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[WELLINGTON] New Zealand business confidence eased a touch in the first quarter on the back of moderating activity, while firms now expect interest rates to fall over the coming year, a private think tank said on Tuesday.
A net 23 per cent of firms surveyed expected general business conditions to improve, compared with an upwardly revised 24 per cent in the previous quarter, the New Zealand Institute of Economic Research's quarterly survey of business option (QSBO) showed.
A net 4 per cent of financial services businesses expect domestic interest rates to fall over the next 12 months, swinging from a net 17 per cent in favour of a rate rise in the previous quarter.
The NZIER said that businesses have pared back expectations for activity, as building activity and retail sales slow and overall momentum in the economy cools after more than a year of strong growth.
"We saw some softening in economic activity in the past quarter, but overall it's still pretty positive," NZIER economist Christina Leung told a briefing, adding that the survey results were consistent with annual GDP growth of just over 3 per cent in the first quarter. "People are leaning more towards a rate cut, but there's none of that strong conviction there," she said, adding that the think tank expects the next move on interest rates by the Reserve Bank of New Zealand will be a lift in late 2016.
The survey does not include the agriculture sector, where sentiment has been hit by falling prices for dairy and timber products.
On a seasonally adjusted basis, a net 20 per cent of firms expected general conditions to pick up, down from an upwardly revised 22 per cent in the previous survey.
The survey's measure of capacity utilisation edged up to 92.3 per cent, the highest since around 2008 according to the NZIER, from an upwardly revised 92.0 per cent in the previous quarter.