The latest ANZ Business Outlook survey shows confidence has risen to its highest level since April 1999.
The bank says business confidence increased three points in July, with a net 53% of respondents expecting economic conditions to improve in the coming year, up from 50% the previous month.
ANZ chief economist Cameron Bagrie says the rebuilding of Christchurch has led to a four-year high in expectations for construction in both housing and non-residential work.
He says that's led to an increase in confidence in the manufacturing sector, up five points on the survey's scale.
Mr Bagrie says there is also some hope for the manufacturing industry which tends to benefit strongly from any upturn in the construction sector.
He says inflation is tipped to rise, with 30% of those surveyed expecting to raise their prices over the next 12 months.
Mr Bagrie says the bank's growth indicator is predicting 3.9% economic growth by year's end, a figure he says is exaggerated. He says businesses tend to predict an improvement following tough economic times because they believe things cannot get any worse.
Mr Bagrie says economic growth in the order of 3% over the next 12 months is achievable and, though not stellar, will see New Zealand outperforming Australia for the next two years.
ANZ warns there are early signs inflation pressures are increasing and some analysts say the Reserve Bank may need to raise benchmark interest rates more aggressively than expected.
