Business sentiment has softened cross the board in NZIER's quarterly survey but not to an extent that suggests firms need to get a grip.

The decline in headline confidence to a three year low is consistent with an economy expanding 2.6 per cent in the year ended June just past -- unchanged , in fact from the year ended March.

It indicates the need for two more official cash rate cuts , NZIER economist Christina Leung said. Again nothing to startle the markets there.

Pricing power is under pressure, though. Only a net 1 per cent of firms reported they were able to raise their prices in the past three months, even though a net 17 per cent reported higher costs.

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The squeeze on profitability is reflected in weaker hiring and investment intentions, though they remain above long-term average levels.

The survey is another indicator that the economic cycle has passed its peak but not that an avalanche of grief is about to descend.

In Auckland, a net 18 per cent of firms still expect the general business situation to improve over the year ahead. That is down from at net 27 per cent three months ago but well above a net 5 per cent nationwide.