New Zealand business confidence held at a three-year high in the second quarter as domestic trading activity eased, according to a survey.
Thirty-one per cent of businesses remained optimistic in June, seasonally adjusted, unchanged from the March quarter, the latest Quarterly Survey of Business Opinion from the New Zealand Institute of Economic Research says.
Last quarter was the highest since March 2010 when 33 per cent were optimistic.
Domestic trading activity, which is closely aligned with economic growth, eased in the latest quarter with four per cent of firms experiencing a pickup in their own activity, down from 10 per cent three months earlier, the institute said.
"The economy is settling into a growth pattern," said institute chief executive Jean-Pierre de Raad.
"Businesses continue to be optimistic, similar to last quarter. They are acting on that optimism with investment and hiring which had been the missing ingredient in the recovery that we are seeing right across the regions."
Nine per cent of firms expect to hire more workers in the next quarter, up from five per cent last quarter.
The economic recovery was uneven across regions, with a surge in Canterbury, gradual growth in Auckland and contraction in Wellington, the institute said. In the North Island, the drought negatively affected the Waikato and Bay of Plenty regions.
Much of the costs and price pressures were concentrated in Canterbury and are low elsewhere, the institute said.
For 27 per cent of Canterbury firms, capacity was a constraint to growth, the institute said, compared with 10 per cent of firms in the rest of New Zealand.
Activity was growing strongly for manufacturing and building, largely driven by Canterbury, service sales were growing gradually while financial services sales slowed in line with lower mortgage approvals in recent months while growth in retail sales also slowed.