The National Bank of New Zealand’s monthly Business Outlook showed a net 16.6 percent of companies expected their own business to improve in the next 12 months compared with 10.3 percent in May.

The measure, regarded as a useful barometer of economic growth, pointed to a “respectable” 1.5 percent to 2 percent growth rate over the coming year and banished fears of a recession, the bank said.

“At the trough in the economic cycle, it now looks increasingly like there will not only be growth, but reasonable growth at that,” Chief Economist Cameron Bagrie said in a statement.

The picture was mixed, however, with firms broadly expecting higher profits, exports and investment, but a fall in the number of new jobs.

The survey showed companies’ overall business expectations became fractionally more negative, with a net 32.2 percent expecting general conditions to deteriorate over the next year compared with last month’s 31.3 percent.

Bagrie said the economy was likely to be short of impetus in the second half of the year as the drivers of growth started to change.

Sectors which had previously driven growth, such as retail, housing and construction, were slowing, but external sectors were picking up as the lower New Zealand dollar, down around 13 percent against the US dollar this year, started to have an effect.

“Such a rebalancing of growth is as inevitable as night follows day.”

The survey showed respondents’ inflation expectations easing marginally to 3.26 percent from 3.29 percent, while those expecting to raise their prices fell to a net 35.2 percent from 39.6 percent in the previous month.

The next move in interest rates was also seen more likely to be down than up.

Bagrie said the Reserve Bank of NZ appeared to be adhering to its stated intention of looking beyond the initial impact of higher oil prices and a lower currency.

However, the central bank would remain wary of a “stickiness” in inflationary expectations and would want to see signs of receding price pressures.

“Until they are assured on that front, the Governor will continue to barrack that cuts in interest rates are off the agenda,” Bagrie said.

The Reserve Bank of New Zealand has kept its benchmark rate at a lofty 7.25 percent since December, but has been adamant there is no scope for an easing this year because of pockets of strong inflationary pressure.

Consumer prices rose 3.3 percent in the year to March 31, and inflation has been outside the central bank’s 1-3 percent target band since the middle of last year

Predictions of a softer southern housing market have failed to materialise.

Prices continue to climb with a shortage of houses for sale.

Real Estate Institute of New Zealand figures show the median price for Southland was $130,000 in May, up from $127,750 in April, but still well below the national of $305,000.

Real Estate Institute of New Zealand Southland deputy president Tony Jenkins said those who had been “sitting on the fence” amid predictions of a slump had joined the property queue while those investing remained high.

“I would say the market is still very, very good. There are no signs of it weakening. Interest rates are at a good level and we are still coming off a very low base so our median price is still good when compared to other regions.”

The biggest problem agents in Invercargill were facing was a lack of listings, Mr Jenkins said.

“There’s still a very strong demand from buyers and multiple offers on properties … but we have found over the last month there has been a shortage of good stock, which is not giving the buyers the choices,” he said.

Meanwhile, sales for Southland in May were 312, well ahead of the 202 sold in April but almost on par with the same time two years ago.

Days to sell were up slightly to 32.

The national median price was steady at $305,000 with sales up from 7576 in April to 9642 in May.

The median in the Central Otago-Lakes District eased $10,000 to $420,000 in May. Sales totalled 139 – 24 more than the previous month.