Key Economic Indicators.
Understanding reports that influence the markets.
We have a lot of data to help analyse a situation better but, some of the most important aspects to look for are economic events that can move the markets significantly in either direction. Releases by a governing body, changes in sales or consumption of commodities, and increases in supply and demand. All of these can affect the markets, making it important for you to know of their occurrence.
Economic indicators can be categorized into three groups:
- Coincident Indicators highlight the present of the economy.
- Leading Indicators indicate the future of the economy.
- Lagging Indicators feature recent past in economic activity.
Let’s start with some Key Indicators:
1. Gross Domestic Product (GDP)
Most talked-about data points for an economy. GDP helps us in evaluating the value of finished goods and services produced by a country over a fixed period of time giving great insight into the actual growth of an economy. Although GDP being a lagging indicator, is considered to be among the best measures of economic stability and remains the most efficient way to establish whether the economy is growing, contracting, or in a recession. The reports can be found at U.S. Bureau of Economic Analysis.
2. Retail Sales Report
Retail Sales Report is a good reflection of the current state of the economy and is also the most reliable barometer for inflationary pressures and reflects sales from 13 major types of retailers, from food and beverage stores to gas stations. The reports can be found at the U.S. Census Bureau and is released at 8:30 Eastern Time on or around the 13th of every month.
3. Non-Farm Payroll Report
The Non-Farm Payroll Report is important as it gives an indication of job growth in the economy. Other important data points include unemployment rate, ADP employment changes, employment constituents of the monthly ISM and PMI data, weekly jobless data. The Bureau of Labor Statistics releases data at 8:30 a.m. Eastern Time on the first Friday of every month.
4. Consumer Price Index and Producer Price Index
Consumer Price Index (CPI) and the Producer Price Index (PPI) are two inflationary measures in the economy and indicate total value of goods and services consumers have bought over a specified period and inflation from the perspective of producers respectively. The Federal Reserve is under considerable pressure to strike a balance between inflation and the jobs market. As a result, any unexpected fluctuations in leading economic indicators are often referenced by members of the Fed and are used to adjust the Inflation rates in the Economy. PPI is seen as a good pre-indicator of inflationary pressures as it measures the costs of producing consumer goods, and commodity and food prices directly affecting the retail prices. The reports can be found at The Bureau of Labour Statistics.
5. Housing Data
Investing in a house is one of the biggest financial commitments an individual can make, so if people are willing to do that, it says a lot about consumer confidence. Strong demand for housing is a potent indicator that the economy is healthy and that consumers are confident about the economic outlook. Some of the things to look into the report are New, Pending and existing home sales, Housing Starts, and the Weekly Mortgage Application Report, which comes out every Wednesday. The reports can be found at the U.S. Census Bureau.
6. Oil Data Report
The impact of oil on a particular economy can’t be overestimated. Some of the reports to help keep a track are:
The weekly U.S. Energy Information Administration (EIA) Petroleum Status Report states U.S. crude oil inventories, both domestically and abroad. This report is released by U.S. Energy Information Administration each Wednesday at 10:30 a.m. Eastern Time.
Weekly Statistical Bulletin Report by the American Petroleum Institute (API), released on Tuesdays at 4:30 p.m. Eastern Time covers U.S. Crude inventories and data related to refinery operations, as well as the production, imports and inventories of some of the major petroleum products.
Weekly Baker Hughes Rig Count reports on total U.S. oil rigs and highlights future oil production and inventories in the U.S.
That’d be it.
I hope this article is helpful and please do reach out to me if you have any questions/corrections with regards to the content published herein.
