Business confidence has lifted significantly in this quarter, signalling early signs of recovery from the deep pessimism seen through winter.

The latest November survey by the Auckland Business Chamber finds more than half (54 per cent) of businesses expect the New Zealand economy to improve, representing a 12-point increase compared to August.

Those rating overall confidence as negative or very negative have fallen sharply from 64 per cent to 44 per cent, while neutral sentiment rose to 39 per cent.

Simon Bridges, CEO of the Auckland Business Chamber, said the business community is yet to be “out of the woods”, but “no longer stuck in the darkest part of the forest”.

“Back in August, confidence was in a real trough,” she said. “What we’re seeing now is a turn – modest, but meaningful.”

While business performance remains mixed, the trend has become more encouraging. About 56 per cent of businesses expect higher revenue next year, and 47 per cent plan to hire staff.

The survey identifies cost escalation as the biggest concern for businesses, with 82 per cent of respondents expecting costs to rise over the next year.

Bridges said that the shift in sentiment is “a welcome sign”, but stresses it is still early days. “After a tough two years, this is the first solid sign that confidence is returning. Now it’s about ensuring that optimism isn’t short-lived.”

He added: “To keep this recovery alive, we need policy settings that back growth, back investment, and give businesses the confidence to push on.”