WELLINGTON - Business confidence continues its retreat from the euphoric levels early this year, falling for the sixth month in a row in the National Bank's survey.
A net 20 per cent of respondents expect the general business environment to improve over the next 12 months, down from 24per cent last month and 68 per cent in February.
But repeating the pattern of recent surveys, firms are more optimistic about their own prospects, with a net 39 per cent expecting increased activity, steady on the past two months.
Retailers are the exception. Their expectations for their own activity eased, to a net 33 per cent from 36 per cent in July.
National bank chief economist Brendan O'Donovan put that down to expectations interest rates will rise.
"Due to a rapid build-up of debt in recent years the household sector is vulnerable to rising interest rates," he said.
Additional pressure on the retail dollar is coming from higher petrol and electricity prices, and local body rates.
Although the survey responses came in before the Reserve Bank signalled on August 18 that a rise in interest rates was increasingly likely before the end of the year, all but 1 per cent of respondents were already expecting rates to rise over the coming year.
That dampens not only firms' general confidence but their own investment intentions, which have been declining gradually since early this year.
Prospects for job seekers are also "not flash", Mr O'Donovan said. Only a net 9 per cent of firms expect to increase staff numbers over the next year, almost unchanged from last month.
Manufacturers have become seriously optimistic about their export prospects, with a net 65 per cent expect their export volumes to rise over the next year, which is close to a six-year peak.
