WELLINGTON (Reuters) - New Zealand business sentiment worsened in February, reversing some of the recent improvement seen in the previous survey in December, an ANZ Bank survey showed on Thursday.
The survey's headline measure showed a net 30.9 percent of respondents expected the economy to deteriorate over the year ahead. That compared with a net 24.1 percent pessimism level in the previous poll in December.
The New Zealand dollar slipped to $0.6838 from $0.6851 after the release.
Fragile business sentiment has dogged New Zealand's economy and its centre-left Labour-led government since it took office in late 2017, with firms worried about investment and employment policies.
Confidence hit a decade-low in August with the index falling to -50.3 percent, although managed to claw back some of these losses in recent months after Prime Minister Jacinda Ardern set up a business council to advise her on economic issues.
The ANZ survey on Thursday showed firms’ expectations for their own activity had eased 3 points, with a net 10.5 percent expecting their business to grow in the next 12 months compared with 13.6 percent in December.
The agriculture and services sectors were the most optimistic and the construction sector the least, the survey showed.
"Clearly the economy is stretched at the moment, but it does appear that momentum has waned markedly over the last six months," said ANZ Chief Economist Sharon Zollner.
In its last policy meeting, New Zealand's central bank retained the possibility of a rate cut in the face of rising economic risks, but struck a broadly neutral policy tone.
ANZ has forecast a cut in rates for November, although the central bank has said it expects to keep rates at their current level through 2019 and 2020.
Businesses in New Zealand complained about the government's decision to hike the minimum wage, restrictions on foreign homebuying and a ban on new offshore oil-and-gas exploration permit.
New Zealand's Tax Working Group last week recommended that the government begin taxing capital gains income, a policy that critics say could deter investors, especially in the property market.
(Reporting by Praveen Menon; editing by Sam Holmes)
