The New Zealand Institute of Economic Research's quarterly survey of business opinion points to an economy going sideways, the institute's principal economist, Shamubeel Eaqub, said.
Firms' view of the general business situation has recovered half the ground lost in the December survey's slump, with a net 13 per cent expecting better times ahead.
And their expectations of their own activity have improved from a net 10 per cent expecting a pick-up to a net 17 per cent - above the long-run average of 14 per cent.
The survey asks firms not only about their expectations about the next three months but their experience of the past three.
For three years now expectations had been more optimistic than what the firms reported actually happened three months later, Eaqub said.
For that reason he is effectively discounting expectations and focusing on firms' reported experience.
The survey showed no increase in reported trading activity in the March quarter on a seasonally adjusted basis.
That was consistent with economic growth at around a 2 per cent annual pace, Eaqub said. GDP expanded 1.8 per cent in calendar 2011.
Likewise only a net 1 per cent of firms reported an increase in staff, unchanged from the December survey. And a net 15 per cent reported lower profitability, little changed from the net 17 per cent in December.
Across regions and sectors performance was patchy, Eaqub said.
"Canterbury continues to rebound from the earthquakes, but activity is lacklustre elsewhere. The services sector is recovering gradually but the pace of growth is historically low."
Retailing slowed a touch, with weakening prices and rising inventories suggesting demand was subdued, he said. Manufacturers reported flat exports and deteriorating domestic sales. Manufacturing output rose but so did finished stocks, with a rise in the net proportion of firms saying they considered them too high.
"While labour is getting harder to find in Canterbury, it is less so elsewhere. This will keep wage increases muted," Eaqub said.
Construction activity is improving - notably in Canterbury - but exports of building materials are falling, reflecting weakness in the Australian market and contributing to a reported increase in spare capacity in the building sector.
Among retailers, the net balance reporting they had raised prices in the past three months fell to 6 per cent from 23 per cent in December. The long-run average for this indicator is 36 per cent.
"Inflation pressures through wages and capacity are quite subdued. The Reserve Bank is going to be on hold for quite some time," Eaqub said.
However the Bank of New Zealand's head of research, Stephen Toplis, said he was "gobsmacked" to hear NZIER dismiss its own survey's expectations series as unreliable.
"We would prefer to interpret the survey data otherwise and say it remains consistent with our view that the economy is slowly but surely regaining momentum," Toplis said.
Businesses were probably too optimistic, he said. "But it is very important to accept that businesses behave according to their expectations. If they are positive they will hire more folk than when they are negative, and invest more."
BNZ expects economic growth to gradually accelerate to 2.4 per cent over 2012 and 2.9 per cent next year.