Business confidence has improved in the National Bank's monthly survey, to the point of heralding an end to the recession.
Firms' views of the general business situation jumped, to the highest level since March 2002.
What they say about their own prospects - a more reliable indicator - has also
improved. A net 13 per cent expect their activity to lift over the coming year, up from a net 8 per cent in June. The level remains low, however. The historical average for that indicator is a net 25 per cent positive.
The services sector recorded the biggest improvement and retailing and construction were also up, but the manufacturing and agriculture sectors were more downbeat than last month.
That was not the mix you would want to see if you were looking for a sustainable recovery, the bank's chief economist, Cameron Bagrie, said.
There was also a pronounced difference between the two islands, he said, with the North leading the rebound and the more trade-exposed South a lot more lacklustre.
Investment, employment and profit expectations all improved, for the fifth month in a row, though they remain in negative territory.
A net 7 per cent of firms are still looking to shed staff, but that is a big improvement from a net 17 per cent last month.
Profitability is still under pressure, with a net 14 per cent expecting lower earnings, up from a net 24 per cent last month. Overall, the survey flagged the possibility the economy would stop contracting soon, Bagrie said, though it was not suggesting growth was set to accelerate.
"We are still cautious about the outlook. We have not really seen the full impact of rising unemployment and reduced rural incomes yet. And the stubbornly elevated dollar is obviously not doing our exporters much good," he said.
"But we have to respect what our respondents are telling us. The outlook is improving and so it should after six quarters of contraction."
