Business confidence is improving, an NZIER survey shows, although firms remain cautious about their own activity.
The Institute of Economic Research's (NZIER) quarterly survey shows a smaller proportion of businesses expected general economic conditions to get worse.
A net 26 percent expected conditions to deteriorate in the last three months of the year, versus 35 percent in the September quarter.
The outlook for firms own trading activity, which provides a better indication of demand in the New Zealand economy, remained soft however.
Firms remained cautious about hiring and investment when it comes to expansion plans, although they were more positive about hiring intentions over the next three months.
Hawke's Bay was the only region where optimists outnumbered pessimists.
Other regions including Gisborne, Manawatū-Whanganui, the West Coast, Tasman and Blenheim were also downbeat, with over 40 percent of businesses there expecting a worsening in economic conditions.
Manufacturers were more upbeat than the service sector, with an improving global outlook.
The NZIER said there were signs the manufacturing sector profitability was turning around.
"The outlook for the building sector is also improving, with signs of a growing pipeline of construction work," it said.
"Architects' measures of activity in their own office points to a rebound in the pipeline of government construction work over the coming year."