clear patterns across the survey measures, he said.
Taranaki, where oil and gas exploration is ramping up, stood out, topping the regional league tables for firms' own activity expectation, profitability, and employment and investment intentions.