Jan. 15, (BusinessDesk) - New Zealand's economy surged in the December quarter to the best level since mid-2007, according to the Quarterly Survey of Business Opinion, which shows firms are more optimistic and output is increasing across the board.
The survey, conducted by the New Zealand Institute of Economic Research (NZIER), shows a rebound in activity, particularly in Canterbury but also a "very good lift" in Auckland.
The survey's measure of business confidence rose to plus 19 percent in the December quarter from minus 1 percent in the previous quarter.
A positive reading indicates more optimists that pessimists.
The trading activity indicator surged to best level since mid-2007, rising to plus 8 percent from minus 4 percent in the previous quarter.
"Capacity pressures are intense in Canterbury, but there is little pressure in the rest of the country," said NZIER principal economist Shamubeel Eaqub.
"Firms do not intend to raise prices much. Consumer price inflation will remain low," he said, predicting that the Reserve Bank of New Zealand will keep interest rates on hold for some time.
The NZIER survey results are consistent with annual growth of above 2 percent for 2012.
NZIER said that the pickup in the economy is not yet flowing through to the labour market. New hiring remains subdued and labour is getting a little easier to find outside Canterbury.
It was surprising that there was not more competition for labour as the economy picked up, NZIER said.
"This part of the recovery remains absent," Mr Eaqub said.
Expectations of domestic trading activity surged to plus 22 percent from plus 9 percent in the previous quarter.
Activity has increased across all industries but the strongest sector is building because of Canterbury. Manufacturing activity rebounded and merchants reported stronger retail spending. The service sector is gradually increasing sales.
There were too many risks in the global economy for the Reserve Bank to be proactive in raising interest rates, Mr Eaqub said.
"It's a very nice finish to 2012," he said.