The New Zealand Institute of Economic Research says its quarterly survey of business opinion indicates the economy is on track to grow at an annual pace of more than 2%.
That's despite a fall in the businesses themselves reporting an improvement in their trading activity -from a net 10% in the March quarter to a net 4% in the June.
The institute says trading activity is a good indicator of economic growth, and while costs and prices ticked up in the June quarter, they remain at historically modest levels.
Nonetheless, it reports that expectations that interest rates will rise have gone from a net negative 9% to positive 30%.
Chief executive Jean-Pierre de Raad says the recovery is still at an early stage, but the fact that businesses are hiring and investing more are signs of continued momentum.
A net 10% of businesses intend to invest in plant and machinery, up from 8% three months ago and a net 9% expect to hire more staff, up from 5%. However, only a net 3% took on more staff, down from 4% in the previous quarter.
A net 15% reported a fall in profits, up from the 12% whose profitability fell in the March quarter, while those expecting to increase profit fell to just 1% compared with 7%.
The Institute says the recovery is uneven with Canterbury surging, Auckland growing gradually and Wellington contracting. In the North Island, the drought has affected Waikato and Bay of Plenty.