Guide to Economic Indicators

Alpesh Patel Spreads is a global institution, giving you access to financial instruments quoted around the globe.

The majority of financial markets are now traded globally and therefore may be affected by key economic indicators throughout the world.

It is therefore imperative that you consider how your positions could be affected by such data.

In order for you to fully understand the market implications of those key economic indicators, Alpesh Patel Spreads provide you below with a definition, method of calculation, and publication date for most of the main indicators that professional traders look at.

Index

• Chicago Purchasing Managers’ Index (Chicago PMI)
• Consumer Confidence Index
• Consumer Price Index (CPI)
• Durable Goods orders
• Existing Home Sales
• Gross Domestic Product (GDP)
• Initial Jobless Claims
• Institute of Supply Managers (ISM) Manufacturing Index
• New Home Sales
• Personal Income & Consumption
• Philly Fed
• Producer Price Index
• Retail Sales
• International Trade

Chicago Purchasing Managers’ Index (Chicago PMI)

Results are based on surveys of more than 200 purchasing managers regarding the manufacturing industry in the Chicago area. The distribution of manufacturing firms in this area mirrors the national distribution.

This helps to forecast the results of the ISM index, which is released the day after the Chicago PMI.

Readings above 50% indicate an expanding factory sector.

Readings below 50% indicate a contracting factory sector.

Time of data release:
Released monthly on the last business day of the month at 3.00pm GMT. Data is released for the current month.

Consumer Confidence Index

A survey of 5,000 consumers, about their attitudes concerning the present situation and expectations regarding economic conditions.

This index can be helpful in predicting sudden shifts in consumption patterns.

Changes of greater than 5 points are considered significant.

Time of data release:
Released monthly on the last Tuesday of the month at 3.00pm GMT. Data relates to the prior month.

Consumer Price Index (CPI)

An index that measures the change in price of a representative basket of goods and services. This basket contains food, energy, clothing, housing, medical care, transportation and education.

Core CPI (CPI excluding food and energy prices) is very closely monitored. This figure gives a clear picture of the underlying inflation trend.

Larger than expected gains in the core CPI is a sign of inflationary pressure being generated in the US economy.

Time of data release:
Released monthly around the 13 th of the month at 1.30pm GMT. Data relates to the prior month.

Durable Goodsorders

This is a government index that measures the dollar volume of orders, shipments and unfilled orders of durable goods. Durable goods are new or used items generally with a normal life expectancy of three or more years.

This report gives information on the strength of demand of US manufactured durable goods. It is an early indicator of both consumer and business demand for equipment.

An increasing index suggests demand is strengthening which is likely to result in rising production and employment. Increasing spending on investment goods reduces the prospect of inflation.

A falling index suggests the direct opposite.

Time of data release:
Released monthly around the 26 th of the month at 1.30pm GMT. Data relates to the prior month

Existing Home Sales

A report measuring the selling rate of pre-owned houses and is considered a good indicator of activity in the housing sector.

Time of data release:
Released monthly on the 25 th or on the first business day thereafter at 3.00pm GMT. Data relates to the prior month.

Gross Domestic Product (GDP)

Gross Domestic Product measures the value of all goods and services produced in the US in Dollar value, regardless of who owns the assets or the nationality of those used in producing the goods or services.

GDP is a very important measure of the performance of the US economy. Higher GDP growth leads to accelerating inflation. Lower GDP growth indicates weakness in the economy.

Time of data release:
Released monthly on the third of fourth week of the month at 1.30pm GMT. GDP is a quarterly figure so the data released in the second and third month of each quarter provide a revision on the monthly figures

Initial Jobless Claims

This index generated by the government tracks the number of people filing first-time claims for unemployment insurance.

This data helps to predict trends in the US labour market. If the figure moves more than 30,000 claims, a significant movement in job growth is indicated.

Time of data release:
Released weekly on Thursdays at 1.30pm GMT.

Institute of Supply Managers (ISM) Manufacturing Index

The ISM Manufacturing Index is based on surveys of 300 purchasing manager’s nationwide representing manufacturing activity. It covers indicators such as new orders, production, employment, inventories, delivery times, prices, export orders and import orders.

Readings of 50% or above are typically associated with an expanding manufacturing sector and the economy is deemed to be healthy. Readings below 50% show contraction. The index is seasonally adjusted for effects of holidays etc.

Time of data release:
Released on the first business day of the month at 3pm GMT.

New Home Sales

This report measures the number of newly constructed homes with a committed sale during the month.

This report is a good gauge of near-term spending for housing-related items and of consumer spending.

Time of data release:
Released around the last business day of the month at 3pm GMT.

Personal Income & Consumption

Personal Income represents the income that households receive from all sources. Personal consumption outlines consumer spending which is divided into durable goods, non-durable goods and services.

Time of data release:
Released on the first business day of each month at 1.30pm GMT. Data is for two months prior.

Philly Fed

This is a manufacturing index which represents Pennsylvania, New Jersey and Delaware. This represents a cross section of US manufacturing activities.

Readings above 50% indicate and expanding factory sector. Values below ate indicative of contraction.

Time of data release:
Released on the third Thursday of the month at 3.00pm GMT.

Producer Price Index

The PPI measures the average price of a fixed basket of good at the wholesale level. Core PPI or PPI excluding food and energy prices is important as it is a measure of economic stability. It gives an indication of the underlying inflation trends.

Inflationary pressures are generated when core PPI posts larger than expected gains.

Time of data release:
Released on the 11th of the month at 1.30pm GMT.

Retail Sales

This index measures the total sales of goods by all retail establishments in the US. These figures are not adjusted for inflation. The data is however adjusted for seasonal and holiday differences.

This is the broadest indicator of broad consumer spending patterns.

Time of data release:
Released around the 12 th of the month at 1.30pm GMT.

International Trade

This shows the difference between exports and imports of US goods and services. Stronger exports are usually bullish for corporate earnings and the stock market.

Time of data release:
Released around the 19 th of the month at 1.30pm GMT.