The final quarter of 2019 saw a slight improvement in business confidence, however the proportion of businesses reporting a weaker demand sat at 11 per cent, according to the latest NZIER Quarterly Survey.
Twenty-six per cent of businesses that were surveyed were pessimistic about the economy, a decrease from 35 per cent in the previous quarter.
The results showed an improvement in confidence in the manufacturing sector, with 20 per cent expecting worse economic conditions. That was down from 52 per cent in the last quarter.
There was still caution from businesses around investing, with 10 per cent of firms considering a reduction in building investment.
The survey found firms generally had a more positive outlook around hiring during the start of this year.
Over 40 per cent of businesses in Gisborne, Manawatu-Wanganui, the West Coast, Tasman and Blenheim expected worse economic conditions.
The survey found Hawke's Bay was the only region where more businesses were more optimistic about the conditions.
National’s finance spokesperson, Paul Goldsmith, said despite the improvement in results "the figures are still as low as 2009".
"This is at a time when we are enjoying record high terms of trade and should be doing well," he said.
"This result also doesn’t take into account the effects of the upcoming minimum wage increase. The April increase will be crippling for many small and medium sized businesses."
Duty Minister Phil Twyford said the results were "further evidence that confidence across the economy was boosted over the December quarter".
"The lift in confidence was also reflected in the ANZ business confidence survey released at the end of last month which showed a 13 point jump with the more important own activity indicator lifting five points to +17.
"We’re investing to boost productivity, lift wages and build the infrastructure New Zealand needs."
The survey was an improvement in the September quarter results, which saw 35 per cent of businesses expecting worse economic conditions. Confidence dropped to its lowest level in 10 years in the July quarter.