New Zealand firms in August were their most confident in five years, according to the findings of a key survey.
It comes despite comments on Monday from Reserve Bank Governor Alan Bollard urging caution about the strength of any recovery.
The National Bank Business Confidence Survey shows a net 34% of firms expect better times over the next year.
This compares to the net 19% expecting a pick-up in the New Zealand economy at the last survey in July.
Firms are upbeat about their own prospects, with a net 26% picking better times ahead, a figure that is close to a five year high and indicating the economy could grow 3%.
But National Bank economists warn the jubilant mood could be doused by rising interest rates.
Dr Bollard warned the era of easy credit which fuelled the last housing boom is over.
He says the recovery is still fragile and could be derailed by more problems in world markets.
