The economic recovery continues to disappoint as growth slows in the second half of the year, according to the latest survey of business opinion.
The NZIER September quarterly survey of business opinion shows business remains gloomy, with a net 5 per cent of firms negative, compared with negative net 1 per cent in the June quarter, seasonally adjusted.
The weak survey results suggested the Reserve Bank would keep official interest rates on hold for some time, into 2014, with a picture of patchy economic growth and subdued inflation evident in business opinion.
NZIER said it did not look like the economy was heading into recession but the growth seen earlier in the year was fading.
The trading activity indicator for the September quarter dropped too, to negative 7 per cent from 0 per cent in June, seasonally adjusted.
The survey results suggested annual economic growth would slow from a solid 2.6 per cent in the June quarter, towards 1.5 per cent in the second half of 2012.
"The recovery remains disappointing. Auckland is growing, but the post-quake surge in Canterbury is moderating and activity elsewhere is slowing," NZIER says.
Activity was patchy across a number of sectors.
The September quarter dip was mainly due to a sharp drop in manufacturing output and slightly weaker services sector volumes. Retail was growing, but modestly.
The job market was also softening. Hiring in Canterbury had been improving for the rebuild, but stalled in the last quarter.
Hiring elsewhere had edged down in the past six months according to NZIER principal economist Shamubeel Eaqub.
Firms are struggling to raise prices in a slow recovery, with profit margins under pressure. Investment intentions remain low compared with what normally happens in a recovery.