Business confidence among small firms in New Zealand has dropped to a nine-year low, according to ANZ’s quarterly Business Micro Scope survey.

In the June quarter, a net of 30% of small businesses were reportedly pessimistic about general business conditions, the highest level since March 2009. Confidence slipped in both micro firms (0-5 employees) and intermediate-sized businesses (those that employ 6-20 employees), unwinding gains in confidence reported in March.

ANZ managing director of retail and business banking Antonio Watson said regulation remains the biggest concern facing small firms.

“Difficulty finding skilled employees is an ongoing challenge for many small businesses, particularly in construction, manufacturing, services and retail, and it continues to weigh on their confidence,” Watson explained. “External factors are also impacting confidence levels, including a cooling housing market and intense online and offshore competition for our retailers.”

While sentiment remains pessimistic, the results suggest small firms are still experiencing sustained demand for their goods and services, however, potentially at a decelerated pace.

The report also shows hiring intentions fell to 4%, slipping away from a short-lived recovery seen in March and affected by drops in the construction and agricultural sectors. Profit expectations fell even more, affected by the construction sector dropping 54% points to -14%, which is likely reflecting rising construction costs and labour shortages.

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