Business confidence has fallen to its lowest level in nearly a year in the face of a slowing local economy and gloomy world outlook.
The ANZ Business Outlook for July shows a net 44 percent of businesses expect conditions to deteriorate in the year ahead, from 38 percent last month.
That is the lowest confidence level since August last year.
The more significant measure of individual businesses own prospects has also weakened, but remains positive, with a net 5 percent expecting better times in the next 12 months, compared with a net 8 percent optimism in the previous survey.
"The outlook for the economy is deteriorating. Despite generally good commodity prices and interest rates at record lows, the headwinds of a global slowdown and credit and cost constraints appear to be winning out," ANZ senior economist Miles Workman said.
He said firms are now expecting to invest less and to start shedding staff. They are also expecting lower profits, more difficulty in getting credit, and higher costs.
Agricultural related businesses were the most negative, but the sharpest fall in confidence was in the construction sector where the residential and commercial parts of the industry were expecting less business and planned to shed staff.
The slowdown in the local and global economy has been evident throughout the year leading to central banks to cut interest rates to stimulate activity.
"We expect two more OCR (official cash rate) cuts this year, helping the economy to find its feet once more," Mr Workman said.
The Reserve Bank (RBNZ) cut the OCR in May to a record low 1.5 percent, but has signalled that the next move is likely to be another cut.
That could come as soon as 7 August, when the RBNZ issues its next monetary policy statement. A growing number of economists are picking a rate cut in November.