The July results are tremendously encouraging.

Business sentiment remains perky. A net 48 percent of businesses expect better times for the economy over the coming year, up marginally on June. The construction sector remains the flagbearer for general business confidence with a net 60 percent of construction firms’ optimistic about the general economy. Sentiment is strong across all the sub sectors, with business confidence residing well north of their historical averages.

The elevated readings in general business confidence continues to be reflected in respondents’ own activity outlook. A net 44 percent of businesses anticipate an increase in activity, up 5 points on June. This continues to be reflected in expected gains in profits (+24, up 4 points), investment (+18, up 3) and employment (+19, up 9).

The July results are tremendously encouraging. They have been taken amongst a backdrop of global uncertainty, softening commodity prices (from highs), firming expectations that interest rates will be moving up (a net 59 percent of respondents expect higher rates) and a rising currency, though the majority of the New Zealand dollar’s movement over the month occurred after most responses were received.

To see New Zealand’s economic pulse beating louder when the only certainty is uncertainty, particularly globally, is testament to real local substance.

-National Bank’s Business Outlook, July 2011