New Zealand business confidence has climbed to a 20-year high, raising the prospects for inflation to start to accelerate.
The New Zealand Institute of Economic Research's Quarterly Survey of Business Opinion showed that 52 per cent of businesses were optimistic in the December quarter - the highest level since June 1994 and up from 33 per cent three months earlier.
Domestic trading activity, which is closely aligned with economic growth, climbed to the strongest since March 2005, with 15 per cent of firms experiencing a pickup in their own activity.
Expectations for the coming quarter rose to 32 per cent from 24 per cent.
"This quarter every region in our survey was doing better," said Shamubeel Eaqub, principal economist at NZIER.
"Until recently much of the recovery was concentrated in Canterbury. This has now broadened to most regions across New Zealand, which points towards a more sustainable and stable recovery."
The survey comes as economists bet the central bank will raise interest rates in the first quarter, lifting the official cash rate from a record low 2.5 per cent to cool inflation pressures in what some economists have called a 'rock star economy'.
The survey did not capture the surge in retail activity over the peak Christmas-New Year period, though merchants still reported the strongest retail sales since September 2002.
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