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Confidence remains flat in the business sector but inflation indicators appear to be inching lower, albeit very slowly.
ANZ's monthly survey of business confidence shows a net 43 percent of respondents expected the economy would deteriorate this year, unchanged from February's survey.
Inflation expectations eased slightly, to at 5.82 percent, down from 5.94 percent last month.
Employment expectations have hit their weakest level in more than two years however, suggesting the labour market is turning.
ANZ chief economist Sharon Zollner said the slowdown looked broadly in line with the Reserve Bank's intentions.
"Firms are wary but hanging in there," she said.
"So far, you'd have to say it looks like a soft landing - activity indicators are subdued but off the floor, labour market tightness is starting to shift, and inflation and cost indicators are very gradually easing.
"It's not an easy environment - expected profitability is under pressure as firms navigate still-high cost inflation and uncertain future demand."
The closely followed measure of firms' views of their own prospects dropped by point-7 of a percent, suggesting businesses were still wary.
Meanwhile finding skilled labour was still the biggest issue businesses said they were facing and although it had become slightly easier, the incentive to poach staff from other businesses remained.
"Problems related to inflation - wage and non-wage costs - continue to rate highly," Zollner said.
"Low turnover remains well down the list, though is growing, and interest rates have understandably grown as a concern.
"The winter could expose a few more rocks as the wave of tourists depart."
Widespread pessimism among businesses - economist
Westpac senior economist Satish Ranchhod said while business confidence had improved from last year's extreme lows, the data still pointed to widespread pessimism among New Zealand businesses.
He said most businesses the bank was in touch with still had firm demand, but were reporting large increases in operating costs and expected further cost increases over the next year - raising some red flags.
"It's one thing for businesses to face increases in operating costs when the economy is running strong," Ranchhod said.
"But interest rates have rocketed higher and demand is set to turn down sharply by year's end.
"That will make it much harder for businesses to deal with ongoing cost rises and certainly signals a squeeze on margins."
