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Economic Indicators Explained

Written by Aboutcurrency

Balance of Payments:

The balance of payments is separated into two main accounts: the current account and the capital account. It's a complete summary of a nation’s economic transactions and the rest of the world including merchandise, services, financial assets and tourism.

Beige Book Fed Survey:

The Beige Book, is published eight times a year by the Federal Reserve Bank. It highlights the activity information by District and sector. The survey normally covers a period of about 4-weeks in duration.

Business Inventories and  Sales:

Inventories are an important component of the GDP report. Business inventories and sales figures consist of data from other reports such as durable goods orders, factory orders, retail sales, and sales data.

Construction Spending:

Spending Measures the value of construction during the course of a particular month. 

Consumer Price  Spending (CPI):

CPI measures the change in prices at the consumer level for a fixed basket of goods and services paid for by a typical consumer. Items included in the CPI reflect all goods and services that people buy for day-to-day living.

Current Account:

The current account is the sum of net income from trade in goods and services, net factor income, and net unilateral transfers from abroad. It's a statement of the country's trade with other nations over a period of time.

Durable Goods Orders:

Durable Goods include large ticket items such as capital goods, transportation and defence orders. They are extremely important because they anticipate changes in production and thus, signal turns in the economic cycle. 

Employment Report:

In the US, the employment report is regarded as the most important among all economic indicators. The Employment Report contains 3 components: Payroll Employment: Measures the change in number of workers in a given month.

Unemployment Rate:

The percentage of the civilian labor force actively looking for employment but unable to find jobs. Average Hourly Earnings Growth: The growth rate between one month’s average hourly rate and another.
 
Factory Orders:

The factory orders report contains data on orders and shipments of non durable goods, manufacturing inventories, and the inventory/sales ratio.

FOMC Decision:

The FOMC holds eight regularly scheduled meetings per year. If the FOMC wants to increase economic growth, it will reduce the target fed funds rate. Conversely, if it wants to slow down the economy, it will increase the target rate with a rate hike.
 
Gross Domestic Product (GDP):

There are four major components of the GDP are: consumption, investment, government purchases, and net exports. GDP measures the market value of goods and services produced in a country.

Housing  Starts/Building  Permits Starts:

Are divided into single-family and multi-family categories. In both cases, a housing unit is considered “started” when excavation actually begins.

IFO:

Germany’s leading survey of business conditions. The index surveys over 7,000 enterprises on their assessment of the current business situation and their resulting plans for the short-term.
 
Industrial Production and Capacity Utilization:

Industrial production measures the monthly percentage change in volume of output of the nation’s factories, mines, and utilities. Capacity utilization measures the extent to which the capital stock is employed in production.
 
National Association of  Purchasing  Managers  (NAPM):

This is leading survey on US manufacturing activity, arranged by the National Association of Purchasing Management (NAPM).
 
New Home Sales:

Monthly data new home sales data contains information on home prices, and number of houses for sale.

Non Farm Payroll (NFP):

NFP represents all business employees excluding general government employees, private household employees, and employees of nonprofit organizations, accounting for about 80% of the workers who contribute to GDP. NFP is released every first friday of the month and can cause big gaps on the forex market.

Personal Income:

Personal Spending, also known as PCE, represents the change in the market value of all goods and services purchased by individuals. It is the GDP's largest component.

Producer Price Index (PPI):

PPI measures the monthly change in wholesale prices and is broken down by commodity, industry and stage of production.

Purchasing  Managers'  Index (PMI):

PMI is widely used by industrialized economies to assess business confidence. Germany, Japan and the UK use PMI surveys for both manufacturing and services industries.

Retail Sales:

Retail sales is the first real indication of the strength of consumer expenditure .Measures the percentage monthly change in total receipts of retail stores, and includes both durable and non-durable goods.

TICS:

The Treasury International Capital (TIC) Report measures foreign demand for US debt and assets. Strong demand tends to strengthen the dollar as foreigners convert their money in order to purchase US securities.

Tankan Survey:

Japan’s chief business survey, compiled quarterly by the Bank of Japan. The survey consists of two major parts; the "judgment survey," asking businesses about their situation in the previous, current and following quarters on macro-economic variables, business conditions, inventory levels, capacity utilization levels and employment level. The other main part is related to "current management issues" confronting companies.

Trade Balance:

The difference between the monetary value of exports and imports in an economy over a certain period of time. A positive balance of trade is known as a trade surplus and consists of exporting more than your imports; a negative balance of trade is known as a trade deficit or, informally, a trade gap. The Trade Balance also has a sizable impact on GDP.


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