Leung said previous surveys show business confidence tends to drop when Labour takes office and increase when National is in charge, but that sentiment has a muted impact on actual trading activity.
The QSBO showed profitability continued to weaken in the December quarter, with a net 7 percent reporting lower earnings and a net 6 percent anticipating reduced profits in the coming quarter. That compares to a net 6 percent experiencing lower profits but a net 13 percent expecting increased earnings in the September survey.
Leung said the decline in expectations was a "worrying development" with fewer firms predicting conditions will recover in coming months. That increased uncertainty showed firms were more cautious about investment, she said.
The QSBO showed a net 2 percent of firms plan to invest in compared to 18 percent in September, while a net 10 percent plan to lift investment in plant and machinery, down from 17 percent, while hiring intentions declined to 12 percent from 19 percent.
Firms are still finding it hard to find labour, with a net 49 percent saying skilled labour was hard to find, deteriorating from 46 percent in September, and a net 31 percent finding it hard to attract unskilled labour, compared to a net 27 percent in the prior period.
Companies still expect to face cost pressures, with a net 38 percent anticipating an increase in costs compared to 24 percent in September, while experienced costs were largely unchanged with a net 29 percent reporting higher costs compared to 30 percent in the prior period. Pricing intentions increased with a net 31 percent expecting to lift prices in the coming quarter, up from 24 percent in September, while a net 18 percent raised prices in December, compared to 17 percent in the prior period.
-Business Desk