WELLINGTON (Reuters) - New Zealand business sentiment extended its slide in March, amid fears that the economy is running out of steam, an ANZ Bank survey showed on Thursday.
This comes a day after New Zealand's central bank unexpectedly adopted an easing bias, sending the currency tumbling to two week lows.
The survey's headline measure showed a net 38 percent of respondents expected the economy to deteriorate over the year ahead. It compared with a 30.9 percent pessimism level in the previous poll in February.
A net 6.3 percent of respondents expected their own businesses to grow in the next 12 months, from 10.5 percent last month.
"Most activity indicators eased slightly in March, consistent with our expectation that the economy is quietly losing steam," said ANZ Chief Economist Sharon Zollner.
A net 1 percent of firms expect to lift investment, down 1 percentage point from the previous survey. Employment intentions fell 2 points to 1 percent and profit expectations fell 3 points to a net 14 percent expecting profit to decline, the survey said.
The New Zealand Dollar fell to a three-week low of $0.6786 after the announcement, adding to the sharp drop on Wednesday after the Reserve Bank of New Zealand (RBNZ) said its next move in interest rates was more likely to be a cut.
"We continue to expect the next move in the Official Cash Rate to be a cut, with a growing risk that it is sooner rather than later," Zollner said in the statement.
ANZ has previously forecast a cut in rates for November.
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 business outlook has improved a little after Prime Minister Jacinda Ardern set up a council to advise her on economic issues.
However, the government's more recent proposal to tax capital gains income has drawn criticism that it could deter investors, especially in the property market.
(Reporting by Praveen Menon; Editing by Shri Navaratnam and Sam Holmes)
