WELLINGTON (Reuters) - New Zealand business sentiment remained gloomy in April, an ANZ Bank survey showed on Thursday, pointing to a weaker economic growth and giving further ammunition central bank policymakers considering cutting interest rates.
Fragile business sentiment has dogged New Zealand's economy, with confidence hitting a decade-low in August last year, as businesses were concerned about centre-left Labour-led government's investment and employment policies.
The survey's headline measure showed a net 37.5 percent of respondents expected the economy to deteriorate over the year ahead. That compared with 38 percent in the previous poll.
The New Zealand dollar slipped from around $0.6680 to $0.6657 in the wake of the release.
"Most ANZ Business Outlook activity indicators were little changed in April, at levels that suggest the economy is experiencing something of a soft patch," said Sharon Zollner, chief economist at ANZ Bank in a research note accompanying the survey's release.
The Reserve Bank of New Zealand (RBNZ) adopted a clear dovish tone in March as it grappled with the prospect of slower economic growth and worked to stabilise inflation around its 2 percent target band midpoint.
The bank has kept rates at a record low of 1.75 percent since late 2016. In March, the bank said its next move in interest rates was now more likely to be a cut than a hike.
Gloomy business conditions, in particular signals of lower investment in the residential construction sector, signalled gross domestic product (GDP) growth was unlikely to pick up in the near future, according to ANZ.
"GDP growth has steadily declined and we expect this to remain the case out to the middle of this year, based on leading indicators such as our ANZ Business Outlook survey," said Zollner.
Residential building intentions sank four points to a decade low of 20 percent expecting lower activity.
Overall, a net 7.1 percent of respondents expected their own businesses to grow in the next 12 months, up from 6.3 percent last month.
The government had scrapped proposals to introduce a tax on capital gains income, which drew criticism from some businesses that it would deter investors, especially in the property market.
ANZ noted, however, that the period when the survey was conducted largely excluded the impact of the government decision to drop those proposal to tax capital gains.
(Reporting by Charlotte Greenfield and Praveen Menon; Editing by Simon Cameron-Moore)
