Those in the manufacturing sector are the most optimistic. Chart 3: Keeping the faithPhoto/SuppliedThe signs of life in the domestic data pulse support our view an underlying recovery in NZ’s economy is underway. It is debatable whether the economy contracted or expanded in Q2, but we are confident there is growth in the current (third) quarter. Chart 8: Inflation > wage growthPhoto/SuppliedAnnual inflation was 4.1% in the second quarter. Chart 9: The core issuePhoto/SuppliedThe inflation outlook doesn’t gel with interest rates at highly stimulatory levels.