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Apr 3
4.2 Economic Indicators

 

LIST OF INDICATORS - A:
ABC/Money Magazine Consumer Comfort Index
Aggregate Hours Worked
Atlanta Fed index
Average hourly earnings
Average Weekly Earnings
Average workweek
ABC/Money Magazine Consumer Comfort Index:
ABC/Money Magazine Consumer Comfort Index is a nationwide enquiry of about 1,000 adults per month about personal finances, buying climate and the status of the economy. It's supposed to be helpful and more frequent measure of consumer opinions.
Aggregate Hours Worked
The aggregate hours worked totalizes two series we just mentioned. The idea is to get an entire picture of the total hours worked each month by calculating an index that represents both employment and the workweek. This indicator is considered to reflect monthly changes of GDP. The quarterly change in the amount of goods produced is defined as equal to the change in man-hours plus the change in productivity.
As far as we can predict productivity from quarter to quarter, the aggregate hours worked index provides a useful monthly read on the entire economy.
Atlanta Fed Index
Official name of this index is Southeastern Manufacturing Survey. It is regional manufacturing review that covers such prominent industrial states as Alabama, Georgia, Louisiana, Tennessee and Florida. The survey's industry business conditions index is designed to represent changes in factory-sector: it is above zero when the sector expands and it's below zero when the sector contracts.
Actually, this index has no market importance and it's available after the releasing of the national Purchasing Managers' Index. So this index considered too dated not worth tracking.
Average Hourly Earnings
One of the most important indicators of the tightness of labor markets and labor cost inflation is Average hourly earnings (AHE). The Bureau of Labor Statistics of the U.S. Department of Labor provides it every month, and it's available one week after the reported month. The indicator seems to take insignificant effect financial markets; unexpected increases can cause rising of interest rates because such increasing considered inflationary, especially if in excess of productivity growth. A large rate of growth of AHE can cause increasing of Fed Funds rate that is also bearish for the bond market. Stock Prices: high wage growth may increase long-term interest rates, reduce profits, and lead to increase of the Fed Funds rate to stem inflation, that is why higher wage inflation is bearish for the stock market.
Exchange Rates: unclear. On one hand it leads to higher nominal interest rates and real ones too. On the other hand high wage inflation leads to high inflation and loss of competitiveness. Ability to Affect Markets: it is an early signal of wage inflation.
Analysis of the Indicator: if the wage growth were above productivity growth, high rates of growth of average hourly earnings would lead to higher inflation.
Employment Cost Index (ECI), closely watched by the Fed, is a measure of wage cost growth. Compared to the quarterly published ECI, the advantage of the average hourly earnings indicator it that it is published monthly and is an early indicator of wage growth in the previous month. But, nevertheless, compared to the ECI, AHE has some minuses. The ECI includes wages and salaries as well as benefits costs, so it is a broader measure of labor costs. In general, the basis of AHE indicator is gross earnings. So they represent changes in basic hourly and incentive wage rates as well as premium pay for overtime, late-shift work and changes in output of workers paid using an incentive based plan. They also demonstrate shifts in the number of employees between relatively high-paid and low-paid work. Changes in earnings for the individual industries making up those groups and divisions will impact averages for industry groups and divisions. Average hourly earnings that are reported by CES are not wage rates.
Average Weekly Earnings
Average Weekly Earnings - multiplying average weekly hours estimates by average hourly earnings estimates derives these estimates. So, weekly earnings are affected the length of the workweek along with changes in average hourly earnings. Monthly trends in these factors as stoppages for varying reason, the proportion of part-time workers, labor turnover during the survey period and absenteeism for which employees are not paid may cause the fluctuations of average workweek. Structural changes in the makeup of the workforce can cause long-term trends of average weekly earnings. For example, persistent long-term rising of the percentage of part-time workers in retail trade and many of the services industries have reduced average workweeks in these industries and have affected the average weekly earnings series.
Average workweek
The average workweek, or worked hours is necessary for two reasons. First, it is considered a useful indicator of labor market conditions: a rising workweek early in the business cycle may be the first indication that employers are preparing to increase their payrolls, while late in the cycle a rising workweek may indicate that employers are having difficulty finding specialists to occupy vacant positions. Second, it is a critical determinant of such monthly indicators as industrial production and personal income.
LIST OF INDICATORS - B:
Balance of trade
Beige Book
Bridge/Commodity Research Bureau (CRB) Indices
BTM-UBSW Chain-Store Sales Index
Building permits
Business inventories
Balance of trade (merchandise trade balance)
The indicator that shows the difference between imports of goods and a nation's exports is called the Trade Balance. On the other side, it may also be considered the difference between national investment and national savings. When export exceeds import, a positive Trade Balance, or a surplus, occurs. A deficit, or a negative trade balance, occurs when import exceeds export. The Trade Balance is a major indicator of foreign exchange trends, therefore the foreign exchange markets closely follow and any changes in exports and imports.
Rates of imports and exports are significant indicators of the overall activity in the economy. Changes in export activities represent the competitive position of the country in question, as well as the intensity of economic activity abroad. Strength of domestic economic activity is reflected by developments in the import activity. When a country has weak currency, it is the result of large Trade Balance deficit, as there is a continually commercial selling of the currency of this country. However, substantial financial long-term investment flows can solve the problem. A surplus occurs when the exports exceed the imports, otherwise a deficit, appears, as the current situation for the US. Different factors can be useful in reaching the balance, such as exchange rates, prices of domestic goods, tariffs, trade agreements or barriers.
Trade surpluses may lead to harmful protectionist policies, although they are generally good for the economy. Deficits can cause problems with debt servicing and unemployment. The US has had a trade deficit is continuously growing (from $101.7 billion in 1990 to $716.7 billion in 2005). Among the reasons we can name the growth of the US economy, high rising oil prices, globalization, demand for American investment assets and the dollar's use as a reserve currency and its overall strength. One of the possible results of this imbalance is depreciating the dollar.
Ideally it can cause imports decreasing, because of reducing of consumers' purchasing power. Generally speaking, a deficit may lead traders to short the dollar and it's believed to be a sign of US economic weakness. Trade balance is followed by an average move of 64 pips in the price of the EUR/USD and is usually published near the middle of the second month after the reporting period.
Beige Book
Each Federal Reserve Bank collects remarkable information on current economic condition in its District through different sources, such as reports from Bank and Branch directors and interviews with key businessmen, market experts and economists. This information is summarized by District and sector in Beige Book.
Fed, uses this report along with other indicators, to define interest rate policy at FOMC meetings, which are held two weeks after the Beige Book's publishing. Interest rates may be changed depending on trends portrayed in the Beige Book. Federal Reserve Board releases the Book eight times a year, every six to eight weeks at 2:00 p.m., second Wednesday before Federal Open Market Committee Meetings.
Bridge/Commodity Research Bureau (CRB)
Indices CRB is everyday indices for 23 different commodity price measures. It is considered as valuable indicator of increase in consumer prices and inflation.
BTM-UBSW Chain-Store Sales Index
BTM-UBSW Chain-Store Sales Index is based on private review information and it covers the week ending the previous Saturday. This index is seasonally adjusted. This index is necessary because its month-to-month changes are a coincidental indicator of nominal retail department store sales.
Building Permits
This application is updated every month. It represents construction statistics on new privately owned residential housing units authorized by building permits by place and by county. Data items contain number of buildings, units, and construction cost for monthly new privately owned residential Building Permits.
Business Inventories
This report is released monthly by the Commerce Department and contains inventory statistics and sales from all three stages of the manufacturing process, which are manufacturing, wholesale, and retail. But two of its inventory components and all three of its sales components have already been reported by the time it is released. As a rule, the market pays no attention to the business inventories report because retail inventory is the only new piece of information in it.
LIST OF INDICATORS - C:
Capacity utilization
Capital Flows (TIC)
CBI Report
Challenger, Gray and Christmas Layoff Announcements
Chicago PMI index
Chicago Purchasing Managers’ Survey
CIPS Report
Composite Index of Leading Economic Indicators
Consumer confidence
Consumer Installment Credit
Consumer price index (CPI)
Consumer Sentiment
Consumer Spending
Corporate Profits
Current account (Balance of payments)
Capacity Utilization
Meaning: Month percentage of estimated efficient possibilities in producing and obtaining goods. This means that if a manufacturer is able to produce 10,000 units per week, but it only produces 8,000 units per week, it works at 80% performance. A rugby stadium, which holds 80,000 person, is at full performance only in case of all places are taken.
Why it is vital: Utilization level usually comes nearer or exceeds 85%. Such rates increase inflation risks by making production bottlenecks and limiting the delivery of goods.
Capacity Utilization shows the amount of usage of different products. It gives you information of how much more can the manufacturing sector do. The informed number is a whole percentage (72%, for example). A rule of thumb is that the more close number is to 80%, the higher the pression is for price increments at the producing rate. That's not to say price rises are automatic or across the board in all branches, however once the number hits 80%, economists begin to work about price hikes.
The second danger that may happen when nearing the 80% rate is the slackening in deliver of products as producers struggle to keep up with require. Producers may not want to ramp up goods until they are sure growth will be sustained. The same logic is used to service sector industries, though it is harder to find a precise figure, because it takes a different period of time to provide each customer. Sometimes demand may exceed capacity, so the producers have to queues forming. At other times personnel may not have anything to do. A service business wishing to control costs effectively will gauge demand at different times of the day and then gauge the staffing rates to match.
Many businesses, including service sector are better able to cope with changing demands by employing temporary or part-time workers. Nowadays there are lots of temporary and part-time workers in the UK as they can enlarge capacity easily and quickly. If demand then goes down temporary staff can be laid off without reserving payments and part-time workers can have their hours moderated, thus moderating capacity easily and fast. This pliability is good for business as it can help to diminish any expensive reserve capacity. These circumstances, however, may not be as appealing to the workers who have far fewer rights than their full-time colleagues.
How To Enlarge Capacity Utilization
One of the methods is to low the capacity by either slackening effects of production employed or moving to smaller locations. But the negative side of moving to a smaller building is that if demand increases in the future, it will be impossible to enlarge delivery in response to it. Such process is called rationalizing. Which production engineering a company chooses to take will depend upon the invoke of the low capacity utilization. Is it due to known temporary shortage, such as a seasonal reduction or due to a financial droop, which may last for 18-24 months. It can be a mistake to moderate capacity in the long run, however it may be indispensable in order to guarantee short-term survival. It is therefore important to select whether the short fall is short or long term.
Operating At Near Full Performance
It will be conceived as a successful country both domestically and outagely leading to reach positive effects. Domestically, employees will feel a sense of pride working for such a successful organization. Outagely, if customers know that a company is working at full capacity it will accept that it is offering the best goods.
High capacity utilization in industry
The highest capacity utilization measured for the last 10 years is watched in industry sector - 89 per cent. While deficiency of capacity has negative influence to industrial firms, the labour lack is the main encumbrance in the construction sector. The wholesale and retail trade continues reporting strong sales figures. One in three private firms conceives to increase staffing. Bung growth in particular was favorable and much higher than companies had expected. The trust pointer has certainly inverted a few points, but is still at a high level.
Besides, favorable growth has conducted to a further enlarge in capacity utilisation, a rise in employment and stronger cost-efficiency. Companies expect a continued enlarge in order and output growth during the fourth quarter. Meanwhile, refilling difficulties have rised, with two out of three companies stating a labour deficiency as the main hindrance to the company's operations. Companies' waitings are more subordinated this time than in previous quarters. The building industry has adapted downward its waitings for the nearest 12 months.
Nevertheless, employment is expected to increase further in the nearest few months. Nine out of ten companies are fulfilled with the sales situation and cost-efficiency is good. The number of employees has increased and employment growth has been congenial in the wholesale trade in particular. The food trade continues to report decrease price cuts, while the wholesale trade in input products for the building sector reports price increases. The wholesale and retail trade expects continued steady sales growth during the fourth quarter.
Employment is expected to increase further, with primarily the wholesale and long-term products trades planning refilling, as beforehand. Employment has increased and different sub-sectors are starting to experience refilling difficulties. Nearly half of architectural and building consulting companies state that a labour deficit is the deficit barrier to their operations. Service companies expect continued favorable demand growth during the fourth quarter. Employment is also anticipated to increase considerably, with nearly one in three companies planning to rise staffing.
Capital Flows (TIC)
Every month the US Treasury introduces a report on the net financial flows into the US. It contains inflows into bonds and stocks. It also divides between private inflows and state inflows, working with central banks. All data about financial flows have great importance when the US current account deficit goes wide.
A reduction in inflows brings waning in the US to overseas confidence. If the economic inflows are lower than US current account deficit in the month, then there will be a great concern. It can increase the dollar's dependency on short-term economic inflows.
A weak rate of inflow makes weak the dollar. Source: US Department of Treasury. Presence: It takes place in the middle of each month (after 11 business days) at 9:00 a.m EST. Frequency: Each month.
CBI Report
Explanation: The mark of trust within the UK industrial sector is received by the CBI in its reports every month or a quarter of month. Challenger, Gray and Christmas Layoff Announcements.
Meaning: Common number of layoff announcements by U.S. companies
Why it is vital: Gives an interesting addition to unemployment claims record in estimating labor market's health. It shows seasonal structures but are not seasonally adjusted and therefore better compared on an yearly basis.
Chicago Purchasing Managers' Index (PMI)
Explanation: It is information, received from surveys of about 200 purchasing managers regarding the producing industry in the Chicago area whose allocation of manufacturing companies mirrors the state spreading.
Significance: According to the Philadelphia Fed Index, it helps to predict the results of the much more closely watched ISM index, which take place every business day. The ISM index is the major pointer of overall financial activity. Readings above 50 show an expanding factory sector, and below 50 - tell about reduction.
Meaning: Browse of purchasing managers in Illinois, Indiana and Michigan.
Why it is vital: This browse show the same information as the Institute for Supply Management survey about half the time and is followed as a second part of corporate purchasing schedule.
CIPS Report
It is equal to the ISM reports in the US. Figures are collected for the manufacturing and services sector and are exhausted by the Chartered Institute of Purchasing and Supply.
Composite Index of Leading Economic Indicators
Meaning: A structure of ten monetary and non monetary indicators.
Why it is vital: These pointers define business cycle peaks and troughs.
Consumer Confidence Index
Explanation: A browse of 5,000 users asking them what they think about the current financial welfare and their spending patterns. They will also be asked about buying expensive consumer products. The report is divided into what people think now and their expectations to the future life.
Significance: A middle rate is in the region of 100. Figures below 75 are gentle and rates above 125 are steady. A bleak drop in trust can indicate that the financial welfare is weakening, but the correlation between expenditure and confidence figures is not steady.
This browse can help to forecast subitaneous moves in consumption patterns. And since user expend accounts for two-thirds of the economy, its gives us comprehension about the direction of the economy. However, only index variation of at least five points has great importance.
Steady trust figures are well for the US currency.
Meaning: Outcomes of a statistics of 5,000 households on questions concerning to their recognition of the economy as well as personal recognitions such as scheme to purchase homes or durable products.
Why it is vital: Gathered since 1969, the Consumer Confidence Index has a steady bad correlation to unemployment, though its attitude to consumer expenditure is free.
Consumer Installment Credit
Meaning: Changing in the dollar amount of user installment credit nonpayment during the month, including bond papers to individuals by central banks and economic companies.
Why it is vital: A pointing of user expenditures that has become less useful since non hypothecary interest lost its tax-deductible rule in 1986.
Consumer Price Index
The Consumer Price Index (CPI) is the average norm of prices of a tight basket of products and services bought by users. Reports every month, which show the changes in CPI are usually followed as an inflation pointer.
The CPI is a primary inflation pointer because user expenditure accounts for nearly two-thirds of financial activity. Sometimes, the CPI is followed but did not consider the price of food and energy as these posts are much more changeable than the rest of the CPI and can shelter the more relevant underlying trend.
Heightening user price inflation is usually linked with the waiting of higher short term interest levels and may therefore be favorable for a currency in the short period. However, a longer period inflation problem will finally undermine confidence in the currency and there will be delicacy.
Importance: The CPI is important to monitor for its monthly stability except for food and energy prices. This activity helps to understand inflation trends better and is mostly known as the "core CPI". The higher inflation rate usually strengthens the dollar as far as the interest rates are supposed to grow. In case the inflation grows rapidly and there is a number of high values the situation lowers the trust and is harmful for dollar.
Source: Bureau of Labor statistics, U.S. Department of Labor
Availability: The data for previous month is available approximately on the 13th of each month at 8:30 a.m. EST.
Consumer Sentiment
What it is: It is a list of 500 consumers that concerns the personal finance and economic conditions and is made throughout the nation each month.
Why we care: It's important to take it into consideration because this list (poll), being carried out since 1950, indicates the consumers' preferences of spending.
Consumer Spending
What it is: An indicator of retail establishment realization that is listed taking into consideration seasonal adjustments, trading-day changes and holidays. It's insecure to use advance estimates, so they are reconsidered in a month and the ultimate results are made in one more month. As far as considerable corrections are thought as suitable, this is not reliable.
Why we care: It is important because two thirds of the GDP (Gross Domestic Product) are occupied by Personal Consumption Expenditures where retail sales take 40%. Consumer spending and trust can be monitored through retail sales.
Corporate Profits
What it is: Corporate tax returns give the basis for calculating Tax-based profit. Current production income is monitored due to adjusted profits. While the adjusted values have more economical significance, the most press is got from tax-based numbers.
Why we care: Corporate profits gains or declinations may serve a forecast of growing or decreasing capital spending input to general GDP increase.
Current account
One of the most significant portions of trade information is the Current Account. It is an overall goods and services sales and purchase, unilateral transfers and interest payments measuring instrument. Moreover, the Current Account includes the Trade Balance and the deficit of Current Account can be a factor of currency weakening.
Importance: In case the deficit grows extremely the trade problems are considered to exist and the US are getting more dependent on capital investments. The risk profile of a dollar rises accordingly with the deficit increase. The dollar weakening is generally produced by a severe deficit. The currency causes serious warnings in case a deficit remains above 5,0% for a long period of time.
What it is: The US trade indicator including services, merchandise, some financial transactions. Why we care: Current account balance fluctuations affect the capital streams moving between the US and other countries directly. For instance, capital investments in the US economy rise while the current account deficit increases. It is used extensively and often called a "trade deficit" rate.
LIST OF INDICATORS - D:
Durable Goods Orders
Durable Goods Orders
This is a government index that measure the level of orders placed at US factories for expensive durable items such as machinery and vehicles. Durable goods are new or used items generally with a normal life expectancy of three years or more. Analysts exclude defense and transportation orders because of their volatility.
This report gives us information on the strength of demand for U.S. manufactured durable goods, from both domestic and foreign sources. When the index is increasing, it suggests demand is strengthening, which will probably result in rising production and employment. A falling index suggests the opposite.
Orders for durable goods show how busy factories will be in the months to come, as manufacturers work to fill those orders. The data not only provide insight to demand for things like refrigerators and cars, but also business investment going forward. If companies commit to spending more on equipment and other capital, they are obviously experiencing sustainable growth in their business. Increased expenditures on investment goods sets the stage for greater productive capacity in the country and reduces the prospects for inflation. That tells investors what to expect from the manufacturing sector, a major component of the economy.
A strong figure is positive for the US currency.
Source: The Census Bureau of the Department of Commerce
Availability: Around the 26th of the month at 8:30 am EST. Data for prior month.
Frequency: Monthly
The Durable Goods Orders index is a major indicator of manufacturing sector trends as most industrial production is done on orders. Rising Durable Goods Orders are normally associated with stronger economic activity and can therefore lead to higher short-term interest rates, which is usually supportive for a currency at least in the short term.
LIST OF INDICATORS - E:
Employment cost index
Employment Report
Employment Situation
Existing home sales
Export prices
Employment Cost Index (ECI)
The ECI measures the labor cost that includes salaries, wages and any kind of benefits and looks after this cost changes.
This index usage facilitates wages trends and wage inflation monitoring. Federal Reserve's enemy list has great wage inflation. The pressures of inflation possibilities are constantly strongly monitored by Federal Reserve's officials. The lack of labor caused by a booming economic development can cause wage pressures penetration. While economic declines and the labor demand is low wage pressures fade out.
The investor can find out if the prices of the business are going to be raised through analyzing labor costs. If there is a possibility of inflation it's a reliable forecast of dollar strengthening due to interest rates increase.
The Employment Report
Economics considers unemployment as an existence of people who have a desire to work at an average wage rate having no ability to find such positions. The unemployment rate is calculated by dividing the amount of unemployed people by total number of those who are able to work (civilian labor force). The quantity of unemployed workers can be calculated in a number of different ways. Each of them has its own specific and what makes it difficult to compare the statistics of different countries is using various systems.
There are two different reports containing the employment report which generally correspond the data from two different researches. They are: the establishment survey that gives the information about average workweek, non-farm payrolls, average earnings per hour and other similar information and the household survey that gives the data of unemployment rate. The period during which any of these surveys is being held contains the 12th of the month. This information also helps to find out the amount of unemployed people searching for a job and the amount of payment and working hours for those who work as well as the number of the latter. The current conditions and future trends of the economy are forecasted perfectly through these figures. It also gives an opportunity to analyze wages trends including the wage inflation being high on the Federal Reserve's enemies list.
Total payrolls dividing into several sectors, such as manufacturing, construction, mining, services, and government gives a better outlook on the economy. As far as these components indicate the tendencies within the economy sector they are followed very closely by the market. Moreover while the manufacturing often heads the business cycles it is watched more precisely. The analysis of working hours, overtime and average earnings per hour are also contained in this data. It's important to take the hours worked (also used as "workweek") into consideration due to following reasons. Firstly, the monthly indicators of industrial production and personal income are formed owing to it.
Secondly, labor market conditions can be understood better by using this indicator. For instance, the beginning of the business cycle accompanied by the hours worked increase may show that the employers are going to raise the total wages paid or in case it happens closer to the end of the business cycle this is an indication of the employers having difficulty with finding suitable labor force. The potential inflation can be found out through average earnings indicator. The labor price responds to an excessively loyal economy policy as well as any other service or goods. The superfluous amount of money spent on few goods or employees can be indicated by the labor prices growing dramatically. Investors can see whether the labor market is too intense by monitoring the jobs data. The possibility of wage inflation indicates possible interest rates increase and currency weakening perfectly.
Employment Situation
All paid jobs at all non-farm business structures and governmental agencies are listed in this report. This report gives the information about average weekly and hourly earnings, the average amount of the hours worked as well as an unemployment rate. This is an important indicator of the economy activity and it's carefully followed because of its opportune and accurate data. The indicator of non-farm payrolls is connected directly with the total economic growth and in case the employment increases so does the whole economy.
Economical decline and interest rate reduction are usually considered when an unemployment rate rises. Though, if an unemployment rate declines economical growth and possible increase of the interest rates are expected. The dangerous situation is thought to occur when it gets too hard to find the labor force as a consequence of too low unemployment rate. The normal situation with the economy employment is considered to exist when the unemployment rate is at the level from 5.5% to 6.0%.
Dramatically growing earnings may indicate a possibility of inflation. In case the number of hours worked rise the employment increase is possible to come.
Existing Home Sales
Pre-owned houses sales are calculated by this report. It is thought to indicate the housing sphere activity reliably.
This shows the economic momentum as well as the situation at housing market. Only people who are sure in their financial stability can afford to buy a house.
The economy and the markets accordingly experience a strong multiplier effect from this data and it gives the same effect to the investments. Investors are able to find some special ideas by monitoring this data (for instance, house resales) and manage the portfolio with a broaden guidance. Home resales don't actually make any output but each deal gives an income for the realtor. The buyer gets a number of consumption chances due to it. There are a lot of items that can be bought by home buyers starting from fridges, washers, dryers and furniture. In case it's thought a hundred thousand households make such buying every month, the economics gets strong “ripple effect”.
What it is: The commodity trade balance values can be transferred into volume (real) conditions by using this specified indices of international price carried out each month.
Why we care: The general pricing for goods that is produced abroad affecting the entire goods inflation in the US is monitored by the price index changing, except the petroleum component.
LIST OF INDICATORS - F:
Factory orders
Federal budget
Federal Government Finances
Federal Reserve Policy Disclosures
Financial Account Balance
FOMC Minutes and Transcripts
Foreign Trade
Factory Orders
Both long-term, durable goods reports and nondurable goods orders form these orders. The sole new component which is nondurables makes the report predictable. The items rising at a stable monthly rate such as food and tobacco are included in the nondurable report. That's why it can be predicted more accurately than the reports of durable orders.
The market not only finds out the values of the nondurables but also revises the important changes in the data of durable orders. Now durable goods orders share 54% of total number of orders. The factory inventories which is a monthly overview on the inventory of the factory comes last for this report. A week later is the time for wholesale inventory and retail inventory gets ready in a few more days. As far as inventory values don't play a considerable role for the market, they are mostly used to improve the inventories projection for the quarterly GDP report.
Federal Government Finances
What it is: This indicator doesn't take season adjustments into consideration and it corresponds monthly budget deficit or surplus.
Why we care: The US treasury securities that are issued for debt financing are supplied by the interest rates which can be affected by the rising pressure from the budget deficit. There are several factors that can affect rates considerably, such as the policy of Federal Reserve, inflation and dollar cost. Finally higher interest rates can cause the reduction of economic growth.
Federal Reserve Policy Disclosures
What it is: A Federal Reserve Board announcement concerning any changes in the monetary policy. It mostly includes federal funds rate changes or depository institutions interest rate at which the different depositary institutions get the balances lent from the Federal Reserve suddenly. The announcement is usually carried out with the statement describing the motives of the following Federal Reserve's rates and the outlook of FOMC on the risks of inflation and economic growth.
Why we care: The federal funds rate is usually lowered when the Federal Reserve is planning to decrease overall interest rates and give a stimulus for the economy to grow, and it is raised when the economy is supposed to grow excessively and is threaten by the risk of inflation. The accompanying statement is thought to be important indicator of the monetary policy direction by the monetary policy analysts and "watchers" of Federal Reserve and the immediate actions yielded by Treasury just after its public presentation reflect this statement interpretation. The Federal Reserve funds rate decision is often estimated being at the same level as the report.
Financial Account Balance
What it is: An indicator of U.S. assets, which are outside the country, and assets from overseas markets in the United States.
Why we care: It presents the U.S. Treasury securities that can influence the demand of the market and are held by the investors from abroad in percents.
FOMC Minutes and Transcripts
What it is: The amount of minutes passed since the latest FOMC meeting was held where the panel discussions were summarized and voted as well as the description of the economic situation relative to the moment carried out. Why we care: It lets us have an outlook on the opinion of FOMC and explains policy changes. It includes a better explanation of FOMC opinion than it's done in the announcement that is carried out after the FOMC meeting that modifies target Federal Reserve funds rate. (Refer to FOMC Policy Announcements).
Foreign Trade (International Trade Balance)
What it is: Billions of dollars expression of the U.S. imported and exported goods and services spread.
Why we care: These values and its divergence from official figures or forecasts may affect the values of GDP growth taken for the present quarter.
LIST OF INDICATORS - G:
GDP - Gross domestic product
GDP advance
GDP deflator
GDP final
GDP provisional (revised)
GNP Indicators
Goldman Sachs Commodity Index
Goldman Sachs Retail Index for Same-Store Sales
Gross Domestic Product (GDP)
This indicator calculates the amount of all goods produced and services provided on the territory of the U.S. in US dollars. Such facts as assets owners or the labor nationality are not taken into consideration. Nominal and real dollars are the equivalent for this data. These rates growth lets investors monitor the inflation.
U.S. economy productivity is shown entirely by this indicator. GDP growth is considered to be normal when it's higher than 2.0% and doesn't exceed 2.5% in the conditions of unemployment rate from 5.5% to 6.0%. This can be carried to the corporate incomes which the stock market is directly dependent on. Low GDP growth shows the weakness of the economy whether high GDP growth values may cause the inflation growth.
Extremely low GDP values, mostly below zero may be harmful for the dollar. One of the most dangerous situations for the economy is raising inflation accompanied by the lowering GDP growth. It can be a sing of stagflation and investors may lose their confidence. There are three releases included in the GDP report: 1) first release (advance); 2) first revision which is preliminary release; 3) second and last revision which is called final release. These three releases usually affect the markets considerably.
GNP Indicators
The entire economy effectiveness is estimated by Gross National Product. Consumption spending, investment spending, net trade and governmental spending are summed for GNP indicator at its macro scale. This indicator gathers all the services provided and the goods produced by the residents of the United States despite the fact whether they are on the U.S. territory or not.
Goldman Sachs Commodity Index
What it is: Commodity investments performance criteria that gives the data of commodity price fluctuations based on production weight and a forecast of possible commodities unleveraged investment return available in some time.
Why we care: Commodity prices prolonged increase can cause consumer prices growth which is the inflation indicator. On the contrary, these factors lowering can cause dis-inflation and possible deflation.
Goldman Sachs Retail Index for Same-Store Sales
What it is: Calculated by Goldman, Sachs retail industry analysts index of sales and percentage change taken year-to-year. The basis of this index is same-store sales reports carried out each month by major merchandiser retailer firms.
Why we care: This index lets figure out any changes in consumer goods preferences.
LIST OF INDICATORS - H
Help Wanted Advertising Index
Help-wanted index
Housing starts
Humphrey-Hawkins testimony
Help Wanted Advertising Index
What it is: 51 leading newspapers-based index gathering help-wanted ads in the most common areas of employment throughout the country.
Why we care: It has successfully showed the peaks in nonfarm employment during recent 40 years and sometimes accompanying but delaying business cycles and the lows of the labor market indicator.
Help-Wanted Index - HWI
It is published every month by Conference Board and is based on 51 leading newspapers gathering help-wanted ads from all over the country. This index is the general showing of the U.S. labor market.
This shows the job market stability. The increased number of these advertisements shows high demand for labor and possible wages increase to attract new labor force. Low ads number signalizes of the labor market weakness and possible wages decrease due to workers acceptance for low ones.
Housing Starts
This indicator looks after the number of houses construction of which has started. It is formed monthly and is the key indicator of the activity of residential construction.
This indicator let understand the builders' position concerning more building activities. Increasing activity is usually considered as an economic growth and stability forecast and is generally followed by a brief interest rates increase that can strengthen the currency for the similar period.
Humphrey-Hawkins testimony
This is one of the indicators that influence the mortgage interest tends. Some others are: the Consumer Price Index and the Employment cost index. The complex of these and some other factors or indicator is analyzed by specialists in order to find out the mortgage interest trend.
The US monetary policy is ruled by the Federal Reserve. Short-term interest rates get an effective way for the FED to influence the amount of money issue and the activity of the economy and prices respectively. Low inflation, stable economy and minimal unemployment are the general targets of the Federal Reserve. As well as the unemployment rate is stable low and the economy is developing predictably FED is trying to gain low inflation. The sum of the approximate new house payment, which is $1000, and other debts paid each month turns into the back ratio. Such expenses as car payments, minimum credit card payments, spousal support, child support and others make up other debts paid monthly. It doesn't include such payments as utility, utility payments and individual retirement account. Here is an example of counting back end ratio. We take a sum of $1000 of house payment, $250 of monthly debt and divide the sum by $3500 of monthly earnings and we obtain a ratio 36. A situation when both inflation and unemployment got high occurred in 1970s. The economy targets reconstruction during the crisis decade was headed by Senator Hubert H. Humphrey and Congressman Augustus Hawkins. They were sure that the consistent actions of both president and Federal Reserve should be undertaken in order to get the unemployment and inflation rates back to their ordinary levels of the previous decades.
The Full Employment and Balanced Growth Act became a law in 1978 after president Jimmy Carter's signing. This legislate (the Humphrey-Hawkins Act) undertakes the President to report to the Congress of his goals concerning economical policy and the period estimated for these goals achievement. The Federal Reserve has to report to Congress twice a year of their prospects for the monetary policy either. This report, “Humphrey-Hawkins testimony” carried out by the chairman of the Federal Reserve, is analyzed carefully for any changes to be projected.
Full Employment and Balanced Growth Act prepared in 1978 was sponsored by Humphrey and Hawkins. The “goals of maximum employment, stable prices, and moderate long term interest rates” were directed for the Federal Reserve to promote in this act. The obligation of Federal Reserve Board's work to be monitored was descried in the Act while passing the Congress. According to this rule the third week of each February and July is the time for Federal Reserve chairman to testimony before the Congress. The main points of the testimony that is carried out before the House and Senate Banking Committees are the resume of present economic conditions and setting the possible variation of target values for a number of economic variables affecting inflation and growth rates.
The forecast for GDP growth, nominal and adjusted to the inflation (called real), unemployment rate of the civilians and the deflator of PCE chain-price is usually made in February regardless of the Humphrey-Hawkins legislation. July is the time for possible revisions announced. Monetary aggregates targets are also set at same time. Humphrey-Hawkins report and testimony is prepared for some period that's why both the meeting of the year and meeting in mid-year of FOMC are held within two days. It was the period of Paul Volcker's being a chairman of the Federal Reserve when Humphrey-Hawkins testimony had the most importance while in the early 1980s the importance of the economical indicators has faded for benefit of monetary aggregates targets. During the Greenspan’s reign since 1987 each shade of the testimony is studied carefully in order to catch the chairman’s ideas concerning Fed policy in future. After the official Humphrey-Hawkins Act expiry in late 1990s the Federal Reserve chairman's testimony before Senate and Housing Banking Committees is no longer obligatory. But as far as the Congress has created the act of Federal Reserve System, their cooperation is implied. The testifying of the chairman Alan Greenspan before House and Senate committees has happened much oftener than it was while the Humphrey-Hawkins Act was valid.
LIST OF INDICATORS - I:
IFO Index
Import prices
Industrial production
Industrial Production and Capacity Utilization
Initial Claims
International Trade
ISM Manufacturing Index
ISM Nonmanufacturing Survey
ISM Services Index
IFO index
The IFO index is close to PMI report and it shows the stability of German economy.
A rising index shows the possibility of production increase during the following months which causes euro strengthening as well as import prices.
What it is: A number of international indices of prices that adapt the figures of merchandise trade balance of each month to turn into volume (or real) conditions.
Why we care: Import price fluctuations except the petroleum ones show perfectly the possibility of foreign-formed prices to affect the U.S. inflation for goods.
Industrial Production
It’s a set of rates with a fixed weight showing both nation's factories, mines and utilities production readjustment and the possible industrial capacity, production and the available resources usage among factories, utilities and mines, which is also known as capacity utilization. This factor affects much on the economy as far as the manufacturing occupies one fourth part of the developed countries' economy.
It is possible to forecast the manufacturing production through the employment report and total manufacturing workweek in particular. The utility production seems to be the most instable factor as far as it can differ much because of the weather conditions. Strong hot or cold periods may rise the utility production as far as heating or cooling requirements increase sharply. This report estimates capacity utilization either. The capacity is taken as a straight line because of difficulties in its measurement. That's why it is possible to predict capacity utilization rate decently relying on the estimated production increase. A key barrier that gives the starting point for generating inflationary pressures is 85% historically. Utilization rate values over 85% may cause production bottlenecks of inflation. For instance it is common for the Federal Reserve to form its interest rate policy and affect the Forex market accordingly basing on this report estimating the possible inflationary pressures from production tensions.
Initial Claims
It’s a government index that represents the amount of people applying for state unemployment insurance.
Investors for forecasting changes in the labor market use this indicator’s four-week moving average. A move of 30,000 or more in claims depicts a considerable change in job growth. The amount of claims is associated with job market strength - low number of claims means strong job market.
International Trade
This report is used to reflect the balance between exports and imports of U.S. services and goods.
Import and export, representing approximately 14 and 12 percent of GDP respectively, are necessary parts of whole economic activity. Generally, the stronger exports are favorable for the stock market and corporate earnings.
This report is also vital for investors who are interested in diversifying globally, because trends in trade balance with particular countries can affect foreign exchange and policy with that trading partner. Surveys of 300 purchasing managers nationwide representing 20 industries regarding manufacturing activity, is the base for the ISM Manufacturing Index. It includes such components as production, new orders, inventories, delivery times, employment, export and import orders and prices. ISM Manufacturing Index is most important among all manufacturing indices. Expanding manufacturing sector and a healthy economy are represented by rates of 50% or above, while slowdown marks are below 50%. Rates traditionally associated with strong growth are above 65% while a figure below 40% means recession in the entire economy.
Besides of it, useful information about manufacturing activity is represented by various sub-components of this index. New orders are associated with long-term goods orders, the production component with industrial production, prices with producer prices, employment to factory payrolls, export orders to merchandise trade exports and import orders to merchandise imports.
The index is influenced by different factors, such as variations within the year, differences due to holidays and institutional changes, so it has to be adjusted seasonally.
ISM Non-manufacturing Survey
ISM Non-manufacturing survey contains interviews with 370 supply and purchasing management professionals from more than 26 sectors of the economy. This survey, despite of its short history (it dates back only to 1997), is supposed to become helpful guide to certain parts of the economy.
ISM Services Index
ISM Services Index, sometimes referred to as Non-Manufacturing ISM, is an index, which represents a survey of about 370 purchasing executives in industries associated with the service sector: communications, insurance, real estate, utilities and finance.
The expansion for the non-manufacturing parts of the economy is portrayed by readings above 50% while readings below 50% are declarative of decrease.
The is a new index created in 1997, so it's not followed as closely as the ISM Manufacturing Index, which dates back to the 1940s.
LIST OF INDICATORS - J:
Jobless Claims
Jobless Claims
Jobless Claims represents number of individuals who filled for unemployment insurance for the first time.
It is very easy to see how this factor shows the strength of the market: less people without jobs, there is more income which gives a household spending power. Spending is highly correlated with growth of the economy, so the stronger the job market, the healthier the economy. On the other hand, if the number of job seekers fall to such a low level that businesses have a tough time finding new workers, investors might have to pay overtime to current staff, use higher wages to lure people from other jobs, and in general spend more on labor costs because of a shortage of workers. This would also lead to wage inflation and can weak economy and currency strength.
By tracking the number of jobless claims, investors can gain a sense of how tight the job market is. Lately, there is general problem with unemployment, so the rule is: the lower the number of unemployment claims, the stronger the job market, and vice versa.
A level above 400,000 signals a particularly weak labor market and a probable recession, whereas a figure below 300,000 suggests a strong labor market and the need for higher interest rates.
LIST OF INDICATORS - K
Kansas City Federal Reserve Bank Manufacturing Survey
It is a reports about their businesses from manufacturers in the Kansas City Federal Reserve Bank district. It indicates changes in regional economic activity.
Source: Federal Reserve Bank of Kansas City
Frequency: Monthly at 11:00 a.m., two weeks after month-end
LIST OF INDICATORS - L:
Leading indicators index
LJR Redbook Report
LJR Redbook Report
It is a report designed to measure department store trends, compiled from information from 21 large department store firms. It has a modest correlation to monthly changes in non auto retail sales.
Source: Lynch, Jones and Ryan
Frequency: Weekly, for week ending Saturday at 9:00 a.m., Tuesday
LIST OF INDICATORS - M:
Manufacturers’ Shipments, Inventories and Orders
Manufacturing and Trade Inventories
Michigan consumer sentiment index
Monetary Base
Money supply (M1, M2, M3)
Mortgage Bankers Association Weekly Survey
Manufacturers’ Shipments, Inventories and Orders
Information about new orders, unfilled order backlogs, shipments and inventories for both durable and nondurable goods at U.S. factories is called Manufacturers’ Shipments, Inventories and Orders.
This data is valuable because factories' inventories in relation to shipments, when averaged over two or three months, can show whether inventory imbalances are present or developing at the factory level.
Manufacturing and Trade Inventories
Manufacturing and Trade Inventories is a review that reflects the level of business stocks at the retail, wholesale and manufacturing levels.
The report includes inventory-to-sales ratio that can be useful to deduce if speed of stock building corresponds to demand trends. This survey is frequently associated with manufacturers' shipments, order and inventory trends. Inventory data are less reliable than other statistics and has to be updated commonly.
This index reflects trends in overall volume of mortgage applications received by MBA members. Mortgage refinancing and purchase mortgage are represented by two sub-indices.
Mortgage Bankers Association Weekly Survey indicates changes in mortgage refinancing activities and housing transactions, which are very important measures of total consumer expenditures, because home purchases is usually the reason for other expenses.
Money Supply Measures
In the economy there are measures of money circulating (M1, M2, M3 and L) which differ in inclusion of various cash equivalents. Outstanding credit market debt of federal, state and local governments as well as the debt of private non-financial sector is reflected by the Debt figure. Monetarist economic theory says that changes in the money supply over time should led to fairly predictable changes in nominal economic output. Growth acceleration or growth retardation considered affecting real economic activity in the short term, but the results of the long-term money growth are still at issue. But nevertheless, break down of these relationships began at the 1980s because of deregulation and globalization.
Monetary Base
Monetary Base is an amount of "high-powered" money in the economy that can be leveraged by the banking system for future lending activities.
According to monetarist economic theory, changes in the growth of the money base mean same changes in monetary aggregate growth rates.
LIST OF INDICATORS - N:
NAPM index (National Association of Purchasing Managers’ index)
National Association of Home Builders Survey
New home sales
Nonfarm payrolls
NY Empire State Index
NAPM: National Association of Purchasing Managers
The NAPM report measures the condition of the manufacturing sector, and more generally the entire economy, by calculating for data about new orders, production, employment, deliveries, and inventory, in descending order of importance. It totalizes the surveys of over 250 companies within twenty-one industries covering all 50 states, and it is published on the first business day of the month at 10 am EST and contains the previous month's data. A rate over 50% indicates that manufacturing growth, while a rate below 50% means its recession. The NAPM index is also considered to be an early symptom of inflationary pressures. Diffusion indexes are calculated for each of report's categories (which are new orders, production, employment, inventories, delivery times, prices, export orders, and import orders), with a reading over 50% indicating expansion relative to the prior month, and a sub-50% reading indicating contraction. The NAPM precedes all other economic releases of the month, even the employment report, and the tone of subsequent releases could be guessed basing on the NAPM survey. The bond market's reaction to the report is often determined by the prices paid and vendor deliveries indexes, especially during periods of inflation concerns. National Association of Purchasing Management (NAPM) monthly releases one of the most popular data series on the U.S. economy, called the Report on Business. Purchasing Managers Index (PMI), which is most cited single feature of the report, presents summary statistics, which indicates whether the manufacturing sector is expanding or contracting. NAPM recently extends its coverage of the U.S. economy in order to represent the condition of U.S. non-manufacturing activity.
A local report, produced by the Houston affiliate of NAPM since January 1995, provided similar insights into the workings of the Houston economy. It is one of 16 regional reports from around the nation. This monthly review of 80 or more local companies presents helpful and well-timed data about a number of economic indicators; besides of it, this survey yields an overall measure of local expansion or contraction. The use of this new tool to analyze the local economy compared to its national counterpart is the subject of this issue. The NAPM has compiled informal and formal reports on U.S. economic conditions since it was established in 1915. Information mostly on price and supply conditions for various commodities had been the main interest of the association for the first 15 years, but in 1930 a committee was formed to expand the reporting basis. Formal structure slowly emerged through the years, and today the panel of 300 members statistically reflects the composition of U.S. manufacturing; they selected by Standard Industrial Classification code and geographical region. Since this year, a separate panel regularly reports on U.S. non-manufacturing industries. Data are collected from member companies on a number of manufacturing-related series regarding production, employment, new orders and export orders, prices, inventories and imports. On the first business day of each month, the results for the previous month are being reported, along with a preview of government series that will be reported later. The NAPM's reported series are highly correlated with the published government series released weeks or months later. That's why they require thoroughly studying and testing. For example, NAPM employment correlates well with the Bureau of Labor Statistics' manufacturing employment report, and NAPM industrial production with the Federal Reserve's Industrial Production Index.
If accelerations and decelerations are similar, the index is neutral with a value of 50; more decreases than increases puts the value under 50, indicating contraction, and more increases than decreases moves the value of the index above 50, implying expansion. Some indexes have break-even value lower than 50, for example inventory (which has a break-even value near 42) and employment and prices (with a neutral value of 47).
Purchasing Managers Index for manufacturing represents the combination of five of the reported series, which are: inventory (weighted at .10), lead times (.15), employment (.20), production (.25), and new orders (.30). A PMI value below 43.6 is the symptom of recessionary conditions in the United States. A PMI value less than 50 indicates contraction, and above 50 indicates expansion is under way in U.S. As variations in this index can explain about 60 percent of the changes in U.S. gross domestic product, the PMI is sometimes used to draw broader conclusions about the U.S. economy as a whole.
Home Builders Survey
Information on buyer traffic, NAHB members regarding current sales conditions, and sales expectations are published in the Home Builders Survey for the next six months.
Buyer traffic and sales expectations usually correspond or slightly overtake housing starts, while, according to by the Department of Commerce, current sales have a modest positive correlation with new homes.
New Home Sales
This indicator is sometimes referred to as New Singly-Family Houses Sold. Interviews of about owners of about 15,000 or 10,000 builders of selected building projects are the bases for it. It shows the number of newly constructed homes that were sold during the month.
It helps to measure the demand for housing as well as the economic momentum. Buying a house means that people feel pretty comfortable and confident in their own financial position. Actually, this narrow piece of data has a significant effect through the economy, and therefore across your investments and the markets. Tracking economic data such as new home sales helps the investors to gain specific investment ideas and provides them with a broad guidance for managing a portfolio.
The construction of a new home requires a lot of construction jobs, and income of those jobs will be returned into the economy. Homebuilder and the realtor gain their profit when the house is sold. Purchasing a house brings provides buyer with a great variety of consumption opportunities. Furniture and home appliances, such as washers, refrigerators and dryers and are just a few items new homebuyers might purchase. A hundred thousand new households that appear around the country every month multiply the economic "ripple effect". The market effect of the report is usually insignificant. Existing home sales report, which has a sample data pool four times as large and is released earlier in the month, is much more popular.
Non Farm Payroll (NFP)
Non Farm Payroll is a measures overall strength of the labor market and the employment rate. It accounts for about 80% of the workers who contribute to GDP, reflecting all business employees excluding private household employees, general government employees, and employees of nonprofit organizations. The full report also represents estimates on weekly earnings of these employees and the average work week. NFP is very necessary as a general indicator of the health of the economy; usually it affects the dollar in forex trading. NFP rises steadily: since 1990 it has increased from 109,144 in January of 1990 to 135,106 in May of 2006. When NFP rates are lower than expected it causes selling of the US dollar on the belief that it is weakening, and the opposite is true for an unexpectedly high NFP. NFP is published at 8:30am EST on the first Friday of every month. It tends to cause an average move of 124 pips in the EUR/USD.
Orders, Sectoral Production and Inventories
It is the results of a survey of 350 purchasing managers on recent trends in orders, production, employment, delivery speeds (vendor performance), and inventories as well as prices for the products they buy. Respondents indicate whether activity in each category has been higher, lower or unchanged from the previous month.
An overall index reading above 50% implies expansion of the manufacturing sector; below 43% implies recession. Growth in other sectors ? service and construction ? can sustain gains for the whole economy when manufacturing weakness is only moderate. This survey is also considered an indicator of corporate purchasing managers? plans.
Source: Institute for Supply Management
Frequency: Monthly at 10:00 a.m., first business day of the following month
LIST OF INDICATORS - P:
Payroll Employment
Personal Consumption Expenditures
Personal income
Philadelphia Fed index
Philadelphia Federal Reserve Bank Business Outlook
Survey
Prices, Wages and Productivity
Producer price index (PPI)
Productivity
vPurchasing Managers Index (PMI)
The Payroll employment
The Payroll employment, that also known as the Labor Report, considered to be the most important among all economic indicators. It represents extensive look of the economy as it includes all necessary factors of the economy. It is usually released on the first Friday of the month. As valuable source of information about changes in job creation in several industry categories, it can reflect the detailed picture of job market.
Payroll Employment is a measure of the number of people being paid as employees by non-farm business establishments and units of government. Monthly changes in payroll employment reflect the net number of new jobs created or lost during the month and changes are widely followed as an important indicator of economic activity. Large increases in the payroll employment indicate strong economic activity that could eventually cause increasing of interest rates and support the currency at least in the short term. However, during the rising of inflationary pressure, this may weaken the long-term confidence in the currency.
Personal Consumption Expenditures
Personal Consumption Expenditures shows the level of consumer spending for all goods and services, quoted in both . real (inflation adjusted) and nominal (current-dollar) terms and divided into three categories: durable goods, nondurable goods and services. This indicator represents two-thirds of the Gross Domestic Product (GDP).
Personal Income shows households' income from all sources, which are self-employment, employment, investments, and transfer payments. It can also be described as total pretax annual income earned by private trust funds, individuals and non-profit organizations.
Disposable personal income (DPI) measures personal income discounting tax and non-tax payments, or, in other words, personal saving subtracts personal consumption expenditures plus interest payments and net transfers to foreigners from personal income.
This index can be helpful in forecasting changes in consumer spending patterns. Two-thirds of GDP is personal consumption; therefore consumer spending has an effect on economic growth.
Spending is determined mostly by income, and average US consumer spends approximately 95 cents of each new dollar. Larger spending benefits the stock market and stimulates corporate profits.
Philadelphia Fed
This index reflects the conditions of regional manufacturing that covers Pennsylvania, Delaware and New Jersey. This region is considered to represent a reasonable cross section of different sectors of national manufacturing. Expanding factory sector is represented by readings above 50 percent; while rates below 50 are the symptom of contraction.
This index, along with the Chicago Purchasing Manager’s Index, is designed to predict the results of ISM index, which is the leading indicator of economic activity as a whole.
Philadelphia Federal Reserve Bank Business Outlook Survey
This survey is based on a poll of manufacturing firms in eastern Pennsylvania, New Jersey and Delaware, the bank’s district, on recent expectations and developments with response to “general conditions” and specific manufacturing activities. It represents trends in regional economic activity.
GDP-Based Price Indices
The broadest measure of inflation in the economy is GDP-Based Price Indices. It is part of the quarterly Gross Domestic Product (GDP) report representing quarter-to-quarter percent change in weighted price indices for the various components of GDP, for the ratio of nominal (current-dollar) GDP to real (inflation-adjusted) GDP and gross domestic purchases (excludes exports).
The Producer Price Index (PPI) measures the average level of prices of a fixed basket of goods received in primary markets by producers. The monthly reports of this index indicate commodity inflation. The PPI is widely followed because it accounts for price trends throughout the manufacturing sector.
The PPI is popular but leaves out the food and energy components. These items are usually much more changeable than the rest of the PPI and can therefore obscure the more important underlying trend.
Studying the PPI allows consideration of inflationary pressures that may be receding or accumulating, but the index has still to be improved.
A rising PPI is normally expected to cause higher consumer price inflation and therefore to potentially increase short-term interest rates. Higher rates will often have a short-term positive affect on a currency, however outstanding inflationary pressure will often weaken the confidence in the currency.
Productivity and Costs
Productivity is seasonally adjusted review that measures the change in output per hour of work. It provides quarterly statistics on total labor compensation as well. Productivity considers the possibility of economic growth without a raise in inflation. It has valuable effect on the outlook for employment and it is also an indictor as efficiency of the labor market.
Purchasing Managers Index (PMI)
The Institute for Supply Management (that was called the National Association of Purchasing Managers (NAPM) before) publishes a monthly complex index of national manufacturing conditions, that contains data on production, new orders, supplier delivery times, inventories, backlogs, prices, export orders and import orders and employment. It consists of two sub-indices: non-manufacturing and manufacturing.
LIST OF INDICATORS - R:
Real earnings (Real average weekly earnings)
Real Gross Domestic Product (GDP)
Redbook Index
Residential Construction Spending
Retail sales
Richmond Federal Reserve Bank Survey
Real Gross Domestic Product (GDP)
The total amount of goods produced and services provided is measured by GDP. The GDP prior period data concerning the growth rate is calculated according to real conditions in order to exclude the uncertainty occurring due to inflation. The Bureau of Economic Analysis of the Department of Commerce is responsible for publishing the GDP data quarterly. GDP shows perfectly the reduction or expansion of the economy, so that it has a major influence on the financial markets productivity.
Redbook Index
CPLR 3211(a)(7) is often referred to for failure by the defendants attempting to cause a dismissal for the complaint. This happens because the public requires a contrary relief of the complaint. There are three causes of the action most often interfered into the complaint. The first is "hot news" misunderstanding, legal basis and the competition held unfairly. The second includes wrong trade secrets appropriation. The third is an insincere contracts conducting.
The brokerage firm called “LJR” (Plaintiff, Lynch, Jones & Ryan, Inc.) deals with institutional securities and provides market research for its institutional investors among its other services. They are the unique rights owner and publisher of "the Redbook Index" (“LJR Redbook Research Retail Sales Growth Index”). The “Redbook Index” is also known to have the information of proprietary and prepared by LJR at its own expense and effort.
The Redbook Index is provided by LJR as a research report prepared each week for major institutional investors being its paying subscribers. LJR distributes the Redbook Index to its subscribers through telephone, hard copy and facsimile. The most important data of the Redbook Index, as LJR states, is the compared information of the national retail sales growths and declines as well as the common data of the previous month.
The subscribers receive the Redbook Index at 2:05 P.M. (EST) and at 2:40 P.M. (in 35 minutes) it is presented to the public. The "embargo period" (the time between the subscribers and general public receive the Redbook Index data) was set to 35 minutes as a result of the Plaintiff subscribers' agreement. Plaintiff is sure that its subscribers appreciate the embargo period greatly. This period gives an advantage before non-subscribers to make analyzed buying decisions earlier than the Redbook Index is spread among the public.
The analysis, monitoring and explanations of the consumer economy and retail sales trends are the things that the Redbook is responsible for. It has proved its reliability by having a 41-year history, being an independent monitor of the trends for all these years. Wall Street has the weekly proprietary retail sales index of the Johnson Redbook Index as the most watched one. The warnings, given in advance by the Index, show early signals of business cycle changes, sector rotation, inflation and interest rates fluctuations.
A number of other statistical analyses of the retail sales series trends are carried out by the Redbook. One of them is retailer same-store data that is based on the largest database of proprietary. The Redbook also carries out a close consumer economy monitoring in order to find the fundamentals that form demand, such as Consumer Indicators watching monthly more than 150 indicators in order to forecast major trends for short- to medium-term to let various consumer watchers along with retail investor use this data.
Residential Construction Spending
What is it: The amount of whole spending for both private and public construction that has the seasonal adjustment for publishing in inflation-adjusted (real) as well as in nominal figures.
Why we care: Some parts of the quarterly GDP report are calculated using Construction spending directly. Still, the financial markets prefer dealing with to housing starts and new home sales because Construction spending suffers quite frequent revision.
Retail Sales
Total receipts of retail stores are measured by the Retail Sales. This is one of the most followed consumer spending indicator that shows the rate of retail sales change through its percentage changes.
Retail sales accumulates about one half of total amount of consumer outlays and over 30 percents of total activity of the economy.
Auto sales follow Retail Sales less due to their higher volatility referring to other parts of the Retail Sales and the following possibility to figure out more significant trend.
Retail sales take the effects caused by the inflation into consideration being measured in nominal conditions. At least a short-term support to the currency may be expected when Retail Sales figures grow up giving the signs of a severe economy that predicts short-term interest rates increase.
Richmond Federal Reserve Bank Survey
What is it: The list of local companies occupied in manufacturing, retail and service sectors on conditions.
Why we care: It shows regional changes in activity of the economy.
LIST OF INDICATORS - T:
Trade Balance
Trade Balance
The trade balance is a measure of the difference between imports and exports of tangible goods and services. The level of the trade balance and changes in exports and imports are widely followed by foreign exchange markets. The trade balance is a major indicator of foreign exchange trends. Seen in isolation, measures of imports and exports are important indicators of overall economic activity in the economy.
It is often of interest to examine the trend growth rates for exports and imports separately. Trends in export activities reflect the competitive position of the country in question, but also the strength of economic activity abroad. Trends in import activity reflect the strength of domestic economic activity.
Typically, a nation that runs a substantial trade balance deficit has a weak currency due to the continued commercial selling of the currency. This can, however, be offset by financial investment flows for extended periods of time..
A widening trade gap suggests that the dollar may be overvalued, especially if exports are weak. Strong imports are a more complex issue as it suggests that domestic spending is too strong. In this case, higher interest rates may be needed which would tend to be dollar supportive, but there would also be pressure for a weaker dollar to help boost exports and close the trade gap. A higher than expected trade deficit will tend to weaken the dollar, especially if exports are weak.
LIST OF INDICATORS - U:
Unemployment Insurance Claims
Unemployment rate
Unit Auto and Truck Sales
Unit labour cost
U.S. Treasury Borrowing Schedule
Unemployment Insurance Claims
What is it: The weekly amount of demands for state unemployment insurance along with the whole number of people who received their insurance for the previous week.
Why we care: Indicates the increasing or reducing unemployment. The condition on the labor market may be understood through the layoff rapidity suggested by the initial claims.
The Unemployment Rate
The household survey doesn't give much reliable information because of its smaller research sample unlike the establishment survey as it was mentioned above. Though, this survey worth mentioning as far it gives the daily figures of unemployment rate. It is worthless of much explanation but still you should be attentive as it can change considerably each month because of the data uncertainty. This rate is calculated by dividing the amount of unemployed people (of the labor force) by the total amount of the labor force.
The figures of labor force and unemployment fluctuate due to the small sample size even more than non-farm payrolls, which is an important problem. Nevertheless, these figures show whether the unemployment changes are caused by the abnormal moves of both indicators or by the only one.
Unit Auto and Truck Sales
What is it: The data provided by largest auto and truck manufacturers each month adjusted in accordance with any seasonal factors.
Why we care: This information monthly describes demand trends existing and occurring in this sector along with other important conclusions.
Unit labor costs (ULCs)
This measure calculates the unit labor costs through the output labor cost and productivity. The background information of the KLIM measures and its methodologies are presented in this document, published by Groningen Growth and Development Centre researchers of the University of Groningen in the Netherlands. 31 countries are supposed to contain the while economy series whether 23 countries are its manufacturing part. The research plan for KILM’s work concerning the measures towards productivity is posed in this document. It measures the cost factors pressing the labor market. The result is calculated by dividing average labor costs ration by output per worker at the hours worked (his or her productivity). Price levels are highly affected by the price of one production unit (or item) paid for its producing. Such models of macroeconomic wage-price sector as the national income forecasting model uses the unit labor costs concept widely. Both nominal and real terms are used if unit labor cost measurement.
The labor cost of the output production is closely connected with the productivity that is represented by ULCs (Unit labor costs). In case the unit labor cost increases then the labor part in the production cost rises as well. The threat to the macroeconomics may occur when the labor costs rise exceed the productivity rise while any other costs are not adjusted in return.
ULSs are supposed to be understood as the indicator of the goods cost competitiveness but not of its general competitiveness. When dealing with advanced economies, unit labor cost, as an ultimate measure of the labor price.
U.S. Treasury Borrowing Schedule
What is it: The figures of the planned U.S. Treasury securities emission to the market.
Why we care: This indicator influences the prices of bond and yields as well when this measure of supply is compared to demand.
LIST OF INDICATORS - W:
Wholesale inventories
Wholesale inventories
Wholesale inventories sometimes swing enough to change the aggregate inventory profile (aggregate inventory is the sum of inventory at the manufacturing, wholesale, and retail levels), which may affect the GDP outlook. In that event they can elicit a small market reaction. More often than not, however, this release goes unnoticed except by market economists.
This release includes sales and inventory statistics from the second stage of the manufacturing process. The sales figures do not move the market as they do not reflect personal consumption. Wholesale inventories may change the aggregate inventory profile which can influence the GDP forecast.
LIST OF JAPAN INDICATORS:
Balance of payments
Consumer price index (CPI)
Gross domestic product (GDP)
Industrial production index
Leading and coincident indices of business conditions
Machinery orders
Money Supply
Retail sales
Tankan report
Unemployment
Wholesale price index (WPI)
Money Supply
The money supply strongly affects the rates of Japanese currency, the yen. In case the supply grows slowly, the Bank of Japan has to decrease the interest rates affecting the yen negatively. The deflation which means falling prices has a negative affection to the yen.
Tankan Index
This index, based on the surveys held among Japanese companies four times a year and showing the business confidence is one of the key indicators of the Japanese economy.
The Tankan values higher than 0 usually show the positive economy trend and are considered as normal though the higher values gives good support for the yen and are good for the entire economy of Japan.
About Japan's economic structure.
The economy of Japan is partly similar to that of the developed European countries. Bank financing is traditionally more reliable from the point of view of Japanese companies than the issuance of equity and bond. It is normal for the employees of big companies to develop careers in one company during all their lives. The Japanese companies are divided into two groups: the first includes multinational corporations, huge and powerful, whether the second one contains small enterprises often owned by families. Since 1960s the economy of Japan has been based on manufacturing industry. The Japanese manufacturing is still dominated by car and electronic production that affect international markets without any difficulties.
Japan leads in production of machine tools as well and export them mostly to the USA and South Korea. Japan is also one of the key players of the steel and iron markets. High level of investments is an important characteristic of Japan's economy in public as well as in private sectors. A gross fixed investment amount calculated for the period from 1999 to 2003 made up 24-27% of the GDP adjusted to current prices which is much higher than US or any european developed country had during the same period.
Economy of Japan
The density of population is high in Japan, about 243 people per square kilometer. This is caused by combination of rather small territory and a considerable population. According to World Bank research, the number of people living in the urban areas is 65% and the length of the life is the highest in the world aggregaing 82 years according to 1997-2003 data. 11.8% of the Japan's population is reported to live below poverty line which corresponds 50% of median household income. The literacy of adult popularion is 99.9%. Speaking about human development index Japan has the 9th place out of 177. Gross National income per capita is $34510 (2003 data) makes Japan the second largest market in the world. Moreover, Japan is a member of OECD. The figures of GDP annual growth was 2.4% in 2004.
Japan used to be the less-developed country in 1952 and its consumption was five times smaler than the one in the USA. But within next 20 years Japan has reached the status of developed country out of less-developed having 8% annual economy growth rate. The values of GDP per capita in Japan raised from 21 to 56 pecent during the period from 1955 to 1970. Though, the largest recession of the Japan's economy since the World War II occured in late 1990s when by the end of this period the Tokyo stock market had suffered 38% decline with 300 trillion yen (2.07 USD trillion) losses. This recession also caused falling of land prices far from it's speculation top. There is a special term "bursting" of the "bubble economy" used for such recession description. GDP decline made up 0.4% in 1997 and 2.8% in 1998 after its constant increase. These two years were the first time when the economy was in decline within two successive years after the World War II. The stock prices increase and the growth of some industries were the first signs of economic recovery occured in 1999 and 2000. The recovery was excited mostly by the rising demand in the developing Asian countries for Japanese products, the development of infomation technologies and government policies. The inflation index, one of the key indicators, made up 1.6% in December 2004.
Japan's phenomenal economic growth
The phenomenal growth of the Japan's economy was a result of two economic trends combination. Firstly, it is the planning and applying the national economic policies by the government along with developing an efficient fiscal and monetary policies. Secondly, the affection of the specific public-spirited management combined with the vast private ownership. The aim of MITI (Ministry of International Trade and Industry) is to create a specific industrial policies that causes economic and social growth. Some industries considered as important for the economic growh were chosen and supported by MITI. In 1960s these industries were: chemicals, shipbuilding, iron and steel, transistor radios; in 1970s they were automobiles and electronics; then computers, computer chips, and other high-technology industries in the 1980s. MITI also helps to smoothly close the plants and retrain the workers for another qualification. It helped with closing textile industry in the 1970s and the shipbuilding industries and ailing coal-mining in the 1980s. The Economic Planning Agency has developed and realized the Ikeda plan which proposed the national economic multiplication by two within the period from 1961 to 1970. It has also developed the strategy of fast GNP increase and inflation containment along with the social and industrial infrastructure improvement. It is also responsible for forecasting the key economy indicators. The Ikeda plan generally consists of independent economy adapted for reaching the certain goals mostly based on the Japan's foreign commerce. The 10-year plan was exceeded in the indicators like GNP annual growth that actually resulted at 11% whether 7.2% was planned; economic social development was at 10.6% which is higher than 8.2% planned.
The purposes of five-year plan adopted in 1988, were to support real GNP growth at 3.8% per year, restrain the inflation, keep low unemployment (2.5% per year) and increase the quality of life by means of a shorter work week and stabilized property prices.
In spite of it, the economy's downturn was mentioned after 1992. Some analysts compare it to 1974 recession in its hardness. Among the main steps taken under the Initiative was a 10-year program for public infrastructure development. It included the expenditure of up to $8 trillion for the construction or restoration of bridges, roads, ports, airports, resorts, medical facilities, retirement communities, telecommunications systems, many more. Real growth reached mark of 1% a year by the 1990s. Besides of it, one of the main trading strategies of Japan is helping to create sustainable trading partners. This strategy is supposed to be guarantee for long-term development of Japanese economy.
LIST OF UK INDICATORS:
House Prices
House Prices A UK report.
Nationwide and Halifax Banks, together with the Royal Institute of Chartered Surveyors (RICS) published the assessments of monthly price changes. Increasing house prices will promote consumer spending and the economy in the short term. Increasing trend also requires rising of interest rates. The longer-term forecasts are more complex. Strong reports will be Sterling positive in the short term. The longer-term conclusions are unfavorable, especially as a sharp recession in the sector can destabilize the economy as a whole. And now some remarks concerning economy of the United Kingdom. United Kingdom has 60.27 million people and occupies 21st rank in the world in terms of population in mid 2004.
National growth rate in UK was 0.3% during the 1975-2002 (according to data obtained from UNDP HD Indicators), and this was much lower comparing to the high-income countries' growth of 0.6 %. The amount of citizens who live below income poverty line is 12.5% of UK's population, and it's 50% of median household income. Improved water source are accessible to all the people in UK. The percent of school-age population as it denoted in gross primary enrollment, with both male and female enrolled equitably, is 101%. Adult Literacy rate is 99%. In terms of human development index, UK occupies 12th place among 177 countries of the world. Gross National income of United Kingdom is $ 1680.6 billions (2003).
This means that UK has the fourth largest economy in the world. The country is a member of OECD. In 2003 purchasing power parity was estimated as US $ 27,460, Per capita GNI. In the same year, average annual growth rate of GDP was 2.2 %. Almost 70% of GDP in the UK is accounted for by private consumption, in concordance with the expenditure method for calculating national income. About National Institute of Economic and Social Research (NIESR) National Institute of Economic and Social Research (NIESR) provides monthly estimation of GDP, totalizing disparate data into a single and easily understood measure. Martin Weale, NIESR Director, and his colleagues describe the process of producing of monthly indicator in the February 2005 issue of the Economic Journal. It is based on movements in the monthly series of data for manufacturing output, industrial production and retail sales.
The data of the third month is being forecasted relying on two months' data for any calendar quarter, using standard statistical techniques. Such forecasts are base for estimation for the growth in GDP in calendar quarters. The estimates are supposed to retrace the first estimate of GDP growth published by the Office for National Statistics (ONS) and anticipate it by about three weeks. The National Institute is publishing the indicator since 1998. Since then there have been only three occasions when the error has been as big as 0.3% of GDP in absolute size. Two of these mistakes have been made due to unusual events, which are the fuel protests in September 2000 and the Golden Jubilee in June 2002.
The third occasion is associated with the Princess of Wales' funeral in September 1997. Standard forecasting method performed badly because of disrupted data of the third month of the quarter and this caused two of these three large errors. NIESR has published estimates of GDP growth for the other twenty-five quarters. Among them eleven have had errors of 0.1 percentage points, four have had errors of 0.2 percentage points and nine have been exact. Scottish Index of Leading Economic Indicators The Bank of Scotland has developed a new tool to present an early indication of turning points in the Scottish business cycle. It is called Scottish Index of Leading Economic Indicators, and it is being published on a quarterly basis. The Index is based on several indices such as Business Optimism, Housing Starts, New Orders and Car Registrations; its development goes up to 1986.
Interpretation of the series is complicated by considerable revisions to the data. Revisions to GDP became very common lately, generally because of the resulting problems caused in the administration of economic policy. The monitoring of key economic variables that have a tendency to move in advance of growth in the whole economy become current practice in many countries, notably in the United States and the United Kingdom. The Scottish Index of Leading Economic Indicators was designed by the Bank of Scotland in order to provide an early indication of changes in economic activity.

LIST OF INDICATORS - A:

 

 

  • ABC/Money Magazine Consumer Comfort Index
  • Aggregate Hours Worked
  • Atlanta Fed index
  • Average hourly earnings
  • Average Weekly Earnings
  • Average workweek

 

ABC/Money Magazine Consumer Comfort Index:

ABC/Money Magazine Consumer Comfort Index is a nationwide enquiry of about 1,000 adults per month about personal finances, buying climate and the status of the economy. It's supposed to be helpful and more frequent measure of consumer opinions.

 

Aggregate Hours Worked

The aggregate hours worked totalizes two series we just mentioned. The idea is to get an entire picture of the total hours worked each month by calculating an index that represents both employment and the workweek. This indicator is considered to reflect monthly changes of GDP. The quarterly change in the amount of goods produced is defined as equal to the change in man-hours plus the change in productivity.

As far as we can predict productivity from quarter to quarter, the aggregate hours worked index provides a useful monthly read on the entire economy.

 

Atlanta Fed Index

Official name of this index is Southeastern Manufacturing Survey. It is regional manufacturing review that covers such prominent industrial states as Alabama, Georgia, Louisiana, Tennessee and Florida. The survey's industry business conditions index is designed to represent changes in factory-sector: it is above zero when the sector expands and it's below zero when the sector contracts.

Actually, this index has no market importance and it's available after the releasing of the national Purchasing Managers' Index. So this index considered too dated not worth tracking.

 

Average Hourly Earnings

One of the most important indicators of the tightness of labor markets and labor cost inflation is Average hourly earnings (AHE). The Bureau of Labor Statistics of the U.S. Department of Labor provides it every month, and it's available one week after the reported month. The indicator seems to take insignificant effect financial markets; unexpected increases can cause rising of interest rates because such increasing considered inflationary, especially if in excess of productivity growth. A large rate of growth of AHE can cause increasing of Fed Funds rate that is also bearish for the bond market. Stock Prices: high wage growth may increase long-term interest rates, reduce profits, and lead to increase of the Fed Funds rate to stem inflation, that is why higher wage inflation is bearish for the stock market.

Exchange Rates: unclear. On one hand it leads to higher nominal interest rates and real ones too. On the other hand high wage inflation leads to high inflation and loss of competitiveness. Ability to Affect Markets: it is an early signal of wage inflation.

Analysis of the Indicator: if the wage growth were above productivity growth, high rates of growth of average hourly earnings would lead to higher inflation.

Employment Cost Index (ECI), closely watched by the Fed, is a measure of wage cost growth. Compared to the quarterly published ECI, the advantage of the average hourly earnings indicator it that it is published monthly and is an early indicator of wage growth in the previous month. But, nevertheless, compared to the ECI, AHE has some minuses. The ECI includes wages and salaries as well as benefits costs, so it is a broader measure of labor costs. In general, the basis of AHE indicator is gross earnings. So they represent changes in basic hourly and incentive wage rates as well as premium pay for overtime, late-shift work and changes in output of workers paid using an incentive based plan. They also demonstrate shifts in the number of employees between relatively high-paid and low-paid work. Changes in earnings for the individual industries making up those groups and divisions will impact averages for industry groups and divisions. Average hourly earnings that are reported by CES are not wage rates.

 

Average Weekly Earnings

Average Weekly Earnings - multiplying average weekly hours estimates by average hourly earnings estimates derives these estimates. So, weekly earnings are affected the length of the workweek along with changes in average hourly earnings. Monthly trends in these factors as stoppages for varying reason, the proportion of part-time workers, labor turnover during the survey period and absenteeism for which employees are not paid may cause the fluctuations of average workweek. Structural changes in the makeup of the workforce can cause long-term trends of average weekly earnings. For example, persistent long-term rising of the percentage of part-time workers in retail trade and many of the services industries have reduced average workweeks in these industries and have affected the average weekly earnings series.

 

Average workweek

The average workweek, or worked hours is necessary for two reasons. First, it is considered a useful indicator of labor market conditions: a rising workweek early in the business cycle may be the first indication that employers are preparing to increase their payrolls, while late in the cycle a rising workweek may indicate that employers are having difficulty finding specialists to occupy vacant positions. Second, it is a critical determinant of such monthly indicators as industrial production and personal income.

 

LIST OF INDICATORS - B:

 

 

  • Balance of trade
  • Beige Book
  • Bridge/Commodity Research Bureau (CRB) Indices
  • BTM-UBSW Chain-Store Sales Index
  • Building permits
  • Business inventories

 

Balance of trade (merchandise trade balance)

The indicator that shows the difference between imports of goods and a nation's exports is called the Trade Balance. On the other side, it may also be considered the difference between national investment and national savings. When export exceeds import, a positive Trade Balance, or a surplus, occurs. A deficit, or a negative trade balance, occurs when import exceeds export. The Trade Balance is a major indicator of foreign exchange trends, therefore the foreign exchange markets closely follow and any changes in exports and imports.

Rates of imports and exports are significant indicators of the overall activity in the economy. Changes in export activities represent the competitive position of the country in question, as well as the intensity of economic activity abroad. Strength of domestic economic activity is reflected by developments in the import activity. When a country has weak currency, it is the result of large Trade Balance deficit, as there is a continually commercial selling of the currency of this country. However, substantial financial long-term investment flows can solve the problem. A surplus occurs when the exports exceed the imports, otherwise a deficit, appears, as the current situation for the US. Different factors can be useful in reaching the balance, such as exchange rates, prices of domestic goods, tariffs, trade agreements or barriers.

Trade surpluses may lead to harmful protectionist policies, although they are generally good for the economy. Deficits can cause problems with debt servicing and unemployment. The US has had a trade deficit is continuously growing (from $101.7 billion in 1990 to $716.7 billion in 2005). Among the reasons we can name the growth of the US economy, high rising oil prices, globalization, demand for American investment assets and the dollar's use as a reserve currency and its overall strength. One of the possible results of this imbalance is depreciating the dollar.

Ideally it can cause imports decreasing, because of reducing of consumers' purchasing power. Generally speaking, a deficit may lead traders to short the dollar and it's believed to be a sign of US economic weakness. Trade balance is followed by an average move of 64 pips in the price of the EUR/USD and is usually published near the middle of the second month after the reporting period.

 

Beige Book

Each Federal Reserve Bank collects remarkable information on current economic condition in its District through different sources, such as reports from Bank and Branch directors and interviews with key businessmen, market experts and economists. This information is summarized by District and sector in Beige Book.

Fed, uses this report along with other indicators, to define interest rate policy at FOMC meetings, which are held two weeks after the Beige Book's publishing. Interest rates may be changed depending on trends portrayed in the Beige Book. Federal Reserve Board releases the Book eight times a year, every six to eight weeks at 2:00 p.m., second Wednesday before Federal Open Market Committee Meetings.

 

Bridge/Commodity Research Bureau (CRB)

Indices CRB is everyday indices for 23 different commodity price measures. It is considered as valuable indicator of increase in consumer prices and inflation.

 

BTM-UBSW Chain-Store Sales Index

BTM-UBSW Chain-Store Sales Index is based on private review information and it covers the week ending the previous Saturday. This index is seasonally adjusted. This index is necessary because its month-to-month changes are a coincidental indicator of nominal retail department store sales.

 

Building Permits

This application is updated every month. It represents construction statistics on new privately owned residential housing units authorized by building permits by place and by county. Data items contain number of buildings, units, and construction cost for monthly new privately owned residential Building Permits.

 

Business Inventories

This report is released monthly by the Commerce Department and contains inventory statistics and sales from all three stages of the manufacturing process, which are manufacturing, wholesale, and retail. But two of its inventory components and all three of its sales components have already been reported by the time it is released. As a rule, the market pays no attention to the business inventories report because retail inventory is the only new piece of information in it.

 

LIST OF INDICATORS - C:

 

 

  • Capacity utilization
  • Capital Flows (TIC)
  • CBI Report
  • Challenger, Gray and Christmas Layoff Announcements
  • Chicago PMI index
  • Chicago Purchasing Managers’ Survey
  • CIPS Report
  • Composite Index of Leading Economic Indicators
  • Consumer confidence
  • Consumer Installment Credit
  • Consumer price index (CPI)
  • Consumer Sentiment
  • Consumer Spending
  • Corporate Profits
  • Current account (Balance of payments)

 

Capacity Utilization

Meaning: Month percentage of estimated efficient possibilities in producing and obtaining goods. This means that if a manufacturer is able to produce 10,000 units per week, but it only produces 8,000 units per week, it works at 80% performance. A rugby stadium, which holds 80,000 person, is at full performance only in case of all places are taken.

Why it is vital: Utilization level usually comes nearer or exceeds 85%. Such rates increase inflation risks by making production bottlenecks and limiting the delivery of goods.

Capacity Utilization shows the amount of usage of different products. It gives you information of how much more can the manufacturing sector do. The informed number is a whole percentage (72%, for example). A rule of thumb is that the more close number is to 80%, the higher the pression is for price increments at the producing rate. That's not to say price rises are automatic or across the board in all branches, however once the number hits 80%, economists begin to work about price hikes.

The second danger that may happen when nearing the 80% rate is the slackening in deliver of products as producers struggle to keep up with require. Producers may not want to ramp up goods until they are sure growth will be sustained. The same logic is used to service sector industries, though it is harder to find a precise figure, because it takes a different period of time to provide each customer. Sometimes demand may exceed capacity, so the producers have to queues forming. At other times personnel may not have anything to do. A service business wishing to control costs effectively will gauge demand at different times of the day and then gauge the staffing rates to match.

Many businesses, including service sector are better able to cope with changing demands by employing temporary or part-time workers. Nowadays there are lots of temporary and part-time workers in the UK as they can enlarge capacity easily and quickly. If demand then goes down temporary staff can be laid off without reserving payments and part-time workers can have their hours moderated, thus moderating capacity easily and fast. This pliability is good for business as it can help to diminish any expensive reserve capacity. These circumstances, however, may not be as appealing to the workers who have far fewer rights than their full-time colleagues.

 

How To Enlarge Capacity Utilization

One of the methods is to low the capacity by either slackening effects of production employed or moving to smaller locations. But the negative side of moving to a smaller building is that if demand increases in the future, it will be impossible to enlarge delivery in response to it. Such process is called rationalizing. Which production engineering a company chooses to take will depend upon the invoke of the low capacity utilization. Is it due to known temporary shortage, such as a seasonal reduction or due to a financial droop, which may last for 18-24 months. It can be a mistake to moderate capacity in the long run, however it may be indispensable in order to guarantee short-term survival. It is therefore important to select whether the short fall is short or long term.

 

Operating At Near Full Performance

It will be conceived as a successful country both domestically and outagely leading to reach positive effects. Domestically, employees will feel a sense of pride working for such a successful organization. Outagely, if customers know that a company is working at full capacity it will accept that it is offering the best goods.

 

High capacity utilization in industry

The highest capacity utilization measured for the last 10 years is watched in industry sector - 89 per cent. While deficiency of capacity has negative influence to industrial firms, the labour lack is the main encumbrance in the construction sector. The wholesale and retail trade continues reporting strong sales figures. One in three private firms conceives to increase staffing. Bung growth in particular was favorable and much higher than companies had expected. The trust pointer has certainly inverted a few points, but is still at a high level.

Besides, favorable growth has conducted to a further enlarge in capacity utilisation, a rise in employment and stronger cost-efficiency. Companies expect a continued enlarge in order and output growth during the fourth quarter. Meanwhile, refilling difficulties have rised, with two out of three companies stating a labour deficiency as the main hindrance to the company's operations. Companies' waitings are more subordinated this time than in previous quarters. The building industry has adapted downward its waitings for the nearest 12 months.

Nevertheless, employment is expected to increase further in the nearest few months. Nine out of ten companies are fulfilled with the sales situation and cost-efficiency is good. The number of employees has increased and employment growth has been congenial in the wholesale trade in particular. The food trade continues to report decrease price cuts, while the wholesale trade in input products for the building sector reports price increases. The wholesale and retail trade expects continued steady sales growth during the fourth quarter.

Employment is expected to increase further, with primarily the wholesale and long-term products trades planning refilling, as beforehand. Employment has increased and different sub-sectors are starting to experience refilling difficulties. Nearly half of architectural and building consulting companies state that a labour deficit is the deficit barrier to their operations. Service companies expect continued favorable demand growth during the fourth quarter. Employment is also anticipated to increase considerably, with nearly one in three companies planning to rise staffing.

 

Capital Flows (TIC)

Every month the US Treasury introduces a report on the net financial flows into the US. It contains inflows into bonds and stocks. It also divides between private inflows and state inflows, working with central banks. All data about financial flows have great importance when the US current account deficit goes wide.

A reduction in inflows brings waning in the US to overseas confidence. If the economic inflows are lower than US current account deficit in the month, then there will be a great concern. It can increase the dollar's dependency on short-term economic inflows.

A weak rate of inflow makes weak the dollar. Source: US Department of Treasury. Presence: It takes place in the middle of each month (after 11 business days) at 9:00 a.m EST. Frequency: Each month.

 

CBI Report

Explanation: The mark of trust within the UK industrial sector is received by the CBI in its reports every month or a quarter of month. Challenger, Gray and Christmas Layoff Announcements.

Meaning: Common number of layoff announcements by U.S. companies

Why it is vital: Gives an interesting addition to unemployment claims record in estimating labor market's health. It shows seasonal structures but are not seasonally adjusted and therefore better compared on an yearly basis.

 

Chicago Purchasing Managers' Index (PMI)

Explanation: It is information, received from surveys of about 200 purchasing managers regarding the producing industry in the Chicago area whose allocation of manufacturing companies mirrors the state spreading.

Significance: According to the Philadelphia Fed Index, it helps to predict the results of the much more closely watched ISM index, which take place every business day. The ISM index is the major pointer of overall financial activity. Readings above 50 show an expanding factory sector, and below 50 - tell about reduction.

Meaning: Browse of purchasing managers in Illinois, Indiana and Michigan.

Why it is vital: This browse show the same information as the Institute for Supply Management survey about half the time and is followed as a second part of corporate purchasing schedule.

 

CIPS Report

It is equal to the ISM reports in the US. Figures are collected for the manufacturing and services sector and are exhausted by the Chartered Institute of Purchasing and Supply.

Composite Index of Leading Economic Indicators

Meaning: A structure of ten monetary and non monetary indicators.

Why it is vital: These pointers define business cycle peaks and troughs.

 

Consumer Confidence Index

Explanation: A browse of 5,000 users asking them what they think about the current financial welfare and their spending patterns. They will also be asked about buying expensive consumer products. The report is divided into what people think now and their expectations to the future life.

Significance: A middle rate is in the region of 100. Figures below 75 are gentle and rates above 125 are steady. A bleak drop in trust can indicate that the financial welfare is weakening, but the correlation between expenditure and confidence figures is not steady.

This browse can help to forecast subitaneous moves in consumption patterns. And since user expend accounts for two-thirds of the economy, its gives us comprehension about the direction of the economy. However, only index variation of at least five points has great importance.

 

Steady trust figures are well for the US currency.

Meaning: Outcomes of a statistics of 5,000 households on questions concerning to their recognition of the economy as well as personal recognitions such as scheme to purchase homes or durable products.

Why it is vital: Gathered since 1969, the Consumer Confidence Index has a steady bad correlation to unemployment, though its attitude to consumer expenditure is free.

 

Consumer Installment Credit

Meaning: Changing in the dollar amount of user installment credit nonpayment during the month, including bond papers to individuals by central banks and economic companies.

Why it is vital: A pointing of user expenditures that has become less useful since non hypothecary interest lost its tax-deductible rule in 1986.

 

Consumer Price Index

The Consumer Price Index (CPI) is the average norm of prices of a tight basket of products and services bought by users. Reports every month, which show the changes in CPI are usually followed as an inflation pointer.

The CPI is a primary inflation pointer because user expenditure accounts for nearly two-thirds of financial activity. Sometimes, the CPI is followed but did not consider the price of food and energy as these posts are much more changeable than the rest of the CPI and can shelter the more relevant underlying trend.

Heightening user price inflation is usually linked with the waiting of higher short term interest levels and may therefore be favorable for a currency in the short period. However, a longer period inflation problem will finally undermine confidence in the currency and there will be delicacy.

Importance: The CPI is important to monitor for its monthly stability except for food and energy prices. This activity helps to understand inflation trends better and is mostly known as the "core CPI". The higher inflation rate usually strengthens the dollar as far as the interest rates are supposed to grow. In case the inflation grows rapidly and there is a number of high values the situation lowers the trust and is harmful for dollar.

 

Source: Bureau of Labor statistics, U.S. Department of Labor

Availability: The data for previous month is available approximately on the 13th of each month at 8:30 a.m. EST.

Consumer Sentiment

What it is: It is a list of 500 consumers that concerns the personal finance and economic conditions and is made throughout the nation each month.

Why we care: It's important to take it into consideration because this list (poll), being carried out since 1950, indicates the consumers' preferences of spending.

 

Consumer Spending

What it is: An indicator of retail establishment realization that is listed taking into consideration seasonal adjustments, trading-day changes and holidays. It's insecure to use advance estimates, so they are reconsidered in a month and the ultimate results are made in one more month. As far as considerable corrections are thought as suitable, this is not reliable.

Why we care: It is important because two thirds of the GDP (Gross Domestic Product) are occupied by Personal Consumption Expenditures where retail sales take 40%. Consumer spending and trust can be monitored through retail sales.

 

Corporate Profits

What it is: Corporate tax returns give the basis for calculating Tax-based profit. Current production income is monitored due to adjusted profits. While the adjusted values have more economical significance, the most press is got from tax-based numbers.

Why we care: Corporate profits gains or declinations may serve a forecast of growing or decreasing capital spending input to general GDP increase.

 

Current account

One of the most significant portions of trade information is the Current Account. It is an overall goods and services sales and purchase, unilateral transfers and interest payments measuring instrument. Moreover, the Current Account includes the Trade Balance and the deficit of Current Account can be a factor of currency weakening.

Importance: In case the deficit grows extremely the trade problems are considered to exist and the US are getting more dependent on capital investments. The risk profile of a dollar rises accordingly with the deficit increase. The dollar weakening is generally produced by a severe deficit. The currency causes serious warnings in case a deficit remains above 5,0% for a long period of time.

What it is: The US trade indicator including services, merchandise, some financial transactions. Why we care: Current account balance fluctuations affect the capital streams moving between the US and other countries directly. For instance, capital investments in the US economy rise while the current account deficit increases. It is used extensively and often called a "trade deficit" rate.

 

LIST OF INDICATORS - D:

 

Durable Goods Orders

This is a government index that measure the level of orders placed at US factories for expensive durable items such as machinery and vehicles. Durable goods are new or used items generally with a normal life expectancy of three years or more. Analysts exclude defense and transportation orders because of their volatility.

This report gives us information on the strength of demand for U.S. manufactured durable goods, from both domestic and foreign sources. When the index is increasing, it suggests demand is strengthening, which will probably result in rising production and employment. A falling index suggests the opposite.

Orders for durable goods show how busy factories will be in the months to come, as manufacturers work to fill those orders. The data not only provide insight to demand for things like refrigerators and cars, but also business investment going forward. If companies commit to spending more on equipment and other capital, they are obviously experiencing sustainable growth in their business. Increased expenditures on investment goods sets the stage for greater productive capacity in the country and reduces the prospects for inflation. That tells investors what to expect from the manufacturing sector, a major component of the economy.

A strong figure is positive for the US currency.

Source: The Census Bureau of the Department of Commerce

Availability: Around the 26th of the month at 8:30 am EST. Data for prior month.

Frequency: Monthly

The Durable Goods Orders index is a major indicator of manufacturing sector trends as most industrial production is done on orders. Rising Durable Goods Orders are normally associated with stronger economic activity and can therefore lead to higher short-term interest rates, which is usually supportive for a currency at least in the short term.

 

LIST OF INDICATORS - E:

 

 

  • Employment cost index
  • Employment Report
  • Employment Situation
  • Existing home sales
  • Export prices

 

Employment Cost Index (ECI)

The ECI measures the labor cost that includes salaries, wages and any kind of benefits and looks after this cost changes.

This index usage facilitates wages trends and wage inflation monitoring. Federal Reserve's enemy list has great wage inflation. The pressures of inflation possibilities are constantly strongly monitored by Federal Reserve's officials. The lack of labor caused by a booming economic development can cause wage pressures penetration. While economic declines and the labor demand is low wage pressures fade out.

The investor can find out if the prices of the business are going to be raised through analyzing labor costs. If there is a possibility of inflation it's a reliable forecast of dollar strengthening due to interest rates increase.

 

The Employment Report

Economics considers unemployment as an existence of people who have a desire to work at an average wage rate having no ability to find such positions. The unemployment rate is calculated by dividing the amount of unemployed people by total number of those who are able to work (civilian labor force). The quantity of unemployed workers can be calculated in a number of different ways. Each of them has its own specific and what makes it difficult to compare the statistics of different countries is using various systems.

There are two different reports containing the employment report which generally correspond the data from two different researches. They are: the establishment survey that gives the information about average workweek, non-farm payrolls, average earnings per hour and other similar information and the household survey that gives the data of unemployment rate. The period during which any of these surveys is being held contains the 12th of the month. This information also helps to find out the amount of unemployed people searching for a job and the amount of payment and working hours for those who work as well as the number of the latter. The current conditions and future trends of the economy are forecasted perfectly through these figures. It also gives an opportunity to analyze wages trends including the wage inflation being high on the Federal Reserve's enemies list.

Total payrolls dividing into several sectors, such as manufacturing, construction, mining, services, and government gives a better outlook on the economy. As far as these components indicate the tendencies within the economy sector they are followed very closely by the market. Moreover while the manufacturing often heads the business cycles it is watched more precisely. The analysis of working hours, overtime and average earnings per hour are also contained in this data. It's important to take the hours worked (also used as "workweek") into consideration due to following reasons. Firstly, the monthly indicators of industrial production and personal income are formed owing to it.

Secondly, labor market conditions can be understood better by using this indicator. For instance, the beginning of the business cycle accompanied by the hours worked increase may show that the employers are going to raise the total wages paid or in case it happens closer to the end of the business cycle this is an indication of the employers having difficulty with finding suitable labor force. The potential inflation can be found out through average earnings indicator. The labor price responds to an excessively loyal economy policy as well as any other service or goods. The superfluous amount of money spent on few goods or employees can be indicated by the labor prices growing dramatically. Investors can see whether the labor market is too intense by monitoring the jobs data. The possibility of wage inflation indicates possible interest rates increase and currency weakening perfectly.

 

Employment Situation

All paid jobs at all non-farm business structures and governmental agencies are listed in this report. This report gives the information about average weekly and hourly earnings, the average amount of the hours worked as well as an unemployment rate. This is an important indicator of the economy activity and it's carefully followed because of its opportune and accurate data. The indicator of non-farm payrolls is connected directly with the total economic growth and in case the employment increases so does the whole economy.

Economical decline and interest rate reduction are usually considered when an unemployment rate rises. Though, if an unemployment rate declines economical growth and possible increase of the interest rates are expected. The dangerous situation is thought to occur when it gets too hard to find the labor force as a consequence of too low unemployment rate. The normal situation with the economy employment is considered to exist when the unemployment rate is at the level from 5.5% to 6.0%.

Dramatically growing earnings may indicate a possibility of inflation. In case the number of hours worked rise the employment increase is possible to come.

 

Existing Home Sales

Pre-owned houses sales are calculated by this report. It is thought to indicate the housing sphere activity reliably.

This shows the economic momentum as well as the situation at housing market. Only people who are sure in their financial stability can afford to buy a house.

The economy and the markets accordingly experience a strong multiplier effect from this data and it gives the same effect to the investments. Investors are able to find some special ideas by monitoring this data (for instance, house resales) and manage the portfolio with a broaden guidance. Home resales don't actually make any output but each deal gives an income for the realtor. The buyer gets a number of consumption chances due to it. There are a lot of items that can be bought by home buyers starting from fridges, washers, dryers and furniture. In case it's thought a hundred thousand households make such buying every month, the economics gets strong “ripple effect”.

What it is: The commodity trade balance values can be transferred into volume (real) conditions by using this specified indices of international price carried out each month.

Why we care: The general pricing for goods that is produced abroad affecting the entire goods inflation in the US is monitored by the price index changing, except the petroleum component.

 

LIST OF INDICATORS - F:

 

 

  • Factory orders
  • Federal budget
  • Federal Government Finances
  • Federal Reserve Policy Disclosures
  • Financial Account Balance
  • FOMC Minutes and Transcripts
  • Foreign Trade

 

 

Factory Orders

Both long-term, durable goods reports and nondurable goods orders form these orders. The sole new component which is nondurables makes the report predictable. The items rising at a stable monthly rate such as food and tobacco are included in the nondurable report. That's why it can be predicted more accurately than the reports of durable orders.

 

The market not only finds out the values of the nondurables but also revises the important changes in the data of durable orders. Now durable goods orders share 54% of total number of orders. The factory inventories which is a monthly overview on the inventory of the factory comes last for this report. A week later is the time for wholesale inventory and retail inventory gets ready in a few more days. As far as inventory values don't play a considerable role for the market, they are mostly used to improve the inventories projection for the quarterly GDP report.

 

Federal Government Finances

What it is: This indicator doesn't take season adjustments into consideration and it corresponds monthly budget deficit or surplus.

Why we care: The US treasury securities that are issued for debt financing are supplied by the interest rates which can be affected by the rising pressure from the budget deficit. There are several factors that can affect rates considerably, such as the policy of Federal Reserve, inflation and dollar cost. Finally higher interest rates can cause the reduction of economic growth.

 

Federal Reserve Policy Disclosures

What it is: A Federal Reserve Board announcement concerning any changes in the monetary policy. It mostly includes federal funds rate changes or depository institutions interest rate at which the different depositary institutions get the balances lent from the Federal Reserve suddenly. The announcement is usually carried out with the statement describing the motives of the following Federal Reserve's rates and the outlook of FOMC on the risks of inflation and economic growth.

Why we care: The federal funds rate is usually lowered when the Federal Reserve is planning to decrease overall interest rates and give a stimulus for the economy to grow, and it is raised when the economy is supposed to grow excessively and is threaten by the risk of inflation. The accompanying statement is thought to be important indicator of the monetary policy direction by the monetary policy analysts and "watchers" of Federal Reserve and the immediate actions yielded by Treasury just after its public presentation reflect this statement interpretation. The Federal Reserve funds rate decision is often estimated being at the same level as the report.

 

Financial Account Balance

What it is: An indicator of U.S. assets, which are outside the country, and assets from overseas markets in the United States.

Why we care: It presents the U.S. Treasury securities that can influence the demand of the market and are held by the investors from abroad in percents.

 

FOMC Minutes and Transcripts

What it is: The amount of minutes passed since the latest FOMC meeting was held where the panel discussions were summarized and voted as well as the description of the economic situation relative to the moment carried out. Why we care: It lets us have an outlook on the opinion of FOMC and explains policy changes. It includes a better explanation of FOMC opinion than it's done in the announcement that is carried out after the FOMC meeting that modifies target Federal Reserve funds rate. (Refer to FOMC Policy Announcements).

 

Foreign Trade (International Trade Balance)

What it is: Billions of dollars expression of the U.S. imported and exported goods and services spread.

Why we care: These values and its divergence from official figures or forecasts may affect the values of GDP growth taken for the present quarter.

 

LIST OF INDICATORS - G:

 

 

  • GDP - Gross domestic product
  • GDP advance
  • GDP deflator
  • GDP final
  • GDP provisional (revised)
  • GNP Indicators
  • Goldman Sachs Commodity Index
  • Goldman Sachs Retail Index for Same-Store Sales

 

 

Gross Domestic Product (GDP)

This indicator calculates the amount of all goods produced and services provided on the territory of the U.S. in US dollars. Such facts as assets owners or the labor nationality are not taken into consideration. Nominal and real dollars are the equivalent for this data. These rates growth lets investors monitor the inflation.

U.S. economy productivity is shown entirely by this indicator. GDP growth is considered to be normal when it's higher than 2.0% and doesn't exceed 2.5% in the conditions of unemployment rate from 5.5% to 6.0%. This can be carried to the corporate incomes which the stock market is directly dependent on. Low GDP growth shows the weakness of the economy whether high GDP growth values may cause the inflation growth.

Extremely low GDP values, mostly below zero may be harmful for the dollar. One of the most dangerous situations for the economy is raising inflation accompanied by the lowering GDP growth. It can be a sing of stagflation and investors may lose their confidence. There are three releases included in the GDP report: 1) first release (advance); 2) first revision which is preliminary release; 3) second and last revision which is called final release. These three releases usually affect the markets considerably.

 

GNP Indicators

The entire economy effectiveness is estimated by Gross National Product. Consumption spending, investment spending, net trade and governmental spending are summed for GNP indicator at its macro scale. This indicator gathers all the services provided and the goods produced by the residents of the United States despite the fact whether they are on the U.S. territory or not.

 

Goldman Sachs Commodity Index

What it is: Commodity investments performance criteria that gives the data of commodity price fluctuations based on production weight and a forecast of possible commodities unleveraged investment return available in some time.

Why we care: Commodity prices prolonged increase can cause consumer prices growth which is the inflation indicator. On the contrary, these factors lowering can cause dis-inflation and possible deflation.

 

Goldman Sachs Retail Index for Same-Store Sales

What it is: Calculated by Goldman, Sachs retail industry analysts index of sales and percentage change taken year-to-year. The basis of this index is same-store sales reports carried out each month by major merchandiser retailer firms.

Why we care: This index lets figure out any changes in consumer goods preferences.

 

LIST OF INDICATORS - H

 

 

  • Help Wanted Advertising Index
  • Help-wanted index
  • Housing starts
  • Humphrey-Hawkins testimony

 

 

Help Wanted Advertising Index

What it is: 51 leading newspapers-based index gathering help-wanted ads in the most common areas of employment throughout the country.

Why we care: It has successfully showed the peaks in nonfarm employment during recent 40 years and sometimes accompanying but delaying business cycles and the lows of the labor market indicator.

 

Help-Wanted Index - HWI

It is published every month by Conference Board and is based on 51 leading newspapers gathering help-wanted ads from all over the country. This index is the general showing of the U.S. labor market.

This shows the job market stability. The increased number of these advertisements shows high demand for labor and possible wages increase to attract new labor force. Low ads number signalizes of the labor market weakness and possible wages decrease due to workers acceptance for low ones.

 

Housing Starts

This indicator looks after the number of houses construction of which has started. It is formed monthly and is the key indicator of the activity of residential construction.

This indicator let understand the builders' position concerning more building activities. Increasing activity is usually considered as an economic growth and stability forecast and is generally followed by a brief interest rates increase that can strengthen the currency for the similar period.

 

Humphrey-Hawkins testimony

This is one of the indicators that influence the mortgage interest tends. Some others are: the Consumer Price Index and the Employment cost index. The complex of these and some other factors or indicator is analyzed by specialists in order to find out the mortgage interest trend.

The US monetary policy is ruled by the Federal Reserve. Short-term interest rates get an effective way for the FED to influence the amount of money issue and the activity of the economy and prices respectively. Low inflation, stable economy and minimal unemployment are the general targets of the Federal Reserve. As well as the unemployment rate is stable low and the economy is developing predictably FED is trying to gain low inflation. The sum of the approximate new house payment, which is $1000, and other debts paid each month turns into the back ratio. Such expenses as car payments, minimum credit card payments, spousal support, child support and others make up other debts paid monthly. It doesn't include such payments as utility, utility payments and individual retirement account. Here is an example of counting back end ratio. We take a sum of $1000 of house payment, $250 of monthly debt and divide the sum by $3500 of monthly earnings and we obtain a ratio 36. A situation when both inflation and unemployment got high occurred in 1970s. The economy targets reconstruction during the crisis decade was headed by Senator Hubert H. Humphrey and Congressman Augustus Hawkins. They were sure that the consistent actions of both president and Federal Reserve should be undertaken in order to get the unemployment and inflation rates back to their ordinary levels of the previous decades.

The Full Employment and Balanced Growth Act became a law in 1978 after president Jimmy Carter's signing. This legislate (the Humphrey-Hawkins Act) undertakes the President to report to the Congress of his goals concerning economical policy and the period estimated for these goals achievement. The Federal Reserve has to report to Congress twice a year of their prospects for the monetary policy either. This report, “Humphrey-Hawkins testimony” carried out by the chairman of the Federal Reserve, is analyzed carefully for any changes to be projected.

Full Employment and Balanced Growth Act prepared in 1978 was sponsored by Humphrey and Hawkins. The “goals of maximum employment, stable prices, and moderate long term interest rates” were directed for the Federal Reserve to promote in this act. The obligation of Federal Reserve Board's work to be monitored was descried in the Act while passing the Congress. According to this rule the third week of each February and July is the time for Federal Reserve chairman to testimony before the Congress. The main points of the testimony that is carried out before the House and Senate Banking Committees are the resume of present economic conditions and setting the possible variation of target values for a number of economic variables affecting inflation and growth rates.

The forecast for GDP growth, nominal and adjusted to the inflation (called real), unemployment rate of the civilians and the deflator of PCE chain-price is usually made in February regardless of the Humphrey-Hawkins legislation. July is the time for possible revisions announced. Monetary aggregates targets are also set at same time. Humphrey-Hawkins report and testimony is prepared for some period that's why both the meeting of the year and meeting in mid-year of FOMC are held within two days. It was the period of Paul Volcker's being a chairman of the Federal Reserve when Humphrey-Hawkins testimony had the most importance while in the early 1980s the importance of the economical indicators has faded for benefit of monetary aggregates targets. During the Greenspan’s reign since 1987 each shade of the testimony is studied carefully in order to catch the chairman’s ideas concerning Fed policy in future. After the official Humphrey-Hawkins Act expiry in late 1990s the Federal Reserve chairman's testimony before Senate and Housing Banking Committees is no longer obligatory. But as far as the Congress has created the act of Federal Reserve System, their cooperation is implied. The testifying of the chairman Alan Greenspan before House and Senate committees has happened much oftener than it was while the Humphrey-Hawkins Act was valid.

 

LIST OF INDICATORS - I:

 

 

  • IFO Index
  • Import prices
  • Industrial production
  • Industrial Production and Capacity Utilization
  • Initial Claims
  • International Trade
  • ISM Manufacturing Index
  • ISM Nonmanufacturing Survey
  • ISM Services Index

 

 

IFO index

The IFO index is close to PMI report and it shows the stability of German economy.

A rising index shows the possibility of production increase during the following months which causes euro strengthening as well as import prices.

What it is: A number of international indices of prices that adapt the figures of merchandise trade balance of each month to turn into volume (or real) conditions.

Why we care: Import price fluctuations except the petroleum ones show perfectly the possibility of foreign-formed prices to affect the U.S. inflation for goods.

 

Industrial Production

It’s a set of rates with a fixed weight showing both nation's factories, mines and utilities production readjustment and the possible industrial capacity, production and the available resources usage among factories, utilities and mines, which is also known as capacity utilization. This factor affects much on the economy as far as the manufacturing occupies one fourth part of the developed countries' economy.

It is possible to forecast the manufacturing production through the employment report and total manufacturing workweek in particular. The utility production seems to be the most instable factor as far as it can differ much because of the weather conditions. Strong hot or cold periods may rise the utility production as far as heating or cooling requirements increase sharply. This report estimates capacity utilization either. The capacity is taken as a straight line because of difficulties in its measurement. That's why it is possible to predict capacity utilization rate decently relying on the estimated production increase. A key barrier that gives the starting point for generating inflationary pressures is 85% historically. Utilization rate values over 85% may cause production bottlenecks of inflation. For instance it is common for the Federal Reserve to form its interest rate policy and affect the Forex market accordingly basing on this report estimating the possible inflationary pressures from production tensions.

 

Initial Claims

It’s a government index that represents the amount of people applying for state unemployment insurance.

Investors for forecasting changes in the labor market use this indicator’s four-week moving average. A move of 30,000 or more in claims depicts a considerable change in job growth. The amount of claims is associated with job market strength - low number of claims means strong job market.

 

International Trade

This report is used to reflect the balance between exports and imports of U.S. services and goods.

Import and export, representing approximately 14 and 12 percent of GDP respectively, are necessary parts of whole economic activity. Generally, the stronger exports are favorable for the stock market and corporate earnings.

This report is also vital for investors who are interested in diversifying globally, because trends in trade balance with particular countries can affect foreign exchange and policy with that trading partner. Surveys of 300 purchasing managers nationwide representing 20 industries regarding manufacturing activity, is the base for the ISM Manufacturing Index. It includes such components as production, new orders, inventories, delivery times, employment, export and import orders and prices. ISM Manufacturing Index is most important among all manufacturing indices. Expanding manufacturing sector and a healthy economy are represented by rates of 50% or above, while slowdown marks are below 50%. Rates traditionally associated with strong growth are above 65% while a figure below 40% means recession in the entire economy.

Besides of it, useful information about manufacturing activity is represented by various sub-components of this index. New orders are associated with long-term goods orders, the production component with industrial production, prices with producer prices, employment to factory payrolls, export orders to merchandise trade exports and import orders to merchandise imports.

The index is influenced by different factors, such as variations within the year, differences due to holidays and institutional changes, so it has to be adjusted seasonally.

 

ISM Non-manufacturing Survey

ISM Non-manufacturing survey contains interviews with 370 supply and purchasing management professionals from more than 26 sectors of the economy. This survey, despite of its short history (it dates back only to 1997), is supposed to become helpful guide to certain parts of the economy.

 

ISM Services Index

ISM Services Index, sometimes referred to as Non-Manufacturing ISM, is an index, which represents a survey of about 370 purchasing executives in industries associated with the service sector: communications, insurance, real estate, utilities and finance.

The expansion for the non-manufacturing parts of the economy is portrayed by readings above 50% while readings below 50% are declarative of decrease.

The is a new index created in 1997, so it's not followed as closely as the ISM Manufacturing Index, which dates back to the 1940s.

 

LIST OF INDICATORS - J:

 

 

  • Jobless Claims

 


Jobless Claims

Jobless Claims represents number of individuals who filled for unemployment insurance for the first time.

It is very easy to see how this factor shows the strength of the market: less people without jobs, there is more income which gives a household spending power. Spending is highly correlated with growth of the economy, so the stronger the job market, the healthier the economy. On the other hand, if the number of job seekers fall to such a low level that businesses have a tough time finding new workers, investors might have to pay overtime to current staff, use higher wages to lure people from other jobs, and in general spend more on labor costs because of a shortage of workers. This would also lead to wage inflation and can weak economy and currency strength.

By tracking the number of jobless claims, investors can gain a sense of how tight the job market is. Lately, there is general problem with unemployment, so the rule is: the lower the number of unemployment claims, the stronger the job market, and vice versa.

A level above 400,000 signals a particularly weak labor market and a probable recession, whereas a figure below 300,000 suggests a strong labor market and the need for higher interest rates.

 

LIST OF INDICATORS - K

 

Kansas City Federal Reserve Bank Manufacturing Survey

It is a reports about their businesses from manufacturers in the Kansas City Federal Reserve Bank district. It indicates changes in regional economic activity.

Source: Federal Reserve Bank of Kansas City

Frequency: Monthly at 11:00 a.m., two weeks after month-end

 

LIST OF INDICATORS - L:


 

  • LJR Redbook Report

 

 

LJR Redbook Report

It is a report designed to measure department store trends, compiled from information from 21 large department store firms. It has a modest correlation to monthly changes in non auto retail sales.

Source: Lynch, Jones and Ryan

Frequency: Weekly, for week ending Saturday at 9:00 a.m., Tuesday

 

LIST OF INDICATORS - M:

 

 

  • Manufacturers’ Shipments, Inventories and Orders
  • Manufacturing and Trade Inventories
  • Michigan consumer sentiment index
  • Monetary Base
  • Money supply (M1, M2, M3)
  • Mortgage Bankers Association Weekly Survey

 

 

Manufacturers’ Shipments, Inventories and Orders

Information about new orders, unfilled order backlogs, shipments and inventories for both durable and nondurable goods at U.S. factories is called Manufacturers’ Shipments, Inventories and Orders.

This data is valuable because factories' inventories in relation to shipments, when averaged over two or three months, can show whether inventory imbalances are present or developing at the factory level.

 

Manufacturing and Trade Inventories

Manufacturing and Trade Inventories is a review that reflects the level of business stocks at the retail, wholesale and manufacturing levels.

The report includes inventory-to-sales ratio that can be useful to deduce if speed of stock building corresponds to demand trends. This survey is frequently associated with manufacturers' shipments, order and inventory trends. Inventory data are less reliable than other statistics and has to be updated commonly.

This index reflects trends in overall volume of mortgage applications received by MBA members. Mortgage refinancing and purchase mortgage are represented by two sub-indices.

Mortgage Bankers Association Weekly Survey indicates changes in mortgage refinancing activities and housing transactions, which are very important measures of total consumer expenditures, because home purchases is usually the reason for other expenses.

 

Money Supply Measures

In the economy there are measures of money circulating (M1, M2, M3 and L) which differ in inclusion of various cash equivalents. Outstanding credit market debt of federal, state and local governments as well as the debt of private non-financial sector is reflected by the Debt figure. Monetarist economic theory says that changes in the money supply over time should led to fairly predictable changes in nominal economic output. Growth acceleration or growth retardation considered affecting real economic activity in the short term, but the results of the long-term money growth are still at issue. But nevertheless, break down of these relationships began at the 1980s because of deregulation and globalization.

 

Monetary Base

Monetary Base is an amount of "high-powered" money in the economy that can be leveraged by the banking system for future lending activities.

According to monetarist economic theory, changes in the growth of the money base mean same changes in monetary aggregate growth rates.

 

LIST OF INDICATORS - N:

 

 

  • NAPM index (National Association of Purchasing Managers’ index)
  • National Association of Home Builders Survey
  • New home sales
  • Nonfarm payrolls
  • NY Empire State Index

 

 

NAPM: National Association of Purchasing Managers

The NAPM report measures the condition of the manufacturing sector, and more generally the entire economy, by calculating for data about new orders, production, employment, deliveries, and inventory, in descending order of importance. It totalizes the surveys of over 250 companies within twenty-one industries covering all 50 states, and it is published on the first business day of the month at 10 am EST and contains the previous month's data. A rate over 50% indicates that manufacturing growth, while a rate below 50% means its recession. The NAPM index is also considered to be an early symptom of inflationary pressures. Diffusion indexes are calculated for each of report's categories (which are new orders, production, employment, inventories, delivery times, prices, export orders, and import orders), with a reading over 50% indicating expansion relative to the prior month, and a sub-50% reading indicating contraction. The NAPM precedes all other economic releases of the month, even the employment report, and the tone of subsequent releases could be guessed basing on the NAPM survey. The bond market's reaction to the report is often determined by the prices paid and vendor deliveries indexes, especially during periods of inflation concerns. National Association of Purchasing Management (NAPM) monthly releases one of the most popular data series on the U.S. economy, called the Report on Business. Purchasing Managers Index (PMI), which is most cited single feature of the report, presents summary statistics, which indicates whether the manufacturing sector is expanding or contracting. NAPM recently extends its coverage of the U.S. economy in order to represent the condition of U.S. non-manufacturing activity.

A local report, produced by the Houston affiliate of NAPM since January 1995, provided similar insights into the workings of the Houston economy. It is one of 16 regional reports from around the nation. This monthly review of 80 or more local companies presents helpful and well-timed data about a number of economic indicators; besides of it, this survey yields an overall measure of local expansion or contraction. The use of this new tool to analyze the local economy compared to its national counterpart is the subject of this issue. The NAPM has compiled informal and formal reports on U.S. economic conditions since it was established in 1915. Information mostly on price and supply conditions for various commodities had been the main interest of the association for the first 15 years, but in 1930 a committee was formed to expand the reporting basis. Formal structure slowly emerged through the years, and today the panel of 300 members statistically reflects the composition of U.S. manufacturing; they selected by Standard Industrial Classification code and geographical region. Since this year, a separate panel regularly reports on U.S. non-manufacturing industries. Data are collected from member companies on a number of manufacturing-related series regarding production, employment, new orders and export orders, prices, inventories and imports. On the first business day of each month, the results for the previous month are being reported, along with a preview of government series that will be reported later. The NAPM's reported series are highly correlated with the published government series released weeks or months later. That's why they require thoroughly studying and testing. For example, NAPM employment correlates well with the Bureau of Labor Statistics' manufacturing employment report, and NAPM industrial production with the Federal Reserve's Industrial Production Index.

If accelerations and decelerations are similar, the index is neutral with a value of 50; more decreases than increases puts the value under 50, indicating contraction, and more increases than decreases moves the value of the index above 50, implying expansion. Some indexes have break-even value lower than 50, for example inventory (which has a break-even value near 42) and employment and prices (with a neutral value of 47).

Purchasing Managers Index for manufacturing represents the combination of five of the reported series, which are: inventory (weighted at .10), lead times (.15), employment (.20), production (.25), and new orders (.30). A PMI value below 43.6 is the symptom of recessionary conditions in the United States. A PMI value less than 50 indicates contraction, and above 50 indicates expansion is under way in U.S. As variations in this index can explain about 60 percent of the changes in U.S. gross domestic product, the PMI is sometimes used to draw broader conclusions about the U.S. economy as a whole.

 

Home Builders Survey

Information on buyer traffic, NAHB members regarding current sales conditions, and sales expectations are published in the Home Builders Survey for the next six months.

Buyer traffic and sales expectations usually correspond or slightly overtake housing starts, while, according to by the Department of Commerce, current sales have a modest positive correlation with new homes.

 

New Home Sales

This indicator is sometimes referred to as New Singly-Family Houses Sold. Interviews of about owners of about 15,000 or 10,000 builders of selected building projects are the bases for it. It shows the number of newly constructed homes that were sold during the month.

It helps to measure the demand for housing as well as the economic momentum. Buying a house means that people feel pretty comfortable and confident in their own financial position. Actually, this narrow piece of data has a significant effect through the economy, and therefore across your investments and the markets. Tracking economic data such as new home sales helps the investors to gain specific investment ideas and provides them with a broad guidance for managing a portfolio.

The construction of a new home requires a lot of construction jobs, and income of those jobs will be returned into the economy. Homebuilder and the realtor gain their profit when the house is sold. Purchasing a house brings provides buyer with a great variety of consumption opportunities. Furniture and home appliances, such as washers, refrigerators and dryers and are just a few items new homebuyers might purchase. A hundred thousand new households that appear around the country every month multiply the economic "ripple effect". The market effect of the report is usually insignificant. Existing home sales report, which has a sample data pool four times as large and is released earlier in the month, is much more popular.

 

Non Farm Payroll (NFP)

Non Farm Payroll is a measures overall strength of the labor market and the employment rate. It accounts for about 80% of the workers who contribute to GDP, reflecting all business employees excluding private household employees, general government employees, and employees of nonprofit organizations. The full report also represents estimates on weekly earnings of these employees and the average work week. NFP is very necessary as a general indicator of the health of the economy; usually it affects the dollar in forex trading. NFP rises steadily: since 1990 it has increased from 109,144 in January of 1990 to 135,106 in May of 2006. When NFP rates are lower than expected it causes selling of the US dollar on the belief that it is weakening, and the opposite is true for an unexpectedly high NFP. NFP is published at 8:30am EST on the first Friday of every month. It tends to cause an average move of 124 pips in the EUR/USD.

 

Orders, Sectoral Production and Inventories

It is the results of a survey of 350 purchasing managers on recent trends in orders, production, employment, delivery speeds (vendor performance), and inventories as well as prices for the products they buy. Respondents indicate whether activity in each category has been higher, lower or unchanged from the previous month.

An overall index reading above 50% implies expansion of the manufacturing sector; below 43% implies recession. Growth in other sectors ? service and construction ? can sustain gains for the whole economy when manufacturing weakness is only moderate. This survey is also considered an indicator of corporate purchasing managers? plans.

Source: Institute for Supply Management

Frequency: Monthly at 10:00 a.m., first business day of the following month

 

LIST OF INDICATORS - P:

 

 

  • Payroll Employment
  • Personal Consumption Expenditures
  • Personal income
  • Philadelphia Fed index
  • Philadelphia Federal Reserve Bank Business Outlook
  • Survey
  • Prices, Wages and Productivity
  • Producer price index (PPI)
  • Productivity
  • vPurchasing Managers Index (PMI)

 

 

The Payroll employment

The Payroll employment, that also known as the Labor Report, considered to be the most important among all economic indicators. It represents extensive look of the economy as it includes all necessary factors of the economy. It is usually released on the first Friday of the month. As valuable source of information about changes in job creation in several industry categories, it can reflect the detailed picture of job market.

Payroll Employment is a measure of the number of people being paid as employees by non-farm business establishments and units of government. Monthly changes in payroll employment reflect the net number of new jobs created or lost during the month and changes are widely followed as an important indicator of economic activity. Large increases in the payroll employment indicate strong economic activity that could eventually cause increasing of interest rates and support the currency at least in the short term. However, during the rising of inflationary pressure, this may weaken the long-term confidence in the currency.

 

Personal Consumption Expenditures

Personal Consumption Expenditures shows the level of consumer spending for all goods and services, quoted in both . real (inflation adjusted) and nominal (current-dollar) terms and divided into three categories: durable goods, nondurable goods and services. This indicator represents two-thirds of the Gross Domestic Product (GDP).

Personal Income shows households' income from all sources, which are self-employment, employment, investments, and transfer payments. It can also be described as total pretax annual income earned by private trust funds, individuals and non-profit organizations.

Disposable personal income (DPI) measures personal income discounting tax and non-tax payments, or, in other words, personal saving subtracts personal consumption expenditures plus interest payments and net transfers to foreigners from personal income.

This index can be helpful in forecasting changes in consumer spending patterns. Two-thirds of GDP is personal consumption; therefore consumer spending has an effect on economic growth.

Spending is determined mostly by income, and average US consumer spends approximately 95 cents of each new dollar. Larger spending benefits the stock market and stimulates corporate profits.

 

Philadelphia Fed

This index reflects the conditions of regional manufacturing that covers Pennsylvania, Delaware and New Jersey. This region is considered to represent a reasonable cross section of different sectors of national manufacturing. Expanding factory sector is represented by readings above 50 percent; while rates below 50 are the symptom of contraction.

This index, along with the Chicago Purchasing Manager’s Index, is designed to predict the results of ISM index, which is the leading indicator of economic activity as a whole.

 

Philadelphia Federal Reserve Bank Business Outlook Survey

This survey is based on a poll of manufacturing firms in eastern Pennsylvania, New Jersey and Delaware, the bank’s district, on recent expectations and developments with response to “general conditions” and specific manufacturing activities. It represents trends in regional economic activity.

 

GDP-Based Price Indices

The broadest measure of inflation in the economy is GDP-Based Price Indices. It is part of the quarterly Gross Domestic Product (GDP) report representing quarter-to-quarter percent change in weighted price indices for the various components of GDP, for the ratio of nominal (current-dollar) GDP to real (inflation-adjusted) GDP and gross domestic purchases (excludes exports).

The Producer Price Index (PPI) measures the average level of prices of a fixed basket of goods received in primary markets by producers. The monthly reports of this index indicate commodity inflation. The PPI is widely followed because it accounts for price trends throughout the manufacturing sector.

The PPI is popular but leaves out the food and energy components. These items are usually much more changeable than the rest of the PPI and can therefore obscure the more important underlying trend.

Studying the PPI allows consideration of inflationary pressures that may be receding or accumulating, but the index has still to be improved.

A rising PPI is normally expected to cause higher consumer price inflation and therefore to potentially increase short-term interest rates. Higher rates will often have a short-term positive affect on a currency, however outstanding inflationary pressure will often weaken the confidence in the currency.

 

Productivity and Costs

Productivity is seasonally adjusted review that measures the change in output per hour of work. It provides quarterly statistics on total labor compensation as well. Productivity considers the possibility of economic growth without a raise in inflation. It has valuable effect on the outlook for employment and it is also an indictor as efficiency of the labor market.

 

Purchasing Managers Index (PMI)

The Institute for Supply Management (that was called the National Association of Purchasing Managers (NAPM) before) publishes a monthly complex index of national manufacturing conditions, that contains data on production, new orders, supplier delivery times, inventories, backlogs, prices, export orders and import orders and employment. It consists of two sub-indices: non-manufacturing and manufacturing.

 

LIST OF INDICATORS - R:

 

 

  • Real Gross Domestic Product (GDP)
  • Redbook Index
  • Residential Construction Spending
  • Retail sales
  • Richmond Federal Reserve Bank Survey

 

 

Real Gross Domestic Product (GDP)

The total amount of goods produced and services provided is measured by GDP. The GDP prior period data concerning the growth rate is calculated according to real conditions in order to exclude the uncertainty occurring due to inflation. The Bureau of Economic Analysis of the Department of Commerce is responsible for publishing the GDP data quarterly. GDP shows perfectly the reduction or expansion of the economy, so that it has a major influence on the financial markets productivity.

 

Redbook Index

CPLR 3211(a)(7) is often referred to for failure by the defendants attempting to cause a dismissal for the complaint. This happens because the public requires a contrary relief of the complaint. There are three causes of the action most often interfered into the complaint. The first is "hot news" misunderstanding, legal basis and the competition held unfairly. The second includes wrong trade secrets appropriation. The third is an insincere contracts conducting.

The brokerage firm called “LJR” (Plaintiff, Lynch, Jones & Ryan, Inc.) deals with institutional securities and provides market research for its institutional investors among its other services. They are the unique rights owner and publisher of "the Redbook Index" (“LJR Redbook Research Retail Sales Growth Index”). The “Redbook Index” is also known to have the information of proprietary and prepared by LJR at its own expense and effort.

The Redbook Index is provided by LJR as a research report prepared each week for major institutional investors being its paying subscribers. LJR distributes the Redbook Index to its subscribers through telephone, hard copy and facsimile. The most important data of the Redbook Index, as LJR states, is the compared information of the national retail sales growths and declines as well as the common data of the previous month.

The subscribers receive the Redbook Index at 2:05 P.M. (EST) and at 2:40 P.M. (in 35 minutes) it is presented to the public. The "embargo period" (the time between the subscribers and general public receive the Redbook Index data) was set to 35 minutes as a result of the Plaintiff subscribers' agreement. Plaintiff is sure that its subscribers appreciate the embargo period greatly. This period gives an advantage before non-subscribers to make analyzed buying decisions earlier than the Redbook Index is spread among the public.

The analysis, monitoring and explanations of the consumer economy and retail sales trends are the things that the Redbook is responsible for. It has proved its reliability by having a 41-year history, being an independent monitor of the trends for all these years. Wall Street has the weekly proprietary retail sales index of the Johnson Redbook Index as the most watched one. The warnings, given in advance by the Index, show early signals of business cycle changes, sector rotation, inflation and interest rates fluctuations.

A number of other statistical analyses of the retail sales series trends are carried out by the Redbook. One of them is retailer same-store data that is based on the largest database of proprietary. The Redbook also carries out a close consumer economy monitoring in order to find the fundamentals that form demand, such as Consumer Indicators watching monthly more than 150 indicators in order to forecast major trends for short- to medium-term to let various consumer watchers along with retail investor use this data.

 

Residential Construction Spending

What is it: The amount of whole spending for both private and public construction that has the seasonal adjustment for publishing in inflation-adjusted (real) as well as in nominal figures.

Why we care: Some parts of the quarterly GDP report are calculated using Construction spending directly. Still, the financial markets prefer dealing with to housing starts and new home sales because Construction spending suffers quite frequent revision.

 

Retail Sales

Total receipts of retail stores are measured by the Retail Sales. This is one of the most followed consumer spending indicator that shows the rate of retail sales change through its percentage changes.

Retail sales accumulates about one half of total amount of consumer outlays and over 30 percents of total activity of the economy.

Auto sales follow Retail Sales less due to their higher volatility referring to other parts of the Retail Sales and the following possibility to figure out more significant trend.

Retail sales take the effects caused by the inflation into consideration being measured in nominal conditions. At least a short-term support to the currency may be expected when Retail Sales figures grow up giving the signs of a severe economy that predicts short-term interest rates increase.

 

Richmond Federal Reserve Bank Survey

What is it: The list of local companies occupied in manufacturing, retail and service sectors on conditions.

Why we care: It shows regional changes in activity of the economy.

 

LIST OF INDICATORS - T:

 

 

  • Trade Balance

 

Trade Balance

The trade balance is a measure of the difference between imports and exports of tangible goods and services. The level of the trade balance and changes in exports and imports are widely followed by foreign exchange markets. The trade balance is a major indicator of foreign exchange trends. Seen in isolation, measures of imports and exports are important indicators of overall economic activity in the economy.

It is often of interest to examine the trend growth rates for exports and imports separately. Trends in export activities reflect the competitive position of the country in question, but also the strength of economic activity abroad. Trends in import activity reflect the strength of domestic economic activity.

Typically, a nation that runs a substantial trade balance deficit has a weak currency due to the continued commercial selling of the currency. This can, however, be offset by financial investment flows for extended periods of time..

A widening trade gap suggests that the dollar may be overvalued, especially if exports are weak. Strong imports are a more complex issue as it suggests that domestic spending is too strong. In this case, higher interest rates may be needed which would tend to be dollar supportive, but there would also be pressure for a weaker dollar to help boost exports and close the trade gap. A higher than expected trade deficit will tend to weaken the dollar, especially if exports are weak.

 

LIST OF INDICATORS - U:

 

 

  • Unemployment Insurance Claims
  • Unemployment rate
  • Unit Auto and Truck Sales
  • Unit labour cost
  • U.S. Treasury Borrowing Schedule

 

 

Unemployment Insurance Claims

What is it: The weekly amount of demands for state unemployment insurance along with the whole number of people who received their insurance for the previous week.

Why we care: Indicates the increasing or reducing unemployment. The condition on the labor market may be understood through the layoff rapidity suggested by the initial claims.

 

The Unemployment Rate

The household survey doesn't give much reliable information because of its smaller research sample unlike the establishment survey as it was mentioned above. Though, this survey worth mentioning as far it gives the daily figures of unemployment rate. It is worthless of much explanation but still you should be attentive as it can change considerably each month because of the data uncertainty. This rate is calculated by dividing the amount of unemployed people (of the labor force) by the total amount of the labor force.

The figures of labor force and unemployment fluctuate due to the small sample size even more than non-farm payrolls, which is an important problem. Nevertheless, these figures show whether the unemployment changes are caused by the abnormal moves of both indicators or by the only one.

 

Unit Auto and Truck Sales

What is it: The data provided by largest auto and truck manufacturers each month adjusted in accordance with any seasonal factors.

Why we care: This information monthly describes demand trends existing and occurring in this sector along with other important conclusions.

 

Unit labor costs (ULCs)

This measure calculates the unit labor costs through the output labor cost and productivity. The background information of the KLIM measures and its methodologies are presented in this document, published by Groningen Growth and Development Centre researchers of the University of Groningen in the Netherlands. 31 countries are supposed to contain the while economy series whether 23 countries are its manufacturing part. The research plan for KILM’s work concerning the measures towards productivity is posed in this document. It measures the cost factors pressing the labor market. The result is calculated by dividing average labor costs ration by output per worker at the hours worked (his or her productivity). Price levels are highly affected by the price of one production unit (or item) paid for its producing. Such models of macroeconomic wage-price sector as the national income forecasting model uses the unit labor costs concept widely. Both nominal and real terms are used if unit labor cost measurement.

The labor cost of the output production is closely connected with the productivity that is represented by ULCs (Unit labor costs). In case the unit labor cost increases then the labor part in the production cost rises as well. The threat to the macroeconomics may occur when the labor costs rise exceed the productivity rise while any other costs are not adjusted in return.

ULSs are supposed to be understood as the indicator of the goods cost competitiveness but not of its general competitiveness. When dealing with advanced economies, unit labor cost, as an ultimate measure of the labor price.

 

U.S. Treasury Borrowing Schedule

What is it: The figures of the planned U.S. Treasury securities emission to the market.

Why we care: This indicator influences the prices of bond and yields as well when this measure of supply is compared to demand.

 

LIST OF INDICATORS - W:

 

 

  • Wholesale inventories

 

 

Wholesale inventories

Wholesale inventories sometimes swing enough to change the aggregate inventory profile (aggregate inventory is the sum of inventory at the manufacturing, wholesale, and retail levels), which may affect the GDP outlook. In that event they can elicit a small market reaction. More often than not, however, this release goes unnoticed except by market economists.

This release includes sales and inventory statistics from the second stage of the manufacturing process. The sales figures do not move the market as they do not reflect personal consumption. Wholesale inventories may change the aggregate inventory profile which can influence the GDP forecast.

 

LIST OF JAPAN INDICATORS:


 

  • Balance of payments
  • Consumer price index (CPI)
  • Gross domestic product (GDP)
  • Industrial production index
  • Leading and coincident indices of business conditions
  • Machinery orders
  • Money Supply
  • Retail sales
  • Tankan report
  • Unemployment
  • Wholesale price index (WPI)

 

 

Money Supply

The money supply strongly affects the rates of Japanese currency, the yen. In case the supply grows slowly, the Bank of Japan has to decrease the interest rates affecting the yen negatively. The deflation which means falling prices has a negative affection to the yen.

 

Tankan Index

This index, based on the surveys held among Japanese companies four times a year and showing the business confidence is one of the key indicators of the Japanese economy.

The Tankan values higher than 0 usually show the positive economy trend and are considered as normal though the higher values gives good support for the yen and are good for the entire economy of Japan.

 

About Japan's economic structure.

The economy of Japan is partly similar to that of the developed European countries. Bank financing is traditionally more reliable from the point of view of Japanese companies than the issuance of equity and bond. It is normal for the employees of big companies to develop careers in one company during all their lives. The Japanese companies are divided into two groups: the first includes multinational corporations, huge and powerful, whether the second one contains small enterprises often owned by families. Since 1960s the economy of Japan has been based on manufacturing industry. The Japanese manufacturing is still dominated by car and electronic production that affect international markets without any difficulties.

Japan leads in production of machine tools as well and export them mostly to the USA and South Korea. Japan is also one of the key players of the steel and iron markets. High level of investments is an important characteristic of Japan's economy in public as well as in private sectors. A gross fixed investment amount calculated for the period from 1999 to 2003 made up 24-27% of the GDP adjusted to current prices which is much higher than US or any european developed country had during the same period.

 

Economy of Japan

The density of population is high in Japan, about 243 people per square kilometer. This is caused by combination of rather small territory and a considerable population. According to World Bank research, the number of people living in the urban areas is 65% and the length of the life is the highest in the world aggregaing 82 years according to 1997-2003 data. 11.8% of the Japan's population is reported to live below poverty line which corresponds 50% of median household income. The literacy of adult popularion is 99.9%. Speaking about human development index Japan has the 9th place out of 177. Gross National income per capita is $34510 (2003 data) makes Japan the second largest market in the world. Moreover, Japan is a member of OECD. The figures of GDP annual growth was 2.4% in 2004.

Japan used to be the less-developed country in 1952 and its consumption was five times smaler than the one in the USA. But within next 20 years Japan has reached the status of developed country out of less-developed having 8% annual economy growth rate. The values of GDP per capita in Japan raised from 21 to 56 pecent during the period from 1955 to 1970. Though, the largest recession of the Japan's economy since the World War II occured in late 1990s when by the end of this period the Tokyo stock market had suffered 38% decline with 300 trillion yen (2.07 USD trillion) losses. This recession also caused falling of land prices far from it's speculation top. There is a special term "bursting" of the "bubble economy" used for such recession description. GDP decline made up 0.4% in 1997 and 2.8% in 1998 after its constant increase. These two years were the first time when the economy was in decline within two successive years after the World War II. The stock prices increase and the growth of some industries were the first signs of economic recovery occured in 1999 and 2000. The recovery was excited mostly by the rising demand in the developing Asian countries for Japanese products, the development of infomation technologies and government policies. The inflation index, one of the key indicators, made up 1.6% in December 2004.

 

Japan's phenomenal economic growth

The phenomenal growth of the Japan's economy was a result of two economic trends combination. Firstly, it is the planning and applying the national economic policies by the government along with developing an efficient fiscal and monetary policies. Secondly, the affection of the specific public-spirited management combined with the vast private ownership. The aim of MITI (Ministry of International Trade and Industry) is to create a specific industrial policies that causes economic and social growth. Some industries considered as important for the economic growh were chosen and supported by MITI. In 1960s these industries were: chemicals, shipbuilding, iron and steel, transistor radios; in 1970s they were automobiles and electronics; then computers, computer chips, and other high-technology industries in the 1980s. MITI also helps to smoothly close the plants and retrain the workers for another qualification. It helped with closing textile industry in the 1970s and the shipbuilding industries and ailing coal-mining in the 1980s. The Economic Planning Agency has developed and realized the Ikeda plan which proposed the national economic multiplication by two within the period from 1961 to 1970. It has also developed the strategy of fast GNP increase and inflation containment along with the social and industrial infrastructure improvement. It is also responsible for forecasting the key economy indicators. The Ikeda plan generally consists of independent economy adapted for reaching the certain goals mostly based on the Japan's foreign commerce. The 10-year plan was exceeded in the indicators like GNP annual growth that actually resulted at 11% whether 7.2% was planned; economic social development was at 10.6% which is higher than 8.2% planned.

The purposes of five-year plan adopted in 1988, were to support real GNP growth at 3.8% per year, restrain the inflation, keep low unemployment (2.5% per year) and increase the quality of life by means of a shorter work week and stabilized property prices.

In spite of it, the economy's downturn was mentioned after 1992. Some analysts compare it to 1974 recession in its hardness. Among the main steps taken under the Initiative was a 10-year program for public infrastructure development. It included the expenditure of up to $8 trillion for the construction or restoration of bridges, roads, ports, airports, resorts, medical facilities, retirement communities, telecommunications systems, many more. Real growth reached mark of 1% a year by the 1990s. Besides of it, one of the main trading strategies of Japan is helping to create sustainable trading partners. This strategy is supposed to be guarantee for long-term development of Japanese economy.

 

 

LIST OF UK INDICATORS:


House Prices A UK report.

Nationwide and Halifax Banks, together with the Royal Institute of Chartered Surveyors (RICS) published the assessments of monthly price changes. Increasing house prices will promote consumer spending and the economy in the short term. Increasing trend also requires rising of interest rates. The longer-term forecasts are more complex. Strong reports will be Sterling positive in the short term. The longer-term conclusions are unfavorable, especially as a sharp recession in the sector can destabilize the economy as a whole. And now some remarks concerning economy of the United Kingdom. United Kingdom has 60.27 million people and occupies 21st rank in the world in terms of population in mid 2004.

National growth rate in UK was 0.3% during the 1975-2002 (according to data obtained from UNDP HD Indicators), and this was much lower comparing to the high-income countries' growth of 0.6 %. The amount of citizens who live below income poverty line is 12.5% of UK's population, and it's 50% of median household income. Improved water source are accessible to all the people in UK. The percent of school-age population as it denoted in gross primary enrollment, with both male and female enrolled equitably, is 101%. Adult Literacy rate is 99%. In terms of human development index, UK occupies 12th place among 177 countries of the world. Gross National income of United Kingdom is $ 1680.6 billions (2003).

This means that UK has the fourth largest economy in the world. The country is a member of OECD. In 2003 purchasing power parity was estimated as US $ 27,460, Per capita GNI. In the same year, average annual growth rate of GDP was 2.2 %. Almost 70% of GDP in the UK is accounted for by private consumption, in concordance with the expenditure method for calculating national income. About National Institute of Economic and Social Research (NIESR) National Institute of Economic and Social Research (NIESR) provides monthly estimation of GDP, totalizing disparate data into a single and easily understood measure. Martin Weale, NIESR Director, and his colleagues describe the process of producing of monthly indicator in the February 2005 issue of the Economic Journal. It is based on movements in the monthly series of data for manufacturing output, industrial production and retail sales.

The data of the third month is being forecasted relying on two months' data for any calendar quarter, using standard statistical techniques. Such forecasts are base for estimation for the growth in GDP in calendar quarters. The estimates are supposed to retrace the first estimate of GDP growth published by the Office for National Statistics (ONS) and anticipate it by about three weeks. The National Institute is publishing the indicator since 1998. Since then there have been only three occasions when the error has been as big as 0.3% of GDP in absolute size. Two of these mistakes have been made due to unusual events, which are the fuel protests in September 2000 and the Golden Jubilee in June 2002.

The third occasion is associated with the Princess of Wales' funeral in September 1997. Standard forecasting method performed badly because of disrupted data of the third month of the quarter and this caused two of these three large errors. NIESR has published estimates of GDP growth for the other twenty-five quarters. Among them eleven have had errors of 0.1 percentage points, four have had errors of 0.2 percentage points and nine have been exact. Scottish Index of Leading Economic Indicators The Bank of Scotland has developed a new tool to present an early indication of turning points in the Scottish business cycle. It is called Scottish Index of Leading Economic Indicators, and it is being published on a quarterly basis. The Index is based on several indices such as Business Optimism, Housing Starts, New Orders and Car Registrations; its development goes up to 1986.

Interpretation of the series is complicated by considerable revisions to the data. Revisions to GDP became very common lately, generally because of the resulting problems caused in the administration of economic policy. The monitoring of key economic variables that have a tendency to move in advance of growth in the whole economy become current practice in many countries, notably in the United States and the United Kingdom. The Scottish Index of Leading Economic Indicators was designed by the Bank of Scotland in order to provide an early indication of changes in economic activity.