Business confidence is continuing to rise despite expectations interest rates will increase early next year and a looming skills shortage.

Business confidence is continuing to rise. Photo: file.

In the last two quarters, the level of business optimism has significantly increased in regard to how businesses in the Northern Region view both the economy's overall performance and how they assess their own prospects in the period ahead.

Tauranga Chamber of Commerce chief executive Max Mason suggests part of the explanation for the improved optimism could relate to the rise in local building activity, increased trading activity in the region, the expectation of increased profitability and to the nationwide momentum of the Christchurch rebuild.

'The increase in business confidence is very positive for the region and is consistent with the recent reports of increased business and consumer confidence throughout New Zealand this quarter,” says Max.

A year ago, net of just 23 per cent of Northern Region businesses believed the general business situation would improve in the following six months.

Asked the same question last month, 59 per cent of the nearly 300 Chamber of Commerce members, who took part in the quarterly survey, predict the environment for doing business would improve in coming months.

Similarly, in respect of how businesses see their own business prospects during the next months, 57 per cent predict they will improve compared to just 46 per cent of this view in November 2012.

However, the trend of recent surveys showing an expectation that interest rates will rise in the next 12 months is maintained. A year ago, just 14 per cent of respondents believed interest rates would increase during the following 12 months compared with 66 per cent of this view in the survey late last month.

Reports of a continuing skills shortage are reinforced in the finding that 25 per cent of businesses are still having difficulty finding employees with the right skills, the same percentage as one year ago.