SYDNEY (Reuters) - New Zealand business confidence fell to the lowest in nearly 11-1/2 years in September, an unwelcome outcome for the central bank which slashed interest rates to a record low of 1% last month to prop up growth and inflation.
Monday's ANZ Bank survey showed business confidence fell 2 points with 54% of respondents reporting that they expect general business conditions to deteriorate in the year ahead. That compared with a 52.3% pessimism level in the previous poll in August.
Firms' views of their own activity was down 1 point to -2%, the fourth fall in a row and the lowest read since April 2009.
Fragile business sentiment has dogged New Zealand's economy for several months and was one reason the Reserve Bank of New Zealand (RBNZ) stunned investors by chopping the official cash rate by a larger-than-expected 50 basis points last month.
The New Zealand dollar <NZD=D3> slipped as low as $0.6276 in the wake of the survey.
"The Reserve Bank will be disappointed that its unexpectedly large 50 basis point cut in the Official Cash Rate last month does not appear to have had much impact on business sentiment or investment and employment intentions," ANZ Chief Economist Sharon Zollner wrote in a commentary on the survey results.
"The prolonged lack of confidence is starting to feed its way through the economy and is threatening the tight labour market."
For the first time in a decade no sector of the economy had reported plans for a net increase in staff numbers, she added.
Other sub-indicators in the survey were also weak.
Profit expectations fell 5 points to a net 25% of respondents expecting profitability to decline, the lowest since April 2009. Inflation expectations eased from 1.70% to 1.63% – well under the 2% target mid-point of the Reserve Bank of New Zealand.
Growth in New Zealand's export-dominated economy slowed to 2.1% in June year-on-year, its weakest since 2013.
(Reporting by Swati Pandey; Editing by Shri Navaratnam and Stephen Coates)
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