"Businesses are the most optimistic they've been for 20 years and economic activity is strong. Optimism and activity are being realized into better profits, higher investment and more jobs."
- Shamubeel Eaqub, NZIER principal economist
Business confidence in New Zealand surged to the highest level since 1994 as the economic recovery expanded across regions, while house prices rose the most in six years, reinforcing the view the Reserve Bank of New Zealand will need to hike interest rates in the foreseeable future. In the last quarter of 2013, a net 52% of 866 respondents to the NZIER quarterly business opinion poll were optimistic and expected business conditions to ameliorate over the coming six months, compared to 33% in September. Both domestic trading activity and hiring rose to the highest level since March 2005 and December 2006, respectively, with firms forecasting to hire more staff in the beginning of this tear, pointing at improved outlook for jobs ad wages.
Surging home prices, increasing consumer spending and improving business sentiment urged investors to raise bets New Zealand will become the first developed economy to begin hiking interest rates. The majority of surveyed economists by Bloomberg sees the central bank's Governor Graeme Wheeler to increase borrowing costs form a ultra-low 2.5 by March. Also, the New Zealand Dollar is considered the second-best performing currency this year after the Japanese Yen among 16 major currencies amid expectations of rate hike.
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