Business confidence has lifted to the highest level in two years, with firms much more confident about their own outlook.
While still negative, the latest ANZ business outlook for August was up 9 points from July, to -4 points, as businesses expected costs to continue to increase, while profit margins shrink.
The more closely followed firms' view of their own prospects jumped 10 points to a positive reading of 11.
"Higher activity but easing inflation pressures speak to a positive supply shock," ANZ chief economist Sharon Zollner said.
While activity levels were still subdued they were more positive as inflation indicators continued to improve.
"Many firms appear to have been pleasantly surprised at how well demand has held up," she said.
"And the Reserve Bank has stopped raising the OCR [official cash rate], which may be creating a sense that the worst is over.
"Workers are much easier for firms to find but unemployment is still very low, and inflation signals are dropping away very tidily."