Business confidence has declined for the third month in a row, ANZ's Business Outlook survey has found, though optimists still outnumber pessimists nearly 10 to one.

"The question asked is whether business conditions are going to improve," said ANZ chief economist Cameron Bagrie.

"They are pretty darn good now. More people are simply saying this may be as good as it gets - and they may well be right."

A net 54 per cent of respondents consider business conditions will improve over the year ahead and while that is down 17 points from its peak in February it is still incredibly healthy by historical standards, according to Bagrie.


He said interest rates had risen and a net 89 per cent of respondents expected them to keep rising. The dollar was still high, despite commodity prices - dairy at least - falling and the housing market was levelling out.

But the glass was more than half full, Bagrie said. Interest rates remained low, export dairy prices remained high, the levelling out of the housing market was on balance positive, net migration was surging and employment growth was very strong.

A net 51 per cent of firms expect their own activity to rise over the year ahead, down from a net 53 per cent in the previous survey but still close to double the long-run average for that indicator.

Expectations for profits, exports and investment have all declined but employment intentions remain steady at a net 30 per cent positive and construction intentions go from strength to strength.

Fewer firms expect to raise their prices and inflation expectations have fallen marginally.

Bagrie said the high currency and aggressive competition were helping to keep inflation in check.

"[And] just eyeballing what's going on across the country at the micro level you can detect a wave of productivity enhancements helping as well, businesses are working smarter and smarter."

The gap between actual growth, which Bagrie estimates is tracking between 3.5 and 4 per cent, and its sustainable rate was closing from both sides, he said.