WELLINGTON (Reuters) - New Zealand's business mood hit an 11-month low in July, a survey showed, with the construction sector particularly gloomy as concerns about the global economy and local policies grew, compounding the case for a central bank rate cut next week.
The New Zealand dollar <NZD=D4> fell to a three-week low of $0.6592 after the release of the closely watched survey from ANZ Bank on Wednesday.
The survey's headline measure showed a net 44.3% of respondents expected the economy to deteriorate over the year ahead, its worst reading since August 2018. That compared with 38.1% in the previous poll.
The results painted a "grim" picture, according to ANZ economists, especially in the construction sector where around a third of firms expected to cut jobs and 38% expecting deteriorating profits, the weakest reading since 2009.
The Reserve Bank of New Zealand (RBNZ) announces its next monetary policy decision on Aug. 7, with many economists expecting the bank to cut the official cash rate (OCR) to a record low of 1.25%, in part due to falling business confidence.
"The outlook for the economy is deteriorating...we expect two more OCR cuts this year, helping the economy to find its feet once more," ANZ chief economist Sharon Zollner said in a research note accompanying the release.
Business confidence has been falling this year as global economic headwinds mount and firms in the small, trading nation complain about policies of Prime Minister Jacinda Ardern's centre left government. These include the increased minimum wage and restrictions on foreign home buying.
(Reporting by Charlotte Greenfield and Praveen Menon; Editing by Sam Holmes)
