1Consumer Price Index (CPI)
The CPI is the most widely used measure of inflation. It gauges changes in the price level of a market basket of consumer goods and services purchased by households. The bundle includes about 200 types of goods and thousands of products, ranging from foods and energy to expensive consumer goods. The prices are measured by taking a sample of prices at different stores. In addition to the overall CPI figure, it is important to also look at the core CPI report excluding volatile goods like food and energy and gives a closer measure of real inflation. Most reports of the CPI figures will include both the overall and the core numbers.
There is also a harmonized CPI (HICP). This is an indicator of inflation and price stability for the European Central Bank (ECB). It is a Consumer Price Index which is compiled according to a methodology which has been harmonized across the EU nations. The HICP is produced by each European Union country to help measure inflation and to guide the ECB in shaping its monetary policy. The HICP is also used as the basis of the European Index of Consumer Prices that is weighted towards household expenditures.
One of the key macroeconomic indicators is the Unemployment Rate, which is the percentage of unemployed workers above 18 years in relation to the total labor force. It is based on a survey of a random sample of about 60,000 households, 375,000 plants. The unemployment rate is calculated by dividing the number of unemployed by the number in the labor force, where the labor force is the sum of the unemployed and the employed. The natural rate of unemployment is considered to make about 4-5% of the labor force. It is treated as an indicator of possible inflationary pressure through wages increase. Salary is considered to grow faster with low unemployment rate, especially in case inflation acceleration is expected.
There are also such reports as the Average Workweek and Average Hourly Earnings. It should be kept in mind that the work force is not the entire population; it is a subset of people that meet certain criteria. The unemployment picture is a key gauge of the health of the economy while the Average Hourly Earnings figure impacts inflation.
Non-Farm Payrolls, known as Non-Farm Employment Change, is a fundamental indicator, which measures jobs added in the previous month. The report excludes farm-related jobs because they tend to be seasonal general and not necessarily indicative of employment trends.
In addition to these standard reports, the U.S. statistical authorities also publish a weekly Initial Jobless Claims report on the number of people filing for unemployment benefits for the first time. These numbers help to take the pulse of the job market. Another crucial report on employment in the U.S. is the ADP National Employment Report that estimates the changes in U.S. employment using payroll data for over 500,000 firms from Automatic Data Processing, Inc. (ADP). This information is compiled by Macroeconomic Advisors, LLC into a report showing aggregate numbers, as well as segments defined by companies' size, goods versus services, and manufacturing vs non-manufacturing firms.
3Consumer Confidence Index
Consumer confidence is considered an essential element of the economic picture. The report measures how confident consumers feel about the state of the national economy and their spending potential. The idea is that the more confident people feel about the stability of their incomes, the more likely they are to make purchases. The Consumer Confidence Index uses about 5,000 households as a sample population and even measures the number of help wanted ads in newspapers to gain a sense of the state of the labor market. Many analysts believe that high consumer confidence can cure a lot of what ails an economy. When most data points to a slumping economy, high consumer confidence and consistent spending may help soften the blow or spark a recovery.
4Durable Goods Orders
The Durable Goods Orders report measures how much people in the U.S. are spending on long-term purchases (products that are expected to last more than three years). The report is made at 8:30 am EST around the 26th of each month and is thought to provide insight into the future of the manufacturing industry. The reports are broken down by industry, which helps to eliminate the effects of single volatile industries like defense spending. Investors are concerned with the overall picture, and the markets are moved by general trends across most industries.
Current Account is the sum of the balance (i.e., net revenue on exports minus payments for imports), factor income (earnings on foreign investments minus payments made to foreign investors) and cash transfers. The current account balance is one of two major measures of the nature of a country's foreign trade (the other being the net capital outflow). A current account surplus increases a country's net foreign assets by a corresponding amount, and a current account deficit does the reverse. Both government and private payments are included in the calculation. It is called the current account because goods and services are generally consumed in the current period.
To compose a survey, about 8-10 thousand businessmen from different economic spheres are polled. The companies, among which 10-15 are large enterprises, 30-35 — medium-sized enterprises, 50-55 small enterprises, are asked about 1) business environment, 2) production and sales, 3) demand and supply, 4) prices level, 5) gains, 6) direct investments, 7) employment, 8) fiscal conditions. Top managers are polled separately. Estimation methods: Diffusion Index (DI) — «Favourable» minus «Unfavourable», % points, percent change — change of the index in relation to the same period of the previous year. The survey increase signals improving economic conditions and is favourable for the JPY rise.
7Personal Consumption Expenditures (PCE)
PCE is a measure of price changes in consumer goods and services. Personal consumption expenditures comprise actual and imputed expenditures of households; the measure includes data pertaining to durables, non-durables, and services.
Similar to the CPI, the PCE is a report (a part of the Personal Income report) presented by the Bureau of Economic Analysis of the Department of Commerce.
The PCE is a fairly predictable report that has little impact on the markets.
This indicator measures the degree of industrial capacity utilization. This is the ratio of total output to the maximum-rated capacity. It shows the current state of the economy. The optimal value of this indicator is 81.5%. The value more than 85% signals that the economy is overheated. A lower value implies a weakening currency and economy
9Philadelphia Fed Index
The index surveys about 100 manufacturers from Philadelphia, the U.S., which indicates their attitude towards the current economic situation and perspectives for the nearest six months. The index signals growth slowdown when it is below zero. This index can indicate what to expect from the ISM Index (Institute of Supply Managment’ index), which comes out a few days later. This index increase triggers USD rise.
Personal Spending is a comprehensive measure of how much consumers spend each month, counting expenditures on durable goods, consumer products, and services. A healthy Personal Spending figure means that consumers are buying goods and services, fueling the economy and spurring output growth. The report is particularly valued for forecasting inflationary pressures. Taken in excess, these high levels of consumption and production may lead to an overall increase in prices. Indeed, the Fed uses a measure of inflation derived from the PCE as their primary gauge of inflation.
On the other hand, persistently low Personal Spending may result in decreasing levels of output and an economic downturn.
11Purchasing Managers' Indexes (PMI)
These economic indicators are derived from monthly surveys of private sector companies. They provide insight into business conditions in services and manufacturing sectors of a country. The headline figure is reported as an index where 50 reflects the centerline of boom-bust sentiment. The larger the divergence from 50 is, the bigger the change in business conditions is.
The indicator represents a number of domestic building permits granted for the month. Strong growth in new approvals and permits indicates a growing housing market. Because real estate generally leads economic developments, housing tends to thrive at the start of booms and wane at the onset of recession. The figure can be used with others to forecast future growth in the economy as a whole. A strong housing market also tends to lead consumer spending. The headline number is the seasonally adjusted percentage change in new building approvals from the previous month.
13Existing Home Sales
The Existing Home Sales indicator records sales of previously owned homes in the United States. This report provides a fairly accurate assessment of housing market conditions, and because of the sensitivity of the housing market to business cycle twists, it can be an important indicator of overall conditions at times when housing is particularly important to the economy.
While used home sales are not counted in GDP, they do affect the U.S. economy. Sellers of used homes often use capital gains from property sales on consumption that stimulate the economy. Higher levels of consumer spending may also increase inflationary pressures, even as they help grow the economy.
The Existing Home Sales report is not as timely as other housing indicators like New Home Sales or Building Permits. By the time the Existing Home Sales is released, market conditions may have changed.
Trade Balance is the difference between imports and exports of goods. Trade deficit indicates that imports of goods are greater than exports. When exports are greater than imports, there is a trade surplus. Trade surpluses indicate that funds are coming into a country in exchange for exported goods.
The balance of trade is sometimes divided into a goods and a services balance.
Trade balance forms part of a current account.