According to Westpac Institutional Bank’s quarterly survey of business opinion, business confidence fell sharply in the June quarter, the lowest it has been since 2012.

The survey shows that a net seven per cent of businesses expect conditions to improve over the coming six months. That is down from March’s 20 per cent result, and well below the results seen over the past year. In fact, business confidence has not been this low since 2012.

Notably, it is not just confidence that is down. Businesses across the economy have reported that activity softened in the June quarter, and fewer and fewer businesses are expecting a pick-up over the coming months.

The drop-off in confidence was seen across sectors, with very sharp declines in confidence among retailers and manufacturers. Confidence was more resilient in the construction sector, but was still down.

Looking into the details of the report, businesses are reporting a pull-back in hiring and investment intentions.

Cost and inflation pressures have remained modest. Only a small proportion of business are reporting cost increases, and the proportion of businesses who raised their prices over the past three months is at its lowest level since 2009. Indicators of what businesses expect to happen to prices over the coming months did nudge up in June, but remain low.