Business confidence rebounded strongly in BNZ's latest monthly survey, reversing the gloom last month following the devastating February 22 earthquake in Christchurch.

The survey of readers of BNZ's Weekly Overview newsletter found a net 14 percent of respondents now expect the economy to be better in a year's time, a big change from the net 21 per cent expecting deterioration in March.

The importance of the latest result was that it showed the shock to sentiment from the earthquake was temporary, and suggested there had probably been some improvement in business employment and investor intentions, the survey, published today, said.

"These developments are therefore supportive of our view that growth in the economy will accelerate as the year progresses, that there will be upward pressure on medium to long term borrowing costs well before the official cash rate rises, and that a cash rate rise either just before or just after the New Year remains highly likely."

Forestry and agriculture were strong on the back of high export prices, but retailing was still weak and manufacturing for the domestic market was still struggling, while manufacturing for export was strong.

Commercial property was weak, partly due to difficulties securing finance, while residential real estate was showing signs of improving, but little upturn was yet apparent in the legal field.

Accountants were slightly less gloomy than in previous months, the survey said.

That was worth tracking, as in the June quarter last year a collapse in the sentiment of lawyers and accountants had been the only strong indicator of the economy ceasing to grow after a reasonably firm March quarter.

- NZPA