Firms have cited government policy, labour costs, consumer confidence and labour shortages as the key challenges leading to downbeat confidence.
Pessimism was flowing through into firm decisions, although investment and hiring intentions were generally still positive, ANZ senior economist Liz Kendall said.
The data was consistent with a softening in annual GDP growth, challenging the Reserve Bank's outlook for acceleration in the second half of the year.
It would add to concerns about the current degree of economic momentum, providing a timely reminder that OCR cuts remained a distinct possibility, she said.
''The RBNZ stands at the ready to support the economy should they deem it necessary to get inflation sustainably back to the midpoint in an acceptable time frame.
''Accordingly, [yesterday's] data have the potential to move the RBNZ's rhetoric further into dovish territory,'' she said.
The bank continued to believe that, on balance, the next OCR move was more likely to be ''a cut than a hike''.
Uncertainty persisted regarding the degree to which firms would follow through on their downbeat intentions.
Westpac senior economist Anne Boniface said weak business confidence had been a lingering concern for the RBNZ.
Although it did not get a specific mention in the September OCR review, as it did in August, it was likely to remain one of the bank's key concerns when it commented ''down side risks to the growth outlook remain'', she said.
ASB economists Jane Turner and Nick Tuffley said it was not just trading activity which was weak. Reported employment had also fallen sharply and was well below the previous quarter's signalled expectations.
At the end of Q2, employment intentions had slowed but suggested still-positive rates of employment growth.
Over Q3, a net 0% of firms reported an increase in employment over the past three months.
That suggested the labour market could have lost considerable momentum over Q3, they said.
Firms reported profitability deteriorated further in Q3. Rising business costs were driving firms' pricing intentions higher.
The key was whether firms were able to pass on higher prices, lifting inflation pressures. If not, then the firms must cut costs or wear lower profits which would lead to lower employment and/or investment.
''Upcoming employment, activity and inflation data will be crucial in deciphering which path businesses will head down,'' they said.
The survey was not all pessimistic, with forward-looking measures of firms' own trading activity, employment and investment intentions holding up quite well and more consistent with the bank's current economic forecasts which assumed annual growth would hold up rather than decelerate.
However, experienced trading activity for Q3 underperformed businesses' Q3 trading expectations from the Q2 survey, which made drawing a firm conclusion on the implications for Q4 growth from the latest trading expectations slightly more difficult.
