Business confidence is still falling from "extreme levels of optimism" early this year, a new survey shows.
The latest ANZ Business Outlook shows a net 40 per cent of businesses are optimistic about general prospects, down 3 points from last month, and while it is only a marginal dip, the index is now down 31 points from its peak.
Confidence fell in all sectors except for manufacturing, and rural sentiment fell into the red for the first time in 14 months, ANZ said.
But the bank said the underlying pulse "still looks good".
ANZ's composite growth indicator still suggested the potential for a booming economy, with growth of 6 per cent "on offer", but the bank said: "That's pie in the sky stuff."
The bank's economists were more circumspect, but still expected a solid rate of expansion, although the economy still faced headwinds of a high dollar and a frail household savings rate.
The Reserve Bank yesterday said it expected growth of 3.7 per cent this calendar year.
ANZ said today that the "wilting sentiment" from previously high levels of business confidence was in line with the economy that was shifting down to a more sustainable economic expansion, with a slower rate of growth than seen recently.
The economy was being hit by a heavy fall in commodity prices while the dollar held up.
But dairy exports have boomed even with the high currency, given the connections to the fast-growing Asian region. That was also helping other goods such as logs, fruit, sheepmeat, wine, dear velvet and honey.
The housing market remained a key factor for the economy, but interest rates have been rising.
The economy's growth has been centred on construction, with big house-building programmes, especially the Canterbury rebuild.
But the economy was not reliant on just cows and housing in Auckland and Christchurch, the ANZ said.
"Confidence among other regions remains high."