Confidence in red zone

Business confidence has slipped into the red for the first time since the February 2011 earthquakes, reaffirming the call for another interest rate cut by the Reserve Bank later this month.

The June ANZ Business Outlook showed headline business confidence had fallen further, down 19 points in June. A net 2% of firms were now pessimistic about the general economy.

ANZ chief economist Cameron Bagrie said other survey indicators held up better but still flagged an economy slipping in the growth stakes.

''The last time we saw business confidence in negative territory was post the most serious Christchurch quake and, prior to that, in 2009 when the economy was in recession.

''We're only just in negative. It's not a crevasse but a crack has opened up.''

Agriculture was the most downbeat about the next 12 months, construction sentiment was low and Canterbury's economic bindings were showing signs of detaching, he said.

The economy was still growing but some parts risked heading off the trail.

Labour finance spokesman Grant Robertson said in an interview the ANZ survey followed on from other surveys showing weakening confidence and workers feeling less secure about their future.

''The economy is drifting and the Government does not have a plan other than relying on commodities. People are losing confidence in the economy on the back of plummeting dairy prices.

"The failure of the National Government to diversify and create new opportunities is adding to the pessimistic environment.''

On a tour of the Central North Island last week, Mr Robertson said he and Labour leader Andrew Little experienced first hand how regional economies were ''coming off the boil'' with farmers not planning to spend money anytime soon.

Latest export data showed exports down 5% on last year off the back of a 28% drop in dairy.

National promised it would increase exports to 40% of GDP but Mr Robertson said they were now going backwards with latest figures showing only 28%.

''Kiwis are not short of ideas or capacity. What they need is leadership to support them to explore new ideas.''

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