Nearly every indicator out so far this year is pointing to a strong economic performance ahead, and the Quarterly Survey of Business Opinion (QSBO), released yesterday is no exception.
Apart from New Zealand workers feeling less confident about a pay rise early this year, business and employment confidence is firmly on the upside.
The New Zealand Institute of Economic Research's quarterly survey is regarded as one of the most influential in the market and it showed business confidence rebounded in the final quarter of last year.
Following a sharp drop in confidence in the previous quarter which saw pessimists outnumber optimists, a net 13% of businesses now expected the New Zealand economy would strengthen in coming months.
Demand also continued to improve with a net 18% of businesses reporting an increase in their own trading activity in the December quarter.
NZIER senior economist Christina Leung said demand had strengthened across all sectors in the survey and businesses expected a further improvement in their own trading activity over the next quarter.
"This suggests solid GDP [economic] growth over the first half of 2016.''
With activity continuing to increase, there were signs of renewed capacity pressures in the economy.
Capacity utilisation rose in December and a greater proportion of businesses reported capacity as the key constraint on their business, she said.
But despite rising capacity concerns, inflation pressures remained weak.
Businesses were finding it slightly easier to put through prices increases but still not by enough to keep pace with cost increases.
That continued to weigh on firm profitability.
Although inflation was subdued, NZIER expected the Reserve Bank would keep the official cash rate on hold this year in the face of solid economic growth, Ms Leung said.
BNZ senior economist Craig Ebert said he was looking for a "high-five'' from the QSBO and he was not left hanging.
"The December quarter survey results were even firmer than we imagined, It's the strongest high so far. We should probably lift our GDP growth forecasts, at least for the nearer term.''
Fourth-quarter economic growth could be much stronger than the 0.6% the BNZ was forecasting.
Job numbers could prove larger for the quarter as well, he said.
There were some caveats to the good news.
One was the ongoing challenge for the dairy industry.
To some extent, some other commodity exporter areas were not captured in the NZIER survey.
The latest survey was taken before the recent global ructions.
A much worse outlook for dairy had been kept at bay, aided by new year rains but it was still set to drag on the economy this year.
The survey also did not directly survey farmers and the ongoing difficulties faced by the dairy industry would need to be borne in mind.
By and large, New Zealand businesses were in a much better frame of mind than they were in September, Mr Ebert said.
And it was still a curiosity as to why sentiment soured so much at that time.
Among the reasons for the souring of sentiment might have been negative press around the dairy sector or the Reserve Bank's interest rate cutting which started in June, making people think the economy must be in some sort of trouble.
