Bankof New Zealand clients were feeling much more optimistic about the economy last Friday than they were a month ago, according to the bank's latest confidence survey.
More than 740 people responded to the Friday survey compared with 867 on March 6.
The survey showed an improvement in expectations for the economy over the coming year to be a net 0% from a net minus 23% reading in March.
"This is the strongest result since the plus 27% in September which came before the collapse of Lehman Brothers in the United States pushed the world close to the brink of a new Great Depression," BNZ chief economist Tony Alexander said.
There was no clear indication of what was behind the improved sentiment, apart from a sharp improvement in residential real estate, where buyers had returned and listings were starting to dry up.
Some respondents noted recent stabilisation in their sectors, but others also feared that recent gains might be short-lived and a new decline might set in when spring arrived, he said.
Overall, uncertainty about what lay ahead still appeared understandably high.
"There were a large number of comments about the media overplaying the downturn, which were largely weeded out as they offered no insight into industry conditions.
"This might suggest businesses are experiencing less dire conditions than generally portrayed in the media.
Many expressions of concern were also made about the reduced availability of credit associated with the ongoing credit crisis," Mr Alexander said.
This morning the New Zealand Institute of Economic Research will release its quarterly survey of business opinion.
The general themes for this survey are likely to mirror the recent ANZ-National Bank business outlook surveys - activity indicators remaining at depressed levels and the economy continuing to contract.
However, considering that some of the measures in the last quarter's survey hit record lows, there was some doubt about whether confidence could deteriorate too much further.
ANZ-National Bank chief economist Cameron Bagrie said the key observation was likely to be stabilisation, but at very depressed levels.
"More specifically, we expect the domestic trade activity measure for the past three months to remain around minus 40.
"A lot of interest will centre on firms' expectations for the June quarter.
"Another large negative, it is likely that the recession will extend to its sixth quarter."
Profit expectations should remain downbeat and firms would continue to lack the confidence to employ and invest, he said.
Indicators of resource pressure were also likely to remain weak, particularly those relating to the labour market.
Mr Bagrie expected the difficulty in finding staff to have improved, largely because firms were not hiring.
That could mean weaker wage settlements in the coming year, along with a sharply higher unemployment rate.
"This is the biggest headwind for those advocating that the recent pick-up in housing market activity is set to be maintained."
The deteriorating labour market and rising unemployment rate - forecast to reach 8% by the middle of next year - increased the likelihood that households would save any windfall gains through tax cuts and lower mortgage repayments, rather than spend them, he said.
Businesses would have it tough as both domestic and external demand waned.
Profitability was well down and firms had already responded by a freeze on hiring and investment at the end of last year.
Firms exposed to domestic demand - retail and housing - had fared poorly as the recession intensified, but exporters would increasingly feel the effects of the global recession in the form of reduced or cancelled export orders.
"Thankfully, business sector balance sheets are healthy.
"But with top-line revenues continuing to head backwards, the recession lasting longer than normal and balance sheet preservation becoming a priority, the onus will increasingly turn towards costs in order for firms to stay profitable."
The bank was forecasting the economy to contract by 2.8% this year, coming out of recession in the second half of the year.
A sustained recovery would not happen until the middle of next year, Mr Bagrie said.
