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NZ business confidence falls in Q3: survey

[WELLINGTON] New Zealand business confidence fell to four-year lows in the third quarter as concerns over slowing growth in China and a drought, with weak inflation causing lower prices, a private think tank said on Tuesday.

A net 14 per cent of firms expected general business conditions to deteriorate, its lowest since March 2011, the New Zealand Institute of Economic Research's quarterly survey of business opinion (QSBO) showed.

The reading points to annual growth of 2.5 per cent in the third quarter, the NZIER said.

The survey does not include the agriculture sector, where sentiment has been hit by falling global dairy prices. "One thing that really stood out this time round was just how weak inflation indicators were. A net 10 per cent of business report cutting prices over the last quarter," NZIER economist Christina Leung told a briefing. "I expect one further rate cut by the end of this year," Ms Leung said. "If their core focus is on headline inflation then it would suggest you have quite a low OCR." On a seasonally adjusted basis, a net 9 per cent of firms expected general conditions to deteriorate, from 6 per cent who expected improvement in the previous survey.

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The poll's measure of capacity utilisation fell to 91.4 per cent from 93.4 per cent the month before, as the building sector slowed.