Economic Indicators

National Accounts

Gross Domestic Product (GDP)

GDP is the total expenditure on domestically produced final goods and services. It measures the total amount of goods and services a country produces (or consumes, which should be the same). The figure is a snapshot of the economy at a certain point in time.

Balance of payments

A summary of an economy`s transactions with the rest of the world. The balance of payments classifies these transactions in two accounts: the current account and the capital account.

Current Account

The c/a is comprised of income and spending, including:

1. Trade balance: difference between a country`s imports and exports of goods

2. Invisible trade balance = trade in services (insurance, FX)

1+2= trade in goods and services

3. Short-term financial transactions, including

Income from investments, such as dividends on stocks and coupon payments from bonds

Salaries of employees

4. Other miscellaneous payments (foreign aid payments, donations, pensions, remittances of foreign workers, etc)

Economically speaking, the c/a is the difference between a nation`s savings and its investment.

Capital Account

The account represent a change in national ownership of assets.

It mainly includes transactions in long-term financial investments. It is divided into two main parts:

Financial account: direct investment (purchases of companies or investments in stores, factories) + portfolio investment (purchases of stocks and bonds) + other investment (loans, bank deposits, derivatives)

Change in reserves: a central bank`s intervention in the FX market, either buying its own currency to support its value or selling its currency to keep it from appreciating.

Sectoral Production, orders and inventories 

Industrial production

A measure of output of the industrial sector of the economy. The industrial sector includes manufacturing, mining and utilities. Manufacturing production is often watched by itself, especially in Norway, where there is a large offshore energy industry.

Durable goods orders

(US) New orders placed with domestic manufactures for delivery of goods that are expected to have a useful life of at least three years, such as cars, furniture, etc. The release includes orders for capital goods, that is, machinery that is used for making other things. This is closely watched as an indicator of business investment intentions.

Machinery orders

(Japan) Orders for capital goods in Japan. The market focuses on orders excluding volatile orders (from shipbuilders and power cos.)

Factory orders

The level of orders for both durable and non-durable goods (such as food, office supplies, clothing or medicine). This is a closely watched indicator in Germany, where analysts differentiate between domestic and foreign orders to see where demand is coming from.

Capacity utilization

A measure of how close the economy is to full capacity. As capacity utilization rises, companies become more likely to increase investment and employment. Too high utilization can be inflationary.

Labour market

Unemployment rate

The unemployment rate is the number of people out of work divided by the total labour force.

Non-farm Payrolls (NFP)

The total number of paid workers in the US, excluding farm employees and a few other small categories. The NFP are broken down between private sector and government workers. The number of interest is the change in total NPF each month.

This is the main employment number in the US as it is considered a better indicator of  the employment situation than the unemployment rate. – First Friday of every month

ADP employment report

Automatic Data Processing Inc. is a business service company that process payrolls for other firms. Each month they estimate the change in payrolls from their data two days before the NFP comes out. The correlation isn`t great but figure is closely watched regardless.

Initial jobless claims

The number of people who filed to receive state jobless benefits for the first time that week. It is the highest-frequency indicator of changes in the employment picture and considered a leading indicator of the NFP. The data can be affected by holidays and weather so the market usually looks at the four-week moving average. Another less-closely-watched series, counting jobless claims, shows the number of unemployed individuals who qualify for and are currently receiving benefits under unemployment insurance.

Inflation and price indices

Consumer Price Index (CPI)

A measure of the price of a representative basket of goods and services that consumers frequently buy such as food, clothing and shelter. The annual rate of change in the CPI is generally referred to as the inflation rate. Core CPI, which excludes energy and food prices, is a closely watched sub-set of the CPI as it is more indicative of what is happening with the price of goods and less affected by volatile markets.

HICP

Harmonized index of consumer price. A CPI measure that all EU countries calculate using the same methodology.

PPI

A measure of price  of raw materials and goods before they get to the stores.There can be two PPI measures: input prices, the price of goods that producers buy (such as raw materials and shipping charges), and output prices, or the price of goods that producers sell (also known as the wholesale price index).

Core Personal Consumption Expenditure (PCE) deflator

The FED`s favored inflation gauge.  The PCE covers a broader basket of goods than the US CPI and the weights of the items differ. Also the PCE tries to adjust the basket of goods to take into account how people`s consumption changes when price change. The FED believes it reflects the inflation that people feel more accurately and so uses it as its target. Core PCE excludes food and energy price.

Housing Market

Building Permits

Authorizations that must be granted by a government or other regulatory body before the construction of a new or existing building can legally occur. A leading indicator of housing starts.

Mortgage Applications

Documents submitted by individuals applying to borrow money to purchase a property. A leading indicator of house purchases, since most people need a mortgage to buy a house.

Mortgage Approvals

The Bank of England publishes the number of mortgages that lenders have approved as part of its money supply data.

Housing Starts

The number of new residential construction projects that have begun during any particular month.

Existing home sales, New home sales

The number and price of single-family homes, condos and co-ops sold. Reported on a seasonally adjusted annualized basis (i.e., how many would be sold over an entire year if they were sold at that pace) so that all month are comparable. Over 10x as many existing homes are sold as new homes, but existing home sales affect GDP less and are less important for future construction than new homes.

Pending Home Sales

An index created by the National Association of Realtors (NAR) that tracks home sales in which a contract is signed but the sale has not yet closed. A leading indicator of future home sales.

S&P/Case Shiller Nat`l home price index; FHFA house price index

Two measures of US single-family house price. The Federal Housing Finance Agency (FHFA) index covers the entire US whereas the S&P/CS indices do not have data from 13 states. On the other hand, the FHFA index is limited to less expensive houses whereas the S&P/CS index covers all prices. The S&P/CS index tends to be the more volatile index. (Note: The UK has several of its own measures of house prices calculated by different institution and associations. These can be market-affecting for GBP)

NAHB housing market index

A monthly survey of members belonging to the National Association of Home Builders (NAHB) that measures sentiment for the U.S. single-family housing market.

Consumption indicators and confidence surveys

Retail Sales

A measure of the sales of goods sold in stores to consumers. The market often focuses on sales excluding gasoline (petrol), as its price is volatile and therefore the value of sales is too. Retail sales are particularly important indicators for the US and UK, which are consumption-led economies.

Consumer Confidence Index

A survey to measure how optimistic or pessimistic consumers are and their views about the economy`s future. It is a leading indicator of personal consumption, which is a major driver of the economy. There are two widely watched consumer confidence indices in the US: the Conference Board and University of Michigan surveys.

Purchasing Manager Index (PMI)

One of the most important indicators. PMIs are based on monthly surveys of companies about whether output, new orders, prices etc. are rising or falling. The indices have a fairly good correlation with output and GDP and are available faster than most of the official data. Moreover they are available on a comparable methodology for many countries around the world. They therefore provide the earliest and broadest indication of the performance of the global economy. There are two main PMIs: manufacturing and service sector. In the EU there is a composite PMI that combines them both. Some countries only have manufacturing PMIs available.

Regional Fed surveys

Several of the regional Fed offices do surveys of the industry in their Districts. The most closely watched ones are the earliest each month: Empire State (NY) manufacturing survey and Philadelphia Fed business outlook survey.

Begie book

Officially known as the “Summary of Commentary on Current Economic Conditions by Federal Reserve Distric,” this report is published 8 times a year ahead of the FOMC meetings. Each of the 12 Federal Reserve Banks gathers anecdotal information on current economic conditions in its District. The Beige Book summarizes this information by District and sector. There are no indices with this report, only qualitative information.

Ifo business climate index

A key monthly survey of around German 7000 firms in manufacturing, construction, wholesaling and retailing. The firms are asked to give their assessment of the current situation and their expectation for the next six months. The business climate is a mean of the balances of the business situation and expectations.

ZEW indicator of economic sentiment

A sentiment survey of approximately 350 economists and analysts regarding the current performance and their expectations for the next 6 months on the economy of Germany.

Tankan Survey

The Short-Term Survey of Economic Conditions (tankan) is carried out quarterly by the Bank of Japan. It polls over 10.000 Japanese companies about current trends and conditions in their businesses and industries as well as their expectations for sales, profits, investments etc. in the future. The tankan is the most closely watched economic indicator in Japan.

Other

Central bank meetings, minutes

All central banks have a board that takes decisions on interest rates and monetary policy. In the US it is the Federal Open Market Committee (FOMC), in Europe it is the Governing Council of the European Central Bank, in Japan it is the Bank of Japan Policy Board, etc. Their decision-making meetings are key events for the FX market. Many central banks release the minutes of those meetings a few weeks later. Analysts examine the minutes closely for clues to the next move in policy. The ECB does not publish the minutes of its meetings.