Yes, it uses the timezone as configured. Note that if your Analytics account is linked to an Adwords account, then you will configure the timezone differently.
How do I set the time zone for my reports?
If your Analytics account is not linked to an AdWords account, you'll be able to set your time zone preference from the Main Website Profile Information section of your Profile Settings page. By default, all accounts are set to use Pacific Time in North America.
If your Analytics account is linked to a Google AdWords account, your time zone will be automatically set to your AdWords preference and you will not see the time zone feature in your Analytics account. This ensures accurate reporting on your AdWords campaigns.
It's important to note that changing your time zone will only affect data going forward, and will not be applied retroactively. You may notice a flat spot or a spike in your report data around the time that you updated your time setting. This is caused by a time shift forwards or backwards, respectively. In addition, your report data may refer to the old time zone for a short period after you update your settings, until our servers have processed the change.