BNZ chief economist Tony Alexander said sentiment had been broadly trending upwards since the middle of last year. In the November survey, only 27 people felt the economy would be in a worst state in a year's time.
There was a rebound in the net percentage of people feeling happy house prices were rising, to 13% from 6% in October. A net 45% of people were relaxed about New Zealand's growing economic relationship with China, a result back at levels seen before the false botulism scare.
The gross percentage of businesses thinking about borrowing money rose to 26% from 20% in October but there was no overall upward trend yet in the early indicator of business investment, he said.
Grant Thornton partner Simon Carey warned yesterday bullish economic optimism among South Island businesses could soon be tempered, with 50% of businesses citing the availability of skilled workers as a concern. In the North Island, only 28% reported the same concern.
With 23% of South Island businesses indicating the skill shortage was a ''major constraint'' compared with only 5% in the North Island, the problem was potentially severe, Mr Carey said.
''The biggest concern is this skill shortage is only likely to get worse in 2014. With construction in Auckland and Christchurch expected to accelerate next year, alongside other favourable trading conditions, some economists are predicting the economy to grow by 4% in 2014.''
The good news was 74% of South Island firms and 69% of North Island firms were optimistic about the country's economic outlook over the next 12 months, with 23% in the South Island and 15% in the North Island being ''very optimistic'', he said.
South Island firms expected to generate a greater increase in selling prices than North Island companies, employ more staff, invest in plant and machinery and pay higher wages.
Eighty-five percent of South Island businesses planned to increase salaries in line with or above inflation, compared with 82% for the North Island.
''The massive rebuild of Christchurch will only really start next year. Couple this with an anticipated dairy boom in the south Island, underpinned by giant irrigation projects such as Central Plains Water in Canterbury and the proposed Hunter Downs in South Canterbury, and it's likely optimism will remain strong for several years.''
Tertiary Eduction, Skills and Employment Minister Steven Joyce said the South was leading the way on employment.
The latest labour market data showed South Island unemployment continued to be ''considerably lower'' than the North Island's, with the South Island regions helping lead New Zealand out of the global financial crisis.
''While the regional unemployment data does move around quite a lot from quarter to quarter and should be treated with a degree of caution, it's great to see regions like Otago and Canterbury with unemployment rates with a four in front of them.''
The Canterbury unemployment rate for the three months ended September was 4.2%, down from 5.2% a year ago, the Otago rate was 4.4%, down from 5.1% a year ago, and the Southland rate was 5.4%.
Mr Joyce has been under fire recently for not trying to save 85 high-skilled AgResearch jobs from shifting from Invermay to either Lincoln or Palmerston North.
He said there was a 4300 increase in employment in Otago in the three months to September alone, with the participation rate also growing to 69.8% - higher than the national average.
There was a 7000 increase in employment in Otago in the past year.
Mr Alexander said the BNZ survey showed
businesses were still unwilling to fund their activities through credit.
''This is generally what is happening in many other countries as well, where even though household spending is picking up, businesses are reluctant to invest and even more reluctant to borrow.
''This debt aversion could be a factor constraining the duration or recoveries around the world and may contribute to an eventual surge in inflationary pressures in New Zealand as capacity limits get reached and productivity grows,'' he said.
Dunedin North MP David Clark said plenty of people he spoke to in the city were looking for work and felt ''squeezed'' by the lack of available jobs.
''It would be a bit rich for Mr Joyce to take credit in any case, particularly on the day we learn 180 jobs are at risk at Silverstream. We still face the loss of the Invermay jobs, where Mr Joyce could have intervened but chose not to.''
Statistics did not always tell the full story. Things that counted as employment now would not have been counted as such a generation ago, he said.
