What are the five most important indicators influencing our economy right now?

It seems like there is a never-ending stream of economic data. It can be complex and is sometimes contradictory.

What matters and what doesn't? The hot stats to watch can vary depending on the state of the economy.

In consultation with some of New Zealand's leading economists here's our list of where to find the best clues for where the economy is headed:

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Confidence surveys

The Government hates these. It says business just doesn't like centre-left governments and that's probably true. But even if business is politically biased, a lack of confidence can flow through to investment decisions and have very real consequences for the economy.

As the domestic economy has slowed this year it certainly looks like business confidence has played a part.

The top line numbers are stuck near historic lows, perhaps more befitting of an economy in recession.

So economists do take those results with a grain of salt.

ANZ chief economist Sharon Zollner. Photo / File
ANZ chief economist Sharon Zollner. Photo / File

But even if we just look at the trend, what happens next is important.

"Now CGT is dead and rates lower, will we see a pick-up?" says ANZ chief economist Sharon Zollner.

"Is business confidence low because businesses feared a capital gains tax? Or because of something more fundamental," says Westpac economist Dominick Stephens.

And then there is other good stuff in the surveys.

Independent economist Cameron Bagrie will be watching what business says about the availability of credit - for evidence that more conservative bank lending is slowing growth.

ASB chief economist Nick Tuffley says he'll looking at responses on costs, prices and margins to reflect "the more tangible pressures that are influencing current business caution".

NZIER principal economist Christina Leung says she'll be watching for levels of business reinvestment - in staff and machinery. These point to the prospects for economic growth in the longer term, she says.

The next ANZ Business Outlook is due at the end of the month. The NZIER Quarterly Survey of Business Opinion is due in early July.

Interest rates

For the past few years central bank rate calls have been pretty boring - but that all changed this year with the US Federal Reserve reversing its long held policy of rate rises and New Zealand's Reserve Bank cutting our cash rate.

At the start of the year when we asked economists to pick the stats to watch , the US yield curve was top of our list because the expected rise in interest rates was pointing to recession.

The US Federal Reserve has reversed its long held policy of rate rises. Photo / Getty Images
The US Federal Reserve has reversed its long held policy of rate rises. Photo / Getty Images

The worldwide shift in central bank policies this year - which some would call a surrender - has eased the recession risk and reassured markets, for now at least.

Westpac economist Dominick Stephens says Wall Street (and particularly the S&P 500) provides the best barometer of the Fed's thinking.

"Share prices rose strongly from January to May, telling us that markets think central banks have done enough to shore up the flagging global economy," Stephens says. "Any change to that view will be seen early in the S&P 500."

Meanwhile, locally the Reserve Bank cut the OCR to a record 1.5 per cent in May. That suggests the domestic economic slowdown is serious. Is it bad enough to need a second cut? The Reserve Bank makes its next rate call on June 26.

House prices

"Our economy is closely tied to what happens in housing, not only because it represents a lot of our wealth, but because it impacts consumer behaviour and economic activity," says Mark Lister, head of private wealth research for Craigs Investment Partners.

"With Auckland house prices now falling slightly, that could certainly dent sentiment and activity levels across the board."

Certainly there were signs in this week's REINZ data that flattening in Auckland is starting to turn into a slump. Auckland prices fell 2.1 per cent in April from March and are down 4.4 per cent from April last year.

Auckland prices fell 2.1 per cent in April from March and are down 4.4 per cent from April last year. Photo / File
Auckland prices fell 2.1 per cent in April from March and are down 4.4 per cent from April last year. Photo / File

Some suburbs are off by a lot more and with eyes on Sydney - where prices have fallen by as much as 20 per cent - the Auckland market is starting to look like an economic headwind.

But it is also possible that we might be seeing the bottom of the cycle for a while.

Westpac's Stephens will also be watching the monthly stats closely but sees the chance of a bounce in Auckland prices.

"Our view is that low interest rates are going to stimulate the economy, preventing the need for a further rate reduction. If we are right, we will see the evidence in the housing market first."

Delicately poised then, whatever happens next the direction is likely to have a big influence on the broader economy.

China and the trade war

The US/China trade stoush is in the headlines every day. But don't spend too much time sweating Donald Trump's latest tweets or even the Wall Street volatility they create.

There are other more specific things that tell us what's really happening in the epic global game of thrones – and what really matters for New Zealand.

ANZ's Zollner says she's watching for the impact on China's credit stats - with debt greater than 250 per cent of GDP.

"Related to that, whether stimulus measures get sustained traction or whether they find themselves pushing on a string," she says.

Chinese President Xi Jinping. Photo / AP
Chinese President Xi Jinping. Photo / AP

Craigs' Lister describes China's economy as "the biggest swing factor" for New Zealand in the medium term.

"China is our biggest trading partner, as well as Australia's. That means we are doubly exposed, because Australia is number two for us."

He's watching the Chinese Performance of Manufacturing Index (PMI) closely.

"The PMIs (both the official government one, as well as those we get from independent sources) are one of the most timely indicators of how activity is looking in China."

Overall the Chinese GDP is slowing but from a Kiwi exporter perspective it's the massive middle class consumer market that matters. For that reason ASB's Tuffley is watching Chinese retail sales, which he says continue to hold up pretty well.

Commodity prices

Exports always underpin New Zealand's economic strength. Commodity prices and the terms of trade (what the nation's earning compared with what it is spending on imports) may determine how serious the current domestic slowdown becomes.

"If global growth was to slow to the point that export prices and volumes fell sharply that's not good for our country," says NZIER's Leung.

The good news is that prices have been broadly in good shape across our most important commodities - meat, dairy and wood.

Timber exports have been strong. Photo / Getty Images
Timber exports have been strong. Photo / Getty Images

The latest stats for March showed New Zealand earned more from goods exports than it has in any other month, ever ($5.7 billion up 19 per cent on March 2018).

"At the moment it still seems a fairly positive picture for our exports," Leung says.

"We don't just want to be backward looking and definitely be mindful of the downside risk but I think it's important to highlight that at the moment that doom and gloom hasn't eventuated."

Honourable mentions ...

ASB's Tuffley also mentions local wages "which are muted so reinforcing the case for the lower OCR)". In fact inflation generally remains a critical piece of economic data - albeit one that has been stuck at firmly low levels for some time now.

Truckometer light traffic index, "is worth its weight in gold", says ANZ's Zollner.

"The RBNZ reckons growth will take off in the second half of the year. The Truckometer LTI will give an early steer on whether they're right (we expect a much more modest pace of recovery)."

And with a nod to the wellbeing Budget and perhaps a slightly broader outlook, NZIER's Leung says to keep an eye on the Government's new child poverty statistics (released early April.)