Business confidence continued to slip in ANZ's latest monthly survey though the level remains high by historical standards. A net 40 per cent of firms expect the general business situation to improve, down three points from June and the lowest level since April last year.

"The latest fall is marginal stuff in the overall scheme of things, but confidence is now 31 points off its peak [in February]," ANZ chief economist Cameron Bagrie said. "Confidence fell in all sectors bar manufacturing, with rural sentiment slipping into the red for the first time in 14 months."

Firms' expectations of their own activity - a better indicator of economic growth - fell marginally from a net 46 per cent positive to a net 45 per cent.

"But this was concentrated solely in retailing. Sentiment lifted in the other four segments," Bagrie said. "The overall level remains very healthy by historic standards."

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A net 26 per cent of firms expect profits to increase, down three points from June, and investment intentions have also slipped three points to a net 26 per cent expecting to invest more.

"That's more than respectable," Bagrie said.

A net 25 per cent expect to be hiring more staff over the year ahead, up two points on June.

Pricing intentions and inflation expectations both inched higher but neither was suggesting the inflation bogey was back, he said.

"That said, trends in the construction sector, where a net 59 per cent expect to raise prices, bear watching in terms of spillover into wider inflation trends."

In the retail sector, a net 28 per cent of respondents expect to raise prices, up six points from last month.

Bagrie said residential investment expectations remained high and the construction sector still topped the survey's indicators for confidence, activity expectations, profits, employment and pricing intentions.

But a Ben Hur-sized construction boom sapped resources from other areas, he said. "There is no free lunch."

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The survey and the survey of consumer sentiment continued to point to very strong growth but headwinds like the high New Zealand dollar and a frail household savings rate stymied the potential for that feel-good factor to be realised in its entirety.

"Growth in demand is still outstripping supply - that is, how fast we can grow without blowing an inflationary gasket. The good news is that the supply-side capacity is on the ascent. The mismatch between demand and supply is no longer as stark."