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Small business owners say they're yet to see any positive flow on effects from recent OCR cuts as pessimism about the economy rises.
A survey of small-to-mid sized firms by accounting firm MYOB showed one third of those polled have trimmed their expenses.
And nearly a quarter of those surveyed have paused hiring of new staff.
MYOB corporate affairs and advocacy lead Anna-Louise Hoffman said the trend is downwards as operators fail to see any green shoots on the horizon.
In the latest results, 40 percent of the more than 500 business owners surveyed said they now expect the economy to decline over the next 12 months.
That compares to the first quarter when owners were taking a far more optimistic view.
"Amongst our small and mid-sized enterprises in New Zealand, 39 percent are expecting the economy to decline over the next 12 months," Hoffman said.
"This is actually quite a change since our Business Monitor which was released earlier in the year, when a much stronger majority of SME decision makers believed the economy would improve. At that point it was around 46 percent."
MYOB's chief customer officer Dean Chadwick said consumers aren't spending and costs to owners keep ramping up.
"More than half of the SME operators surveyed are somewhat or extremely concerned about the current level of inflation and its impact on their business," he said.
"Following the 'survive to 25' narrative that surfaced last year and with the Reserve Bank making a few cuts to the OCR, businesses and consumers alike were hopeful that 2025 might offer a reprieve from the difficult years it followed.
"While last week's 0.25 point cut to the Official Cash Rate will have been welcomed by local consumers, the SME decision makers surveyed believe more is needed."
The MYOB survey of SMEs comprises a nationally representative sample of 505 owners and decision makers in small to mid sized businesses in New Zealand.
"Over the past 12 months, 40 percent of business operators surveyed said customers are spending less, making smaller purchases and decreasing the frequency of purchasing," Chadwick said.
The latest survey also showed 24 percent of respondents expect economic conditions will remain the same as they are now, while 36 percent believe conditions will improve over the next year.
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