The high New Zealand dollar and drought have failed to dent business confidence, with more firms upbeat about the economy's prospects and intending to employ and invest more.
A quarterly survey of business opinion by the Institute of Economic Research found optimists outnumber pessimists, with a net 23% of firms expecting business conditions to improve in the three months to March, compared to 20% picking better times ahead in the previous quarter.
Radio New Zealand's business editor said firms are increasingly upbeat and signalled they intend to employ and invest more.
The institute said domestic trading activity maintained the momentum it set in the December quarter, and edged up to its strongest reading since June 2007. Its principal economist, Shamubeel Eaqub, says the survey indicates annual growth of about 3%.
"So we're seeing a very nice lift in economic activity - the momentum is continuing from late last year. We're seeing a broad-based economic recovery across most sectors, and the strong growth we've seen in Auckland and Canterbury is now being seen in the rest of New Zealand."
The survey does not capture the agricultural sector, but it does include firms related to it, such as food processors and fertilizer retailers.
The drought appears to have had little impact on sentiment at this stage, though the institute warns its effect on production is likely to be felt later in the year.
The institute says despite the 3% growth, inflation pressures remain subdued and the Reserve Bank is unlikely to lift the official cash rate from its record low of 2.5% this year.