Business confidence has turned negative and fallen to its lowest level in two years because of political uncertainty.
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ANZ Bank's monthly survey shows pessimists outnumber the optimists with sentiment falling from zero in the last survey to a negative 10.1 percent.
Firms were also more downbeat about their own prospects, with confidence falling eight points to 22.2 percent with expectations that profits will fall, and unemployment will go up.
ANZ's chief economist Cameron Bagrie said most responses were received before the make-up of the new government was known.
"This month's survey primarily covers the uncertainty around the outcome and not the outcome itself. The latter will be next month's story.
"Importantly, other survey indicators held up better, though a tempered mood is becoming more apparent."
The survey showed investment and hiring intentions were marginally softer, while there was a rebound in sentiment about the property sector, and inflation expectations were little changed
He said the high levels of confidence seen earlier this year were going to be hard to maintain especially with the housing market and record immigration showing signs of slowing.
"Transitions can be wobbly and create uncertainty, which is being exacerbated by changes in government policy and economic direction. The last thing the economy needs right now is a repeat of the 2000 winter of discontent."