Rising inflation pressures and the threat of lower profits are taking their toll on business confidence.
A preliminary read of the ANZ Bank's monthly survey for April showed headline confidence becoming more pessimistic, with a net 8 percent believing the broad economic outlook will get worse over the coming year.
The more closely followed "own-activity" measure was steady with 16 percent expecting better times for their own businesses.
ANZ's chief economist, Sharon Zollner, said the economy was showing stresses and strains.
"Cost pressures are intense, and subdued profitability expectations suggest firms are not optimistic about their ability to recoup all of it," Zollner said.
The survey showed three-quarters of respondents were expecting higher costs, with the number planning to raise prices hitting a record high at 53 percent.
"Rising costs are an economy-wide issue. Shipping disruptions, rising global commodity prices, the higher minimum wage, and skill shortages are creating something of a perfect storm," Zollner said.
Inflation expectations were sitting steady at just under 2 percent, which is the Reserve Bank's (RBNZ) target. It has previously said it wanted to see inflation firmly established around the target point as one of the conditions for easing back on easy money policies.
"It's inflationary, but not growth-friendly, so the RBNZ will look through it as long as it appears transitory," Zollner said.
The survey showed business optimism holding steady or slightly improving about further investment, hiring, and exporting.