Business confidence improved a little in the National Bank's April survey, though pessimists still outnumber optimists by nearly seven to one.
A net 55 per cent of respondents to the survey expect general business conditions to get worse over the next 12 months, compared with a net 55per cent last month.
Firms' views of their own prospects - a more reliable indicator of the economic outlook - remain sombre. A net 4 per cent expect their activity to decline over the coming year, where a net 6 per cent did last month.
"Firms' own activity expectations are seldom negative so while an improvement is welcome the absolute level remains disconcerting," National Bank economist Khoon Goh said.
Their profit expectations and investment intentions have deteriorated.
The economy's momentum had stalled, Goh said.
"Weakness in the first quarter has extended into the second."
The economy might be doing well if it recorded any growth at all over the coming year.
While the survey's growth indicators are weak, its inflation indicators remain in the danger zone, with a net 31 per cent of firms saying they expect to increase their prices over the next three months, the same as in March, and inflation expectations are stuck at 3.29 per cent.
"Facing falling prices and stagnant sales growth firms naturally look to the price lever," Goh said.
If prices cannot be increased and profit margins restored their attention would quickly turn to labour costs. The survey's reading on employment intentions was weak by historical standards, though no worse than last month.
The economy's solid fundamentals - high export commodity prices, low unemployment and strong fiscal position - would dampen the cyclical adjustment but could not stop it, he said.
