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ADP National Employment Report

The ADP National Employment Report provides a monthly snapshot of U.S. nonfarm private sector employment based on actual transactional payroll data.

It is also popularly known as the ADP Jobs Report or ADP Employment Report.

The report is sponsored by Automatic Data Processing Inc., the firm that has prepared the report since 2006, and handles payroll for about a fifth of U.S. private employment.

The ADP National Employment Report is viewed as a useful preview of the more widely followed Employment Situation report by the Bureau of Labor Statistics.

What is the ADP National Employment Report?

The ADP National Employment Report is an independent estimate of the change in U.S. nonfarm, private employment derived from actual, anonymous payroll data of client companies served by ADP,

The report details the current month’s total private employment change, weekly job data, and wage insights from the previous month.

The ADP National Employment Report is released to the public each month, free of charge, to provide insights into the U.S. labor market and provide businesses and governments with a source of credible and valuable information.

The following payroll-based employment information is provided:

Total U.S. private employment
Employment for U.S. goods industries ( manufacturing, mining, and construction)
Employment for U.S. service industries
Employment for small (1-49 employees), medium (50-500 employees), and large (500+ employees)

Why is the ADP National Employment Report important?

If you’re employed by a non-government company, there’s a possibility that your paycheck is processed by Automatic Data Processing Inc. (ADP).

The company handles payroll for about a fifth of U.S. private employment, putting it in a unique position to survey trends in the nation’s labor market.

Traders often consider the ADP report as the prelude to the BLS release of NFP because of the existent correlation between the two. The overlaying of both series below should speak for itself.

Another reason that forex traders follow this report is the same as with the Employment Situation report.

Solid growth in employment figures increases inflationary pressures which increase the likelihood that the Federal Reserve will raise interest rates.

What’s the difference between the ADP National Employment Report and the NFP report?

The ADP National Employment Report presents an independent measure of the U.S. labor market rather than a forecast of the Bureau of Labor Statistics (BLS) monthly non-farm payrolls (NFP) report.

The ADP National Employment Report claims to provide “high-frequency measures of employment, including jobs and wages, to provide a clearer, near real-time assessment of the labor market.”

ADP’s anonymized person-level payroll data based on 25 million workers aims to provide a more representative picture of the U.S. labor market and is meant to complement official government data.

The two reports capture the labor market from different angles.

For example, in the BLS survey, a person is counted as employed if they received pay during the week which includes the 12th day of the month. The ADP report asks how many people were actually on the company’s payroll during that month.

Aside from being an independent measure of U.S. employment data that’s meant to complement government data, here’s how ADP’s report differs:

Government employees are excluded.
Since data is based on payroll, this means some workers such as the self-employed aren’t counted.
Not as detailed as the BLS Employment Situation report.

Where to find the ADP National Employment Report?

Published monthly, two days before the Bureau of Labor Statistics puts out the NFP, the data can be seen on BabyPips.com’s economic calendar

Previous months’ data, consensus, and actual releases are available.

What time is it released?

The ADP National Employment Report is published monthly by the ADP Research Institute in collaboration with the Stanford Digital Economy Lab.

The ADP National Employment Report s is released on the first Wednesday of every month, at 8.15 am ET.

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ANZ Commodity Price Index

ANZ Commodity Price Index is an economic indicator that measures the price movement of major export commodities for a specific country.

By tracking the index, you can better understand the health of the economy, the implications of commodity price movements, and the potential impact on trade balances and economic growth.

What is the ANZ Commodity Price Index?

Developed by Australia and New Zealand Banking Group (ANZ), the index tracks a diverse basket of commodities and serves as a reliable gauge of export price trends.

Commodity prices are crucial for understanding the health of an economy, as they directly impact export revenues, trade balances, and overall economic growth.

Why is the ANZ Commodity Price Index important?

The ANZ Commodity Price Index is essential for businesses, policymakers, and traders alike, as it offers insights into the performance of key commodities and their potential impact on the economy.

A rising index signals an increase in commodity prices, which could lead to higher export revenues, a ber currency, and positive implications for economic growth.

Conversely, a falling index may indicate declining commodity prices, potentially resulting in lower export revenues, a weaker currency, and reduced economic growth.

Since commodity exports constitute an important part of the New Zealand economy, readings above expectations can have a positive effect on the New Zealand dollar (NZD).

Who publishes the ANZ Commodity Price Index?

The Australia and New Zealand Banking Group (ANZ) compiles and publishes the ANZ Commodity Price Index.

The index is based on a selection of commodities that are significant to the country’s export sector, including agricultural products, minerals, and energy resources.

The composition of the index may vary between countries, reflecting the unique export profiles of each economy. ANZ uses data from a variety of sources, such as government agencies, industry associations, and private sector organizations, to ensure accuracy and comprehensiveness.

When is the ANZ Commodity Price Index released?

The ANZ Commodity Price Index is published on a monthly basis, typically within the first week of each month. It is available on the ANZ website, as well as through various financial news outlets and data providers.

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Baker Hughes Rig Count

The Baker Hughes Rig Count is a weekly report that tracks the number of active drilling rigs in the United States and Canada.

The report is published by Baker Hughes, a global oilfield services company, and is widely followed by the oil and gas industry as a leading indicator of drilling activity.

What is the Baker Hughes Rig Count?

The Baker Hughes Rig Count is a closely watched report that tracks the number of active drilling rigs in the oil and gas industry.

It serves as a barometer for the health of the energy sector, with changes in rig counts reflecting fluctuations in exploration and production activities.

Established in 1944 by oilfield services company Baker Hughes (now Baker Hughes, a GE company), the rig count has evolved into a key indicator of drilling activity in the United States, Canada, and international markets.

By monitoring the number of active rigs, the report provides insights into industry trends, production levels, and the overall health of the energy sector.

How to Read the Report

The Baker Hughes Rig Count breaks down the data into several categories:

Geographical regions: The report tracks rig counts in the United States, Canada, and international markets. U.S. data is further divided into individual states and offshore regions.
Rig types: Rig counts are separated into oil rigs, gas rigs, and miscellaneous rigs, providing insights into the specific energy resources being targeted.
Directional, horizontal, and vertical drilling: The report also includes information on the types of drilling techniques employed by the active rigs, which can be indicative of technological advancements and efficiency improvements in the industry.

The weekly changes in rig counts, along with longer-term trends, can be analyzed to gain insights into the direction of the energy sector and its potential impact on oil and gas prices

Why is the Baker Hughes Rig Count important?

The Baker Hughes Rig Count is a valuable tool for industry participants, analysts, and investors for several reasons:

Production levels: An increase in active rigs can signal higher production levels, while a decrease may indicate lower production. This information can affect oil and gas prices as well as energy stocks.
Industry health: Rig count trends can provide insights into the financial health of the oil and gas industry, as companies may adjust their exploration and production activities in response to market conditions, such as oil prices and economic factors.
Employment and economic impact: The number of active rigs can also be indicative of employment levels in the oil and gas sector and the broader economic impact of the industry.

Who publishes the Baker Hughes Rig Count?

The Baker Hughes Rig Count is published by Baker Hughes, a GE company, one of the world’s largest oilfield services providers.

The company compiles the data from its extensive network and industry sources.

When is the Baker Hughes Rig Count released?

The Baker Hughes Rig Count is released every Friday and can be accessed on the Baker Hughes website.

Historical data is also available, enabling users to analyze long-term trends and compare rig counts across different time periods and market conditions.

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Balance of Trade

The Balance of Trade is an economic indicator that measures the difference in value between a country’s exports and imports over a specified period.

A positive balance of trade, also known as a trade surplus, occurs when a country exports more goods and services than it imports.

A negative balance of trade, also known as a trade deficit, occurs when a country imports more goods and services than it exports.

It is an essential component of the current account and provides valuable insights into a country’s trading relationships and overall economic health.

What is the Balance of Trade?

The Balance of Trade is calculated by subtracting the value of a country’s imports from the value of its exports.

When a country exports more goods and services than it imports, it has a trade surplus.
When a country imports more than it exports, it has a trade deficit.
A balanced trade occurs when the value of exports equals the value of imports.

A country with a trade surplus is generally seen as being in a b economic position, as it is earning more from its exports than it is spending on its imports.

This can lead to increased economic growth, as businesses have more money to invest and hire new workers.

Several factors can influence a country’s Balance of Trade, including currency exchange rates, trade policies, economic growth, and global demand for goods and services.

These factors can cause fluctuations in the Balance of Trade, making it a dynamic and important economic indicator.

How to Read the Report

The Balance of Trade is reported as a dollar amount.

A positive number indicates that the country has a trade surplus, while a negative number indicates that the country has a trade deficit.

The balance of trade is also reported as a percentage of gross domestic product (GDP).

This percentage is known as the trade balance to GDP ratio.

A high trade balance to GDP ratio indicates that a country is more reliant on trade than other countries.

Balance of Trade reports are typically presented in either a table or chart format, displaying the data in millions or billions of the country’s currency.

The data may be presented as a single value, representing the trade balance, or broken down into exports and imports.

When reviewing the report, consider the following:

Identify whether the Balance of Trade indicates a surplus, deficit, or balance.
Examine the trends over time to gain insights into the country’s trade patterns and economic health.
Analyze the components of the report, including the breakdown of exports and imports, to identify the key drivers of the trade balance.
Compare the Balance of Trade to other economic indicators to gain a more comprehensive understanding of the country’s overall economic performance.

Why is the Balance of Trade important?

The Balance of Trade is a critical indicator of a country’s economic health and international competitiveness.

It is important for a number of reasons:

1. The balance of trade provides insights into a country’s economic health

A country with a trade surplus is generally seen as being in a b economic position, as it is earning more from its exports than it is spending on its imports.

This can lead to increased economic growth, as businesses have more money to invest and hire new workers.

2. The balance of trade can affect a country’s currency value.

If a country has a trade surplus, its currency is likely to appreciate in value. This is because there is more demand for the currency from foreign buyers.

Conversely, if a country has a trade deficit, its currency is likely to depreciate in value. This is because there is less demand for the currency from foreign buyers.

3. The balance of trade can affect a country’s employment levels.

When a country has a trade surplus, it is likely to create more jobs in the export sector. This is because businesses need to hire more workers to produce the goods and services that are being exported.

Conversely, when a country has a trade deficit, it is likely to lose jobs in the export sector. This is because businesses need to lay off workers when they are not selling as much as they are buying.

Who publishes the Balance of Trade data?

The Balance of Trade data is typically sourced from a country’s official statistical agency, such as the Bureau of Economic Analysis (BEA) in the United States, or the Office for National Statistics (ONS) in the United Kingdom.

These agencies collect and analyze trade data and publish the Balance of Trade figures on a regular basis.

When is the Balance of Trade data released?

The Balance of Trade data is publicly available and can be accessed through the websites of the respective statistical agencies.

The data is usually published monthly or quarterly, depending on the country, and is often accompanied by additional analysis and supporting information.

In addition to official sources, many financial news outlets and economic research organizations provide access to Balance of Trade data and analysis.

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Baltic Dry Index (BDI)

The Baltic Dry Index (BDI) is an economic indicator that tracks the global shipping market’s health and offers insights into the demand for raw materials and global trade patterns

This shipping and trade index is considered to be a leading indicator of the future trend of the global economy.

What is the Baltic Dry Index (BDI)?

The Baltic Dry Index was established in 1985 by the London-based Baltic Exchange, an organization that provides data on maritime transportation and facilitates the trading and settlement of ship charter contracts.

The BDI is a composite index that measures the cost of shipping bulk raw materials such as coal, iron ore, and grains across various shipping routes.

It is calculated using data from the shipping market, including the daily charter rates for different vessel types, such as Capesize, Panamax, and Supramax.

The BDI calculates the index by using multiple shipping rates across more than 20 routes which do tend to provide a broad perspective of the geographic shipping paths for the world economy.

How to Use the Baltic Dry Index (BDI)?

A rising or contracting index is considered to be a leading indicator of future economic growth.

A rising movement in the index reflects a robust economy.
A contracting index reflects slow economic growth
A decline in the index reflects a recession.

Understanding the Baltic Dry Index involves the following key points:

Index calculation: The BDI is calculated daily, incorporating average shipping rates across various routes and vessel types. It is a weighted average of the sub-indices for different vessel sizes, with larger vessels receiving a higher weighting.
Demand and supply: The BDI reflects the balance between the demand for shipping capacity (driven by the demand for raw materials) and the supply of available ships. An increase in the BDI indicates ber demand for shipping capacity, while a decrease suggests weaker demand.
Market sentiment: The BDI can also be considered a leading indicator of market sentiment, as it reflects the expectations of future economic activity and global trade.

Why is the Baltic Dry Index (BDI) important?

The Baltic Dry Index holds importance for several reasons:

Economic indicator: The BDI is a leading indicator of global economic activity and trade, as it reflects the demand for raw materials used in production and construction.
Supply chain insights: The index provides insights into global supply chain dynamics, helping businesses and investors gauge potential disruptions or bottlenecks in the transportation of goods.
Investment tool: The BDI can help investors assess the health of the shipping industry, informing investment decisions related to shipping stocks, commodities, and related sectors.
Policy analysis: Policymakers and economists can use the BDI to analyze international trade patterns and the potential impact of trade policies or geopolitical events on global trade.

Who publishes the Baltic Dry Index (BDI)?

The Baltic Dry Index is calculated and published by the Baltic Exchange, a leading provider of maritime market data.

When is the Baltic Dry Index (BDI) released?

The Baltic Dry Index can be accessed through the Baltic Exchange’s website or various financial news outlets and market data providers.

Some websites offer historical BDI data, allowing users to analyze long-term trends and draw comparisons between different time periods.

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Baltic Dry Index (BDI)

The Beige Book is a summary of economic conditions around the United States compiled for the Federal Reserve Board.

Each Federal Reserve Bank gathers anecdotal information on current economic condition in its district through reports from bank directors and interviews with key businessmen, economists, market experts, and other sources.

The Beige Book summarizes this information by district and sector.

It is released at 2:00 pm EST two Wednesdays before each FOMC meeting.

This report allows outsiders to know what the Fed governors are looking at as they prepare for their upcoming FOMC meeting.

Why is the Beige Book important?

The Fed uses this report, along with other indicators, to determine interest rate policy at FOMC meetings.

The Beige Book is considered a valuable tool, acting in essence, as a general gauge on the overall strength of the economy, it is even considered that occasionally it can have the power to shift market reactions if the findings represent a significant enough deviation from current analyst expectations.

It must be remembered, however, that the report does not actually provide a clear view of what the FOMC members think about the economy, but instead presents a series of economic facts concerning the various districts.

It is also worth bearing in mind that while these facts may be accurate, they appear in the form of descriptive information, not as a break down of the actual data itself.

If the Beige Book portrays inflationary pressure, the Fed may raise interest rates, which is dollar bullish.

If the Beige Book portrays recessionary conditions, the Fed may lower interest rates, which is dollar bearish.

What is the Beige Book?

The ‘Beige Book’ is the informal name given to the report issued by the Federal Reserve, the full name for the Beige Book report is actually “Summary of Commentary on Current Economic Conditions by Federal Reserve District“.

The Beige Book is released eight times a year, two Wednesdays prior to each FOMC (Federal Open Market Committee) meeting, and is a key tool in advising the members on changes that have occurred within the economy since the last meeting.

The Beige Book is not a collection of statistical data. It is a compilation of anecdotal information from each of the 12 Federal Reserve Districts and is based on interviews with local business people and academics who are surveyed about the economic health in their region.

Essentially, the Beige Book is a compilation of data gathered from each District within the Federal Reserve and is a mixture of anecdotal evidence on current economic conditions in the district gained through reports from various bank directors and also interviews with economists and market experts, along with other sources.

The Beige Book report presents this information in the form of summaries by both district and sector.

Two weeks before each FOMC meeting, the Fed releases the Beige Book so called due to its tan cover.

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Big Mac Index

The Big Mac Index is an informal, yet widely recognized measure of the purchasing power parity (PPP) between two currencies.

Created by The Economist in 1986, it is based on the idea that the price of a McDonald’s Big Mac burger should be roughly the same in different countries when considering exchange rates.

By comparing the price of a Big Mac in different countries and adjusting for exchange rates, the index offers a glimpse into whether a currency is overvalued or undervalued relative to the US dollar.

The index provides a fun and easy-to-understand way to assess the relative value of currencies and the cost of living in various countries.

What is the Big Mac Index?

The Big Mac Index was initially developed as a light-hearted attempt to simplify the concept of PPP, which postulates that exchange rates should adjust so that identical goods and services cost the same across countries.

The theory behind the Big Mac Index is that if exchange rates were in equilibrium, then the price of a Big Mac would be the same in any two countries. However, in reality, exchange rates are often not in equilibrium, and the price of a Big Mac can vary significantly from country to country.

If the exchange rate PPP is higher than the actual exchange rate, then the currency is said to be undervalued. This means that the currency is not providing a fair return for its purchasing power.
If the exchange rate PPP is lower than the actual exchange rate, then the currency is said to be overvalued. This means that the currency is providing a higher return than its purchasing power.

Keep in mind that the Big Mac Index is not a perfect measure of PPP, as it does not take into account factors such as differences in labor costs, taxes, and transportation costs. However, it still offers a useful starting point for understanding exchange rates and currency valuation

How to Read the Big Mac Index

The Big Mac Index report compares the price of a Big Mac in various countries, expressed in their local currency and in US dollars.

To interpret the index:

Find the local price of a Big Mac in a specific country.
Convert the local price to US dollars using the current exchange rate.
Compare the converted price to the price of a Big Mac in the United States.
If the price in US dollars is higher than the price in the United States, the local currency is considered overvalued. If it’s lower, the currency is considered undervalued.

Why is the Big Mac Index important?

While the Big Mac Index is an informal and simplified measure, it provides valuable insights into the world of currency valuation and purchasing power.

It allows for a quick comparison of the cost of living between countries and can serve as a useful starting point for a deeper analysis of currency markets and economic conditions.

Who publishes the Big Mac Index?

The Big Mac Index is published annually by The Economist.

The magazine updates the index with new data on Big Mac prices and exchange rates to provide a current snapshot of currency valuation and purchasing power across the globe.

The Big Mac Index is available for free on The Economist’s website, where you can access the most recent data, as well as historical information and interactive tools to explore the index further.

The website also offers a downloadable version of the data for those who wish to conduct their own analysis.

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Business Inventories

The Business Inventories report measures the total amount of inventories held by manufacturers, wholesalers, and retailers in the country.

It is an economic indicator that offers insights into inventory levels across various industries and their potential implications for the economy

What is Business Inventories data?

The Business Inventories report is a monthly measure of the dollar value of inventories held by manufacturers, wholesalers, and retailers in the United States.

The goal of this report is to measure changes in domestic retail trade, wholesale trade, and manufacturers’ activities in a broad and timely way.

It is the only report where you can get monthly information about the total amount of business done by retailers, wholesalers, and manufacturers.

Inventories are an essential component of the economy, as they represent goods that have been produced but not yet sold. The report covers all three stages of the supply chain – manufacturing, wholesale, and retail – providing a comprehensive view of inventory levels and trends.

The data in the report is expressed both in terms of the absolute dollar value of inventories and as the inventory-to-sales ratio, which compares inventory levels to the corresponding sales figures for the same period.

Why is Business Inventories data important?

The Business Inventories report is considered an important economic indicator, as inventory levels can have significant implications for the economy.

High inventory levels may indicate weak demand or overproduction, which could lead to reduced production, layoffs, or price cuts in the future.
Low inventory levels may indicate b demand or underproduction, potentially resulting in increased production, hiring, or price increases.

By monitoring inventory levels and trends, economists, investors, and policymakers can gauge the overall health of the economy and make informed decisions based on current conditions.

Traders also look at how retail inventory numbers will influence interest rates.

If inventories are rising at a faster pace than sales, this usually indicates that the economy is slowing down. A slowing economy means lower interest rates, which is dollar bearish.

It is considered dollar bullish if both sales and inventories are rising at the retail, wholesale, and manufacturing level.

The Bureau of Economic Analysis uses the data in GDP estimates and the leading economic indicator series. The Federal Reserve Board, the Treasury Department, and the Council of Economic Advisers use the data to inform monetary and fiscal policy.

Who publishes Business Inventories?

The Business Inventories report is produced by the U.S. Census Bureau, a division of the Department of Commerce.

The Census Bureau is responsible for collecting, analyzing, and disseminating economic data related to various aspects of the U.S. economy, including business inventories.

The report is based on data collected through the Monthly Retail Trade Survey, the Monthly Wholesale Trade Survey, and the Manufacturers’ Shipments, Inventories, and Orders Survey.

When is the Business Inventories report released?

The Business Inventories report is typically released on a monthly basis, around the middle of the month.

For example, the report for January would be released in mid-March. The Census Bureau publishes the report on its website, making it easily accessible to the general public.

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Caixin Manufacturing PMI

The Caixin Manufacturing Purchasing Managers’ Index (PMI) is an economic indicator that provides insights into China’s manufacturing sector.

The index gauges the health of the manufacturing industry, based on a survey of purchasing managers from small and medium-sized enterprises (SMEs).

What is Caixin Manufacturing PMI?

The Caixin Manufacturing PMI is a monthly survey of purchasing managers in the manufacturing sector in China.

It measures the level of activity in the manufacturing sector and is a leading indicator of economic growth in China.

The survey gathers responses from purchasing managers in small and medium-sized manufacturing companies, focusing on their perceptions of the sector’s performance in terms of production, new orders, employment, inventories, and suppliers’ delivery times.

It is an important indicator for investors and businesses. It can provide insights into the health of the Chinese economy and the potential for future growth.

The PMI is also used to track the effectiveness of government policies, such as those aimed at stimulating economic growth.

How to Read the Caixin Manufacturing PMI

The index is calculated using a weighted average of five sub-indices, with the following weights:

New orders (30%)
Output (25%)
Employment (20%)
Suppliers’ delivery times (15%)
Stock of items purchased (10%)

A PMI reading above 50 indicates expansion in the manufacturing sector,

A reading below 50 signals contraction.

A reading at 50 suggests no change in the sector’s performance.

When interpreting the Caixin Manufacturing PMI report, consider the following factors:

Index value: Assess whether the index is above, below, or at the 50-mark threshold. This will help determine if the manufacturing sector is expanding, contracting, or remaining stable.
Trend direction: Compare the current month’s PMI value with the previous months to identify any trends, such as sustained growth or contraction in the sector
Sub-indices: Analyze the performance of the five sub-indices to gain insights into specific areas of the manufacturing sector, such as new orders, output, and employment
Comparison with other indicators: Examine the Caixin Manufacturing PMI alongside other relevant economic indicators, such as GDP growth and industrial production, to obtain a comprehensive understanding of China’s economic health.

Why is Caixin Manufacturing PMI important?

The Caixin Manufacturing PMI is important for several reasons:

Timeliness: As a monthly indicator, it offers a timely snapshot of China’s manufacturing sector, allowing investors, policymakers, and analysts to monitor economic trends closely.
Representativeness: By focusing on small and medium-sized enterprises, the Caixin PMI complements the official Chinese Manufacturing PMI, which primarily covers large enterprises.
Global impact: As the world’s second-largest economy, China’s manufacturing performance can influence global trade, commodity prices, and financial markets. The Caixin PMI is a valuable tool for international investors and policymakers to assess the Chinese economy’s health.

Who publishes Caixin Manufacturing PMI?

The Caixin Manufacturing PMI is compiled by IHS Markit, a leading global provider of information, analytics, and solutions, in collaboration with Caixin Media, a prominent Chinese financial media group.

The data is based on a survey of purchasing managers from small and medium-sized manufacturing companies across China.

When is Caixin Manufacturing PMI released?

The Caixin Manufacturing PMI report is typically released on the first business day of each month, providing data for the previous month.

The report is available through Caixin Media’s website and various financial news outlets.

In addition, IHS Markit offers subscription-based access to detailed PMI data and analysis, catering to a range of professional users such as investors, economists, and researchers.

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Caixin Services PMI

The Caixin Services Purchasing Managers’ Index (PMI) is an economic indicator that measures the performance of China’s services sector.

The index is based on a survey of purchasing managers from small and medium-sized enterprises (SMEs) across various service industries.

What is Caixin Services PMI?

The Caixin Services PMI is derived from a monthly survey that gathers data from hundreds of purchasing managers across China.

The index is highly valued for its ability to reveal month-to-month changes and trends in the services sector, helping to paint a clearer picture of China’s overall economic health.

The index complements the Caixin Manufacturing PMI, which focuses on the performance of small and medium-sized manufacturing companies in China.

Together, these two indices provide a comprehensive and balanced view of China’s economy, highlighting the importance of both the manufacturing and services sectors.

How to Read the Caixin Services PMI

The services PMI is based on five sub-indices:

New business
Business activity
Employment
Outstanding business
Input prices

These sub-indices are weighted to produce the headline PMI figure, which ranges from 0 to 100.

A reading above 50 indicates expansion in the services sector, while a reading below 50 signifies contraction.

When interpreting the Caixin Services PMI report, consider the following factors:

PMI value: Determine whether the index is above, below, or at the 50-mark threshold. This will help indicate if the services sector is expanding, contracting, or remaining stable.
Trend direction: Compare the current month’s PMI value with previous months to identify trends in the services sector, such as sustained growth or contraction.
Sub-indices: Analyze the performance of the five sub-indices to gain insights into specific areas of the services sector, such as new business, employment, and input prices.
Comparison with other indicators: Examine the Caixin Services PMI alongside other relevant economic indicators, such as GDP growth and the Caixin Manufacturing PMI, to obtain a comprehensive understanding of China’s economic health.

Why is Caixin Services PMI important?

The Caixin Services PMI is of significant importance for several reasons:

Timeliness: As a monthly indicator, it offers a timely snapshot of China’s services sector, allowing investors, policymakers, and analysts to closely monitor economic trends.
Representativeness: By focusing on small and medium-sized enterprises, the Caixin PMI complements the official Chinese Non-Manufacturing PMI, which primarily covers large enterprises.
Global impact: As the world’s second-largest economy, China’s services sector performance can influence global trade, financial markets, and economic growth. The Caixin PMI is a valuable tool for international investors and policymakers to assess the Chinese economy’s health.

Who publishes Caixin Services PMI?

The Caixin Services PMI is compiled by IHS Markit, a leading global provider of information, analytics, and solutions, in collaboration with Caixin Media, a prominent Chinese financial media group.

The data is based on a survey of purchasing managers from small and medium-sized service companies across China.

When is Caixin Services PMI released?

The Caixin Services PMI report is typically released on the third business day of each month, providing data for the previous month.

The report is available through Caixin Media’s website and various financial news outlets.

Additionally, IHS Markit offers subscription-based access to detailed PMI data and analysis, catering to a range of professional users such as investors, economists, and researchers.

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Capacity Utilization

Capacity Utilization is an economic indicator that measures the percentage of an economy’s industrial capacity being used in the production of goods and services.

By monitoring changes in capacity utilization, you can gain insights into the overall health of the economy, the efficiency of resource allocation, and the potential for inflationary pressures.

What is Capacity Utilization?

Capacity Utilization is a measure of a nation’s industrial capacity and how much of it is being used.

It is calculated by dividing the actual output of an economy by its potential output, then multiplying the result by 100 to express the figure as a percentage.

The potential output is the maximum level of output an economy can sustain without generating inflationary pressures.

There are three main sectors that contribute to capacity utilization:

Manufacturing: This sector includes the production of durable and nondurable goods, such as vehicles, machinery, and consumer goods.
Mining: This sector encompasses the extraction of minerals, ores, and other natural resources.
Utilities: This sector covers the production of electricity, gas, and water.

Capacity Utilization is often used alongside other economic indicators, such as Industrial Production, which measures the real output of various sectors within an economy.

How to Read Capacity Utilization

Capacity Utilization is typically presented as a seasonally adjusted monthly percentage, allowing for easy comparison of trends over time.

A capacity utilization percentage of 85% or more can also be considered a signal for imminent inflation, but the inherent difficulty of measuring industrial capacity implies that this measure shouldn’t be exclusively relied on.

When analyzing the report, it is essential to consider factors such as:

Sector performance: The index can be broken down by sector, allowing for a more in-depth analysis of specific industries and their performance relative to the overall economy.
Cyclical trends: Capacity Utilization can be subject to cyclical fluctuations, so it is often helpful to examine longer-term trends or moving averages to gain a better understanding of the underlying dynamics of the economy.
External factors: Global economic conditions, trade policies, and other external factors can significantly influence capacity utilization, so it is essential to consider these factors when interpreting the data.

Why is Capacity Utilization important?

Capacity Utilization is important for several reasons:

Economic Health: Changes in capacity utilization can signal shifts in the overall health of an economy, as increased utilization typically indicates b demand for goods and services, while decreased utilization may signify economic weakness.
Inflationary Pressures: High levels of capacity utilization can lead to increased inflationary pressures as businesses may raise prices due to limited spare capacity and increased production costs.
Investment Decisions: Investors and businesses can use capacity utilization data to identify trends and assess the performance of specific industries, guiding investment decisions and resource allocation.

Who publishes the Capacity Utilization data?

Capacity Utilization data is published by the Federal Reserve in the United States and by various other national statistical agencies in other countries.

Data is collected through surveys and other sources, such as production and shipment records from factories, mines, and utilities.

When is Capacity Utilization data released?

Capacity Utilization data is released monthly, typically around the middle of the month following the reporting period.

The data is available on the Federal Reserve’s website, as well as through various financial news outlets and data providers.

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Chicago PMI

The Chicago Purchasing Managers Index (Chicago PMI) is an economic indicator that offers valuable insights into the manufacturing and business conditions in the Chicago region.

It serves as a barometer for the health of the region’s diverse industries, including manufacturing, transportation, and financial services.

As a leading indicator, the Chicago PMI can offer early warnings of potential changes in the broader U.S. economy, making it a valuable tool for investors and traders.

What is the Chicago PMI?

The Chicago PMI, also known as the Chicago Business Barometer, is a monthly report that measures the health of the manufacturing and non-manufacturing sectors in the Chicago area.

It is based on a survey of purchasing managers from various industries who provide their outlook on factors such as new orders, production, employment, supplier deliveries, and inventory levels.

The index is calculated by taking the percentage of respondents who report an increase in these factors and adding it to half the percentage of respondents who report no change.

An index value above 50 indicates expansion.
An index value below 50 signifies a contraction.

The Chicago PMI is closely watched by economists, investors, and policymakers as it can provide early signals of changes in the broader U.S. economy.

Why is the Chicago PMI important?

The Chicago PMI is important for several reasons:

Regional economic health: The Chicago area is home to a diverse range of industries, including manufacturing, transportation, and financial services. The Chicago PMI offers insights into the health of this crucial economic hub, reflecting broader trends in the U.S. economy.
Manufacturing sector: As a significant component of the overall U.S. economy, the manufacturing sector is an essential driver of economic growth and job creation. The Chicago PMI helps gauge the strength and vitality of this sector.
Leading indicator: The Chicago PMI is considered a leading indicator, meaning it can provide early warnings of shifts in the national economy. This makes it a valuable tool for investors and policymakers in their decision-making processes.
Market impact: The release of the Chicago PMI often impacts financial markets, particularly stocks, bonds, and currencies, as it can influence investor sentiment and expectations about future economic conditions.

Who publishes the Chicago PMI important?

The Chicago PMI is published by the Institute for Supply Management-Chicago (ISM-Chicago), in partnership with MNI Indicators, a market intelligence firm.

The data is compiled based on a survey of purchasing managers from a diverse range of industries in the Chicago area, who provide their insights on the factors mentioned earlier.

When is the Chicago PMI released?

The Chicago PMI is released every month, typically on the last business day of the month.

It is available to the public through the ISM-Chicago website.

The report includes a summary of the findings, the index value, and a detailed breakdown of the individual components of the index.

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Conference Board Consumer Confidence Index (CCI)

The U.S. Consumer Confidence Index (CCI) measures the degree of optimism that consumers feel about the overall state of a country’s economy, as well as their own personal financial situation.

The CCI survey is conducted monthly and contains about 50 questions that track different aspects of consumer attitudes toward current and future business conditions, current and future employment conditions, and total family income for the next six months.

This report is highly regarded by the Fed and can be a key factor in determining U.S. monetary policy.

A survey of 5,000 consumers asking them how they feel about the current economy and their spending patterns.

They will also be asked how confident they are about buying expensive consumer goods. The report is split into how people feel now and their expectations over the next few months.

How to Read It:

A neutral level is in the region of 100.

Figures below 75 are generally weak, while levels above 125 are b.

A high level of consumer confidence stimulates economic expansion while a low level can lead to an economic downturn.

A sharp drop in confidence can signal that the economy is weakening, but the correlation between spending and confidence figures is not very b.

Only index changes of at least five points should be considered significant.

Since the Conference Board queries an entirely new group of people every month, the index shows more erratic behavior than the University of Michigan’s which polls many of the same individuals every month.

Why is it important?

Consumer confidence surveys are key indicators of the overall health of the economy. When people feel confident about the stability of their incomes it influences their spending and saving activities.

A pessimistic consumer worries investors in the U.S. markets. It raises the probability of falling interest rates and a weakening economy, both of which are detrimental to the dollar’s value.

Investors might sell the dollar and look for higher yields and a ber economy elsewhere.

An optimistic consumer can raise interest rates and the stock market returns to levels that provide a higher return relative to other countries in the world.

This would result in increased demand for the U.S dollar.

Where to find it?

The Conference Board is a subscription-based service, and unfortunately, the data does not appear on BabyPips.com’s economic calendar,

The best way to find is to simply Google “Consumer confidence”.

Background:

The Consumer Confidence Index measures how consumers feel about the economy, jobs, and spending.

Happy consumers are more likely to shop, travel, and keep the economy b. Unhappy consumers become protective of their wallets which is bad for the economy.

This report can occasionally be helpful in predicting sudden shifts in consumption patterns. And since consumer spending accounts for two-thirds of the economy, it gives us insights about the direction of the economy.

Source:

The Conference Board

Availability:

It is released at 10:00 am EST on the last Tuesday of the month being surveyed.

Frequency:

Monthly.

Revisions:

Minor revisions can occur as more survey results are collected and processed.

Additions:

The Index of Consumer Confidence, more commonly referred to as the CCI or Consumer Confidence Index is a monthly report issued by an independent economic research organization called The Conference Board.

The CCI is based on statistical data gathered from five thousand households and is considered an accurate measurement of how the general public view the United States economy for that month and even goes as far as to involves calculating the number of “help wanted” advertisements in local newspapers in order to determine just how tight the job market really is.

This measurement is thought to be highly indicative of the consumption component of the gross domestic product and the Federal Reserve consults the CCI when seeking to determine changes to interest rates. The CCI also has the power to affect prices on the stock market.

The base confidence level of the CCI is set at 100, as decided at the beginning of the index in 1985. The Conference Board is known to declare an economic recession whenever there occur two or more consecutive quarters where the confidence levels fall below 100.

The data contained in the CCI is of a timely nature and is considered to be a predictor of movements in the business cycle. Although it bears remembering however that the report is just a survey and there is no actual data series to take figures from as only “planned spending” is collected as opposed to actual dollars spent, meaning that the CCI is unable to forecast the future.

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Conference Board Leading Economic Index (LEI)

The Conference Board Leading Economic Index or “LEI” warns of turning points in theU.S economy and gives an overall indication of the near-term future performance.

The LEI is one index out of three that are published at the same time:

The Conference Board Leading Economic Index
The Conference Board Coincident Economic Index
The Conference Board Lagging Economic Index

All three are composites of existing economic indicators, but the LEI is the one that’s most followed.

What is Conference Board Leading Economic Index (LEI)?

The Conference Board Leading Economic Index anticipates (or “leads”) turning points in the business cycle by around 7 months.

The LEI is made up of 10 sub-indices which tend to move ahead of the overall economy.

The 10 sub-indices are:

1. Average weekly hours in manufacturing

The average weekly hours worked by manufacturing workers. Before hiring or firing employees manufacturing firms will normally increase worker hours when demand requires or cut back on worker hours when demand falters, which is why this is included as a leading economic indicator.

2 Average weekly hours in manufacturing

The average number of initial applications for unemployment insurance – As is probably obvious if the number of applications for unemployment increases this means more people out of work, which means people will have less money to spend, which means a weaker economy and market sell-offs all else being equal.

3. Manufacturers’ new orders for consumer goods and materials

The amount of manufacturers’ new orders for consumer goods and materials – An increase in the number of new orders should indicate a pickup in demand and vice versa.

4. Speed of delivery of new merchandise to vendors from suppliers

This is a leading indicator because an increase in demand can cause an increase in delivery time as suppliers have trouble keeping up with new demand.

5. Manufacturers’ new orders for nondefense capital goods excluding aircraft orders

The number of new orders for capital goods unrelated to defense. Another way of looking at new orders should lead the business cycle as pickups in new orders indicate rising demand.

6. Building permits for new private housing units

The number of new building permits for residential buildings. As builders try to anticipate demand, new building permits normally move higher ahead of demand which is why this is considered a leading economic indicator.

7. The S&P 500 stock index

The S&P 500 Index includes the stock prices of the 500 largest companies in the US. Markets anticipate making changes in the stocks that make up this index a leading indicator of future economic activity.

8. The inflation-adjusted monetary supply (M2)

In simple terms, this is watched as it is a measure of bank lending which increases ahead of economic expansion and decreases ahead of economic contraction making this a leading economic indicator.

9. Interest rate spread (10-year Treasury bonds less federal funds rate)

9. The spread between long and short interest rates – as we learned in our lessons on interest rates, normally the shorter term the loan the lower the interest rate one will pay. This is considered a leading economic indicator as when the distance between short-term interest rates and long-term interest rates narrow this is indicative of a situation where the market participants are anticipating Fed interest rate cuts which normally come during economic slowdowns, and vice versa.

10. Average consumer expectations for business conditions

This index measures how optimistic the consumer is about the economy and is a leading indicator as to when the consumer feels that the economy is not good and not going to be good they will normally pull back spending causing economic slowdown and vice versa.

What the market focuses on when this indicator is released depends on what is happening in the market during that time, so the best way to learn how to incorporate this indicator into your analysis and trading is to follow the indicator in real-time

When is it released?

The Conference Board Leading Economic Index® is published monthly at 10:00 am ET.

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Construction Spending

Construction Spending is an economic indicator that measures the total value of construction work completed in the U.S.

It covers both private and public sectors, providing insights into the health of the construction industry.

The level of construction spending is also used to gauge the strength of the economy and the level of demand for goods and services.

What is Construction Spending?

The Construction Spending report provides data on spending in three major categories: residential, non-residential, and public construction.

Residential construction covers single-family and multi-family homes.
Non-residential construction includes commercial, industrial, and institutional projects.
Public construction encompasses spending by federal, state, and local governments on infrastructure, education, healthcare, and other public projects.

The data is collected through surveys of construction companies and public agencies, as well as from building permits and other related sources.

How to Read the Report

The Construction Spending report presents data as a percentage change from the previous month and as a year-over-year percentage change.

A positive month-over-month or year-over-year change indicates an increase in construction spending, while a negative change signifies a decrease.

The report also provides a breakdown of spending by category, making it easier to identify trends and shifts in various sectors of the construction industry.

Why is Construction Spending important?

Construction Spending is an important indicator of economic growth.

High levels of construction activity typically signal a thriving economy, as increased spending on construction projects can lead to job creation, higher demand for raw materials, and a boost in overall economic activity.

A decline in construction spending may indicate economic weakness or a potential slowdown.

The Construction Spending report can influence monetary policy decisions, as policymakers use the data to assess the state of the economy and determine the appropriate level of interest rates.

The report is also closely watched by investors and analysts, as it can impact the stock market and other financial instruments tied to the construction industry.

Who publishes the Construction Spending report?

The Construction Spending report is published by the United States Census Bureau, a branch of the U.S. Department of Commerce.

When is the Construction Spending report released?

The report is published on a monthly basis, typically at the beginning of each month, and reflects the previous month’s data.

You can access the report on the United States Census Bureau’s website, where you can also find historical data and additional resources related to construction spending.

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Consumer Price Index (CPI)

The Consumer Price Index (CPI) is a monthly measure of the change in prices paid by consumers for goods and services.

It is an index that measures the change in the price of a representative basket of goods and services such as food, energy, housing, clothing, transportation, medical care, entertainment, and education.

What is CPI?

The CPI is the measurement used by economists for tracking price changes in a typical “basket” of goods and services that consumers purchase.

The Bureau of Labor Statistics (BLS) computes the CPI by taking the average weighted cost of a basket of goods in a given month and dividing it by the weighted cost of the same basket the previous month.

Then, it multiplies this percentage by 100 to get the number for the index.

Why is CPI important?

The CPI measures inflation (a sustained rise in prices in an economy) as experienced by consumers in their day-to-day living expenses

The increase in the CPI is what most people think of as the “inflation rate.”

It is used by retailers in predicting future price increases, by employers in calculating salaries, and by the government in determining cost-of-living increases for Social Security.

Signs of inflation mean the central bank has to raise interest rates. The most widely used indicator of inflation is CPI.

If CPI is increasing, then it gives a central bank such as the Fed the necessary supportive data to hike rates. Higher interest rates are bullish for the country’s currency.

What goes into the Consumer Price Index?

Background of Consumer Price Index (CPI)

The CPI is a measure of the change over time in the prices paid by consumers for a market basket of goods and services.

These goods and services include food, clothing, shelter, and used cars. Items on which the average consumer spends a great deal of money, such as food, are given more weight, or importance, in computing the index than items such as toothpaste and movie tickets, on which the average consumer spends comparatively less.

The CPI does not include investment items, such as stocks, bonds, real estate, and life insurance. These items relate to savings and not to day-to-day consumption expenses.

Each month, data collectors from the Bureau of Labor Statistics (BLS) called economic assistants visit or call thousands of retail stores, service establishments, rental units, and doctors’ offices, all over the United States to obtain price information on thousands of items used to track and measure price change in the CPI.

These economic assistants record the prices of about 80,000 items each month. These 80,000 prices represent a scientifically selected sample of the prices paid by consumers for the goods and services purchased.

During each call or visit, the economic assistant collects price data on a specific good or service that was precisely defined during an earlier visit.

If the selected item is available, the economic assistant records its price. If the selected item is no longer available, or if there have been changes in the quality or quantity (for example, eggs sold in packages of 8 when previously they had been sold by the dozen) of the good or service since the last time prices had been collected, the economic assistant selects a new item or records the quality change in the current item.

The recorded information is sent to the national office of BLS where commodity specialists, who have detailed knowledge about the particular goods or services priced, review the data.

These specialists check the data for accuracy and consistency and make any necessary corrections or adjustments. These can range from an adjustment for a change in the size or quantity of a packaged item to more complex adjustments based on a statistical analysis of the value of an item’s features or quality.

Source

Bureau of Labor Statistics, Department of Labor

Availability

It is released at 8:30 am EST on the second or third week following the month being covered. Always released after the Producer Price Index.

Frequency

Monthly.

Revisions

No monthly revisions.

Additions

The Consumer Price Index or CPI as it is more commonly known is also sometimes referred to as the ”Retail Price Index” and is often considered the most widely used and most accurate measure of inflation and tends to also be regarded as an indicator of the effectiveness of the current government policies.

Essentially, the CPI is a “basket” of various consumer goods and services that have been purchased by the wage earners of certain urban areas and which have been tracked from month to month.

The CPI is a fixed quantity price index and also a form of cost of living index and is considered one of the most useful tools in financial circles as it can provide clues as to movements in inflation.

When inflation rises, our purchasing power subsequently falls into decline meaning that every dollar earned is capable of buying a lesser percentage of a good or service. While it is typical for The federal reserve to battle rising inflation by increasing short-term interest rates this is often frowned upon by investors because the cost of borrowing increases.

Close attention needs to be paid to the “core rate” as this rate excludes volatile energy and food prices to give a more strict measurement of general prices.

Ideally, within the financial markets, you would generally be looking for the CPI to rise at an annual rate of just 1-2%, as any amount over this would indicate a warning about growing levels of inflation.

CPI can be greatly influenced in any given month by a movement in volatile food and energy prices. Therefore, it is important to look at CPI excluding food and energy, commonly called the “core” CPI

Within the core CPI, some of the more volatile and closely watched components are apparel, tobacco, airfares, and new cars. In addition to tracking the m/m changes in core CPI, the y/y change in core CPI is seen by most economists as the best measure of the underlying inflation rate.

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Continuing Jobless Claims

Continuing Jobless Claims is an economic indicator that provides insights into the health of the economy and the effectiveness of government policies in addressing unemployment.

This report measures the number of individuals who have filed for unemployment benefits for an extended period, reflecting the overall state of the labor market.

What is Continuing Jobless Claims?

Continuing Jobless Claims represents the total number of people receiving unemployment benefits, excluding first-time filers.

This report serves as a measure of the long-term unemployment situation, capturing those who have been jobless for an extended period and are still seeking government support.

This data is typically published alongside the Initial Jobless Claims report, which measures the number of individuals who have filed for unemployment benefits for the first time during the reporting period.

How to Read the Continuing Jobless Claims data

The Continuing Jobless Claims report provides data on the total number of individuals who have filed for and are receiving unemployment benefits.

When analyzing the report, it’s essential to consider the following factors:

Trend: Look for trends in the data, such as a steady increase or decrease in the number of continuing claims. This can provide valuable insights into the overall health of the labor market.
Seasonal factors: Be aware of seasonal fluctuations that may impact the data, such as increased claims during holiday seasons or other industry-specific factors.
Comparison with historical data: Comparing the current data with historical figures can help put the numbers in context and identify any significant deviations from the norm.

Why is Continuing Jobless Claims important?

The Continuing Jobless Claims report is important for several reasons:

It serves as a barometer for the overall health of the labor market and the economy. High continuing claims may indicate persistent unemployment and economic weakness.
The report can provide insights into the effectiveness of government policies, such as fiscal stimulus measures or unemployment benefits, in addressing long-term unemployment.
Investors and policymakers use continuing jobless claims data to make informed decisions about monetary policy, fiscal policy, and investment strategies.

Who publishes the Continuing Jobless Claims data?

The Continuing Jobless Claims report is compiled and published by the U.S. Department of Labor’s Employment and Training Administration.

In other countries, similar reports are released by the respective government department or agency responsible for labor market statistics.

When is Continuing Jobless Claims data released?

The Continuing Jobless Claims report is generally released on a weekly basis, with a one-week lag from the end of the reporting period.

The report is publicly available on the U.S. Department of Labor’s website, making it accessible to anyone interested in the data.

Financial news websites and apps also tend to cover the release of the Continuing Jobless Claims report, offering further insights and interpretations of the data.

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Core PCE Price Index

The Core Personal Consumption Expenditure (PCE) Price Index measures the changes in the price of goods and services bought by consumers and non-profits, excluding food and energy.

The Federal Reserve uses the Core PCE index as its primary measure of inflation.

The Core PCE Price Index is less volatile than the PCE Price Index since it does not include more volatile food and energy prices.

What is the Core PCE Index?

The Core Personal Consumption Expenditures (PCE) Price Index is an economic indicator that measures inflation by tracking the changes in prices of goods and services purchased by consumers in the United States, excluding food and energy costs.

It is considered the “core” PCE index because it focuses on the underlying inflation trends by removing the volatile components of food and energy prices.

The Federal Reserve closely monitors this metric as it helps them assess the state of the economy and guide monetary policy decisions.

Prices are weighted according to total expenditure per item. It measures price change from the perspective of the consumer.

Why is the Core PCE Index important?

The Core PCE Price Index is significant for several reasons:

Inflation measurement: It serves as an essential gauge of inflation, providing insight into the price changes of goods and services over time. By excluding the volatile food and energy components, it presents a more stable and accurate reflection of the underlying inflation trends.
Monetary policy: The Federal Reserve uses the Core PCE Price Index as its preferred inflation measure when setting monetary policy. The Fed’s inflation target is typically around 2%. This index helps policymakers determine whether they need to adjust interest rates or employ other monetary tools to control inflation and maintain price stability.
Economic health: The Core PCE Price Index is an essential indicator of the economy’s overall health. A stable and moderate level of inflation is considered healthy for economic growth. However, high inflation can erode purchasing power and create economic uncertainty, while low inflation or deflation can signal weak demand and a stagnating economy.

A higher-than-expected reading should be taken as bullish for the USD

A lower-than-expected reading should be taken as bearish for the USD.

Who publishes the Core PCE Index?

The Core PCE Price Index is calculated and published by the Bureau of Economic Analysis (BEA), an agency within the U.S. Department of Commerce.

The data for the index is released as part of the monthly Personal Income and Outlays report.

The BEA collects and analyzes data on consumer spending patterns from various sources, including household surveys, retail sales data, and information from businesses and government agencies.

When is the Core PCE Index released?

The Core PCE Price Index is released on a monthly basis, typically on the last business day of the month.

The data is available on the BEA’s website.

The release includes both the month-over-month and year-over-year changes in the index, providing timely and detailed information on the state of inflation in the U.S. economy.

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Current Account

The Current Account is the difference between a nation’s total exports of goods, services, and transfers, versus its total imports.

It provides a comprehensive view of a nation’s economic transactions with the rest of the world and offers insights into the health of its economy, foreign exchange reserves, and overall financial stability.

Basically, it is the broadest measure of international flows of capital, goods, and services in and out of a country.

What is the Current Account?

A country’s current account is a way to determine its economic activity and can allow us to form a clear picture of the current extent of activity of a country’s industries, services, and capital market, as well as credit or debt to other countries.

The current account is the broadest measure of trade because it covers not only trade in goods and services but also investment flows between countries.

The current account consists of four main components:

Trade Balance: The difference between the value of goods and services exported and imported by a country.
Investment Income: The difference between the income earned by domestic investors on their foreign investments and the income earned by foreign investors on their domestic investments.
Unilateral Transfers: These are one-way transfers of assets without receiving anything in return, such as foreign aid, remittances, or donations.
Net Income from Abroad: The net income earned from international trade in services, such as tourism, transportation, and financial services.

The formula used for calculating the current account balance is:

CAB=X-M+NY+NCT

Where:

X = Exports of goods and services

M = Imports of goods and services

NY = Net income abroad

NCT = Net current transfers

The current account can be in surplus, deficit, or balance.

A surplus indicates that a country exports more goods, services, and capital than it imports.
A deficit implies the opposite.
A balanced current account means that inflows and outflows are equal.

How to interpret the Current Account?

The current account report is usually presented as a percentage of a country’s Gross Domestic Product (GDP) or in absolute terms (e.g., millions or billions of dollars).

A positive figure represents a surplus, while a negative figure signifies a deficit.

By analyzing the current account data, one can gain insights into a country’s trade competitiveness, savings and investment patterns, and potential risks to its currency and financial markets.

Why is the Current Account important?

The Current Account Balance can bly reflect a country’s overall economic position.

If the CAB of a country is standing at a surplus, then it indicates that the economy is a net creditor to the rest of the world.

It also demonstrates how much that country is saving as opposed to investing, meaning that the country is providing an abundance of resources to other economies, and is owed money in return.

A CAB level that is in deficit, however, shows that an economy that is a net debtor to the rest of the world meaning that it is investing more than it is saving and so is using resources from other economies in order to meet its own domestic consumption and investment requirements.

The current account is important for several reasons:

Trade Competitiveness: A sustained current account surplus or deficit can reveal the competitiveness of a country’s goods and services in the global market.
Foreign Exchange Reserves: Persistent current account imbalances may lead to significant changes in a country’s foreign exchange reserves, impacting its currency valuation and monetary policy.
Financial Stability: Large current account deficits can signal vulnerability to external shocks, such as sudden reversals in capital flows or changes in global economic conditions.

Who publishes the Current Account?

Current account data is typically sourced from a country’s central bank or statistical agency.

In the United States, the Bureau of Economic Analysis (BEA), part of the Department of Commerce, is responsible for compiling and releasing the current account data.

When is the Current Account released?

The current account data is usually released on a quarterly basis, with some countries also providing monthly updates.

In the United States, the BEA publishes the current account data quarterly, with a lag of around three months.

The data is available on the BEA website and through various financial news outlets and data providers.

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Durable Goods Orders

The Durable Goods Orders report is an economic indicator that offers insights into the health of the U.S. manufacturing sector and the overall economy.

It tracks the volume of new orders, unfilled orders, and shipments placed with domestic manufacturers for the production of durable goods for various industries.

Durable goods are items with a lifespan of at least three years, such as vehicles, machinery, and appliances.

What is the Durable Goods report?

Durable goods are an essential component of the economy, as they represent a significant portion of consumer spending and investment. Their production often requires substantial capital investment, labor, and resources.

As a result, changes in durable goods orders can provide early signals of shifts in economic activity and demand.

The report provides a detailed breakdown of new orders, shipments, unfilled orders, and inventories by industry and product category, enabling analysts, traders, and policymakers to gain a comprehensive understanding of the trends in durable goods demand.

Why is the Durable Goods report important?

The Durable Goods Orders report is crucial for several reasons:

Economic health: Changes in durable goods orders can indicate shifts in consumer and business confidence, as well as the overall economic outlook. A rise in orders suggests increased demand and potential growth, while a decline may signal a weakening economy.
Manufacturing activity: The report offers insights into the health of the manufacturing sector, which is a vital component of economic growth. b demand for durable goods can lead to increased production, job creation, and investment in the manufacturing industry.
Market impact: The release of the Durable Goods Orders report can impact financial markets, as it influences expectations about future economic growth, interest rates, and inflation. Traders and investors use the data to inform their decisions and assess the potential impact on stocks, bonds, and currencies.
Monetary policy: The Federal Reserve monitors the Durable Goods Orders report when setting monetary policy, as it provides valuable information on the state of the economy and inflationary pressures.

Who publishes the Durable Goods report important?

The Durable Goods Orders report is compiled and published by the U.S. Census Bureau, a division of the U.S. Department of Commerce.

The data is collected through the Manufacturers’ Shipments, Inventories, and Orders (M3) survey, which gathers information from approximately 5,000 domestic manufacturers across various industries.

When is the Durable Goods report released?

The Durable Goods Orders report is released monthly, usually around the fourth week of the month following the reporting period.

The data is available on the U.S. Census Bureau’s website and includes both preliminary and revised figures.

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EIA Crude Oil Inventories

The EIA Crude Oil Inventories data measures the change in crude oil stockpiles in the United States.

It is an essential resource for market participants and analysts, providing valuable insight into the supply and demand dynamics of the crude oil market.

The report, published by the U.S. Energy Information Administration (EIA), tracks the change in the number of barrels of crude oil held in inventory by commercial firms in the United States.

What is Crude Oil Inventories?

Crude oil inventories are the amount of crude oil that is stored in commercial facilities in a country. They are typically measured in barrels.

Crude oil inventories are an important indicator of the supply and demand for oil. They can be used to predict future prices and to help policymakers make decisions about energy policy.

The EIA Crude Oil Inventories report is a weekly publication that presents the change in crude oil stockpiles in the United States.

It covers data from the previous week, which includes information on crude oil production, imports, and refinery utilization rates.

How to Read the Report

The EIA Crude Oil Inventories report provides several key data points, including:

Total commercial crude oil inventories: The overall level of crude oil stocks held by commercial firms in the United States.
Weekly change: The net increase or decrease in crude oil inventories from the previous week.
Regional breakdown: The distribution of crude oil inventories across various regions in the United States.
Days of supply: The number of days it would take to consume the current inventory at the current refinery utilization rate.

An increase in crude oil inventories typically indicates weak demand or an oversupply in the market, whereas a decrease in inventories suggests b demand or tight supply conditions.

Why is Crude Oil Inventories important?

The EIA Crude Oil Inventories report plays a vital role in influencing crude oil prices, as it offers insight into the balance between supply and demand in the U.S. market.

The data can impact oil prices globally, as the United States is one of the world’s largest oil consumers and producers.

Market participants, such as traders, investors, and analysts, closely monitor the report to identify trends and make informed decisions on oil-related investments or trades.

When crude oil inventories are high, it indicates that there is a lot of oil available and that prices may be under pressure.
When crude oil inventories are low, it indicates that there is not a lot of oil available and that prices may be under upward pressure.

Who publishes the Crude Oil Inventories data?

The EIA Crude Oil Inventories report is sourced directly from the U.S. Energy Information Administration (EIA).

The EIA is a statistical and analytical agency within the U.S. Department of Energy that provides independent and impartial energy information to support policy-making, market analysis, and public understanding of energy-related issues.

The data is collected through surveys of oil companies, refineries, and storage facilities.

When is the Crude Oil Inventories data released?

The EIA Crude Oil Inventories report is published weekly, typically on Wednesdays at 10:30 a.m. Eastern Time (ET).

However, if there is a U.S. federal holiday on Monday, the report is released on Thursdays at 11:00 a.m. ET.

The report is available on the EIA’s official website (www.eia.gov) and can be accessed for free.

In addition to the main report, the EIA also publishes historical data and supplementary information, allowing for in-depth analysis and comparison over time.

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Empire State Manufacturing Index (ESMI)

The Empire State Manufacturing Index (ESMI) is a survey given out by the Federal Reserve Bank of New York to manufacturing companies within the state of New York.

It’s used to gauge the health and performance of the manufacturing sector within New York.

As one of the most influential indicators of the state’s economic vitality, the ESMI provides a snapshot of current manufacturing trends and serves as a reliable proxy for the broader U.S. manufacturing industry.

What is Empire State Manufacturing Index (ESMI)?

The Empire State Manufacturing Index is a monthly survey conducted by the Federal Reserve Bank of New York.

The survey is sent on the first day of each month to about 200 manufacturing executives in New York State, typically the president or CEO.

The survey collects data on various aspects of manufacturing activity, such as new orders, shipments, employment, prices, and general business conditions.

How to Understand the ESMI

Understanding the Empire State Manufacturing Index involves the following key points:

Diffusion index: The ESMI is a diffusion index, meaning it measures the degree to which manufacturing activity is expanding or contracting. A reading above zero indicates expansion, while a reading below zero signifies contraction.
Components: The ESMI is comprised of several sub-indices, each reflecting a different aspect of manufacturing activity. These sub-indices include new orders, shipments, employment, prices paid, and prices received.
Seasonal adjustments: The index values are seasonally adjusted to account for fluctuations related to factors such as holidays, weather, or production cycles.

Why is the Empire State Manufacturing Index (ESMI) important?

The Empire State Manufacturing Index is essential for several reasons:

Economic indicator: The ESMI is a leading indicator of New York State’s manufacturing sector, which is a vital component of the state’s economy. A b manufacturing sector can contribute to job growth and overall economic well-being.
Proxy for the broader U.S. manufacturing industry: The index can also serve as a proxy for the broader U.S. manufacturing industry, as New York’s manufacturing sector shares similarities with other regions.
Investment tool: Investors can use the ESMI to inform their decisions regarding stocks, bonds, or other investments related to the manufacturing sector.
Policy analysis: Policymakers and economists can use the ESMI to analyze the impact of monetary and fiscal policies on the manufacturing sector and gauge the overall health of the economy.

Who publishes the Empire State Manufacturing Index?

The Empire State Manufacturing Index is calculated and published by the Federal Reserve Bank of New York, one of the twelve regional banks in the Federal Reserve System.

When is the Empire State Manufacturing Index released?

The Empire State Manufacturing Index is released monthly, typically around the middle of the month.

The index data and reports can be accessed through the Federal Reserve Bank of New York’s website.

Additionally, various financial news outlets and market data providers offer coverage and analysis of the ESMI.

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Employment Cost Index

The Employment Cost Index (ECI) is an economic indicator that measures changes in the cost of labor, including wages, salaries, and benefits.

This index helps policymakers, businesses, and economists understand the dynamics of the labor market and the overall health of the economy

Since the Employment Cost Index (ECI) is generally considered to be one of the most comprehensive measurements of labor costs, it’s used to signal changes in wage inflation.

What is the Employment Cost Index?

The ECI is a quarterly measure that tracks changes in the costs of labor compensation for employees in various industries and occupations.

The index is designed to reflect the overall movement in labor costs, including wages, salaries, and benefits such as health insurance, retirement plans, and paid leave.

The ECI is constructed using a fixed-weight Laspeyres index, which means it measures the changes in the cost of employing a fixed set of labor inputs, allowing for a consistent comparison of labor costs over time.

It doesn’t get as much attention from the financial media as the Consumer Price Index (CPI).

While the CPI measures inflation in consumer prices, the ECI measures inflation in wages and employer-paid benefits. In other words, the ECI shows whether changes in employment costs are going up or down.

Why is the Employment Cost Index important?

The ECI is an essential economic indicator for several reasons:

Inflation measurement: Changes in labor costs can have a significant impact on inflation, as higher labor costs may lead to increased prices for goods and services. The ECI helps policymakers and economists monitor inflationary pressures resulting from labor market dynamics.
Monetary policy: The Federal Reserve, closely watches the ECI to gauge the labor market’s health and assess inflationary pressures. Depending on the ECI’s trends, the Fed may adjust its monetary policies to control inflation and maintain economic stability.
Wage negotiation: Businesses and labor unions can use the ECI as a benchmark for wage negotiations, ensuring that compensation packages remain competitive and reflect prevailing labor market conditions.
Economic analysis: Economists and financial analysts rely on the ECI to understand labor market trends and make projections about economic growth, inflation, and employment levels.

Who publishes the Employment Cost Index?

In the United States, the ECI is compiled and published by the Bureau of Labor Statistics (BLS), a division of the U.S. Department of Labor.

The BLS collects data from a representative sample of employers across various industries and regions, covering both private and public sectors.

The data is obtained through the National Compensation Survey, which gathers information on wages, salaries, and benefits for a wide range of occupations.

When is the Employment Cost Index released?

The ECI is released on a quarterly basis, typically during the last week of the first month following the end of the quarter.

For example, the Q1 ECI report would be published in the last week of April.

The BLS’s website provides access to the latest ECI reports, along with historical data and detailed breakdowns of compensation components.

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Employment Situation Report

The Employment Situation Report is released on a monthly basis.

You’ve probably heard people call it by different names: the employment report, jobs numbers, and nonfarm payrolls, but they all refer to the same colossal report: the Employment Situation.

It includes a basket of employment reports such as the Unemployment rate, Average Hourly Earnings, and the Non-Farm Payrolls (NFP) report.

The Non-Farm Payrolls report is arguably one of the biggest market movers in the forex market. If you are looking for a report that creates a lot of volatility then this is the one for you!

What is the Employment Situation Report?

The Employment Situation report provides insight into the U.S. job market such as the monthly change in nonfarm payrolls, unemployment rate, hours worked, and average earnings

The Employment Situation report aims to lay out a thorough picture of the previous month’s state of employment in the United States, mainly:

How many people are working now
How many people are looking for work
How much people are getting paid
How many hours people are working

The Employment Situation consists of two separate reports:

An establishment survey that tracks approximately 697,000 work sites for nonfarm payroll, work hours, and wage data.
A survey of households of approximately 60,000, presenting data on unemployment and unincorporated self-employment.

All of this information is broken down across multiple demographics. It’s a lot to pore over so most people just the Summary that accompanies each report.

What to Focus on in the Employment Situation Report

The Employment Situation typically summarizes data according to five main categories:

1. Nonfarm Payrolls

The nonfarm payrolls number presents the total number of full- and part-time workers in every U.S. sector and industry minus farming jobs.

When private payrolls are highlighted, all government jobs are excluded; when manufacturing payrolls are highlighted, it refers only to manufacturing jobs.

2. Unemployment Rate

The unemployment rate tells you the percentage of unemployed people in the labor force. Keep in mind: it counts only people who are actively looking for jobs.

3. Average Hourly Earnings

The average hourly earnings tell you how much U.S. workers are getting paid.

4. Average Workweek

The average workweek figure tells you the number of hours people worked over a period of a week.

5. Participation Rate

The participation rate tells you the percentage of people who are either working or looking for work.

Because it also presents the percentage of people who are not working, it can help you better understand the unemployment rate.

Why is the Employment Situation Important?

A b, growing economy usually means that employment is rising. More people working means more people with paychecks, which means usually leads to more spending on goods and services.

Falling employment usually means the economy is slowing or declining. Fewer people working means fewer people with paychecks, which leads to less spending.

When employment levels start to change, investors, government policymakers, and the central bank start paying closer attention to employment data.

The Employment Situation gives traders a way to gauge the future direction of the economy.

When it comes to economic reports that sometimes move markets, the Employment Situation arguably holds a lot of weight.

Excluding U.S. farming jobs, this report covers 89% of the jobs that drive the entire economy.

In addition to providing recent data on employment across nearly all sectors of the U.S. economy, the report can also be used to forecast potential trends in other aspects of the economy.

Everyone” watches this report closely.

They pay close attention to the numbers, waiting to see if the “actual” numbers miss or beat the “consensus” figures.

Because everyone watches it closely, it moves violently no matter what the report actually says.

However, since the Employment Situation covers everything from the number of workers to how much they’re making, it makes this report a powerful tool for “guessing” where the economy is headed.

The jobs report can help you determine aggregate wage growth.

For example, market participants like to use average hourly earnings growth and the length of the average workweek to gauge what the aggregate wage growth was for the month.

This is important because it can help forecast the health of the consumer, which drives roughly two-thirds of the U.S. economy.

For example, if the labor market is growing, that means more people are making money.

The more people that make money, the more spending there will be.

More spending results in a higher GDP, and GDP my friend, is the broadest measure of the economy.

Some of the granular, job-category-specific data from the establishment survey can help traders analyze the health of certain sectors. For example, the survey tracks employment changes in residential and commercial building construction, mining, and several categories of retail employment, among others.

Specific sector data is used to help forecast the health of companies in an industry. Such data can also offer clues to other key economic indicators.

For example, the number of manufacturing jobs from the establishment survey is used to help forecast durable goods data.

It’s important to remember, though, that one month’s set of numbers doesn’t constitute a trend.

It’s best to consider each data point in the context of trends across time periods to get a more complete picture.

How does the Employment Situation report affect the U.S. dollar?

The monthly Employment Situation report provides a comprehensive overview of the U.S. labor market.

Generally speaking, if the Employment Situation is positive (growing NFP, lower unemployment rate) then this is considered positive for the US. dollar.
On the other hand, if the Employment Situation is negative (decreasing NFP, higher unemployment rate) then this is considered negative for the US. dollar.

That said, all of this has to be considered in the broader context of how other economies are faring relative to the United States and also how the employment data change market expectations of future interest rate decisions by the Fed (if any).

This report sounds like a lot of fun to watch. When does it come out?

The Employment Situation report comes out on the first Friday of every month at 8:30 a.m. ET.

As a forecasting tool, however, the meaning of the numbers and what they potentially indicate for the future of the markets may not always be clear.

Just remember that interpreting this report can sometimes be a blend of art and science.

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Existing Home Sales

Existing home sales data measures the monthly sales of previously-owned single-family houses.

By understanding the background, importance, source, availability, and frequency of this report, investors and economists can better analyze and interpret the data, enabling them to make more informed decisions about the economy and the housing market.

What is the Existing Home Sales report?

The Existing Home Sales report is a crucial economic indicator that provides insights into the health of the housing market and overall economic activity.

The Existing Home Sales report measures the number of completed transactions for single-family homes, townhouses, condominiums, and co-ops within a given month.

These sales figures help to create a snapshot of the housing market’s current state and provide valuable insights into trends and fluctuations.

By analyzing the Existing Home Sales report, economists and investors can identify potential shifts in the housing market, which can have broader implications for the economy as a whole.

Why is the Existing Home Sales data important?

The Existing Home Sales report is considered a leading economic indicator, as it reflects the strength of consumer spending and borrowing patterns.

A healthy housing market often correlates with a b economy, as home purchases involve significant financial commitments and typically lead to additional spending on home improvements, furniture, and appliances.

Additionally, the housing market can impact other areas of the economy, such as the construction and lending industries. Therefore, monitoring existing home sales can help provide a comprehensive understanding of the overall economic climate.

Almost eight out of every 10 houses are existing homes, while the rest are newly constructed. Sales of existing homes can provide economic stimulus.

Some sellers will use the profits from the sale of their existing house and buy a bigger house which usually means more spending on furniture and appliances.

Other sellers will choose to simply spend their profits on discretionary items. An uptrend in existing home sales also means more commissions to real estate agents and higher revenue for mortgage lenders and moving companies.

Existing home sales are used as an indicator of consumer spending and can influence interest rates.

Generally, b growth of existing home sales is dollar bullish. A decline in existing home sales over several months is dollar bearish since this would cause interest rates to fall which weakens demand for the dollar.

Source:

The National Association of Realtors (NAR) is the primary source of the Existing Home Sales report. As a leading trade association representing real estate professionals in the United States, the NAR collects and analyzes data from Multiple Listing Services (MLS) across the country to compile the report.

By aggregating sales data from a wide range of sources, the NAR ensures that the Existing Home Sales report is accurate and representative of the broader housing market.

Availability:

The Existing Home Sales report is typically released on a monthly basis, around the third week of the month following the reporting month.

For example, the report for January would be released in February. The NAR publishes the report on its website, making it readily available to economists, investors, and the general public.

Frequency:

As mentioned earlier, the Existing Home Sales report is published on a monthly basis, providing a regular and up-to-date assessment of the housing market.

This frequent release allows for the tracking of trends and changes in the market, as well as the ability to identify potential turning points or emerging patterns that may impact the broader economy.

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Factory Orders

The Factory Orders report is an economic indicator that measures the overall volume of new orders received by manufacturers for both durable and non-durable goods.

It provides insights into the health of the manufacturing sector, business investment, and future production levels, making it a valuable tool for policymakers, traders, and analysts in evaluating the strength of the economy.

What is the Factory Orders report?

Factory orders encompass all new orders placed with manufacturers, including those for consumer goods, capital goods, and defense-related items.

The report typically excludes orders for services and is divided into two main categories:

Durable Goods: These are items with a useful life of more than three years, such as automobiles, machinery, and computers.
Non-Durable Goods: These are items with a shorter useful life, such as food, clothing, and petroleum products.

The Factory Orders report is closely related to the Durable Goods Orders report, which is released a week earlier and focuses exclusively on durable goods orders.

The Factory Orders report expands upon this data by incorporating non-durable goods orders.

How to read the Factory Orders report

The Factory Orders report is usually presented as a percentage change from the previous month or year.

Positive figures indicate an increase in new orders, while negative figures signify a decrease.

The report may also include data on shipments, unfilled orders, and inventories, which can provide further insights into the state of the manufacturing sector.

When analyzing the report, it is essential to consider factors such as seasonal variations and the impact of large, one-time orders (e.g., aircraft orders) that can cause significant fluctuations in the data.

Analysts often look at the “core” factory orders figure, which excludes volatile items like transportation equipment, to get a clearer picture of underlying trends.

Why is the Factory Orders report important?

The Factory Orders report is important for several reasons:

Economic Health: An increase in factory orders signifies growing demand for goods, indicating a healthy and expanding economy. Conversely, a decline in orders may signal economic weakness or contraction.
Business Investment: Factory orders data can provide insights into business investment trends, as businesses typically invest in capital goods when they expect future demand to rise.
Future Production: Since factory orders represent the pipeline of future production, the report can help predict future output levels and potential changes in employment within the manufacturing sector.

Who publishes the Factory Orders report?

The Factory Orders report is published by the U.S. Census Bureau, which is part of the Department of Commerce.

The Census Bureau collects data from the Manufacturers’ Shipments, Inventories, and Orders (M3) survey, which covers thousands of manufacturing companies across the country.

When is the Factory Orders report released?

The Factory Orders report is released monthly, usually within the first week of the month following the reporting period.

The data is available on the United States Census Bureau’s website and through various financial news outlets and data providers.

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Financial Contagion

Financial contagion is a phenomenon in which financial crises or market disturbances spread across countries, industries, or asset classes, causing a chain reaction that amplifies the initial shock.

Financial contagion is when problems in one part of the financial world spread to other parts of the financial world, like a disease.

This can happen for a number of reasons, such as when people see that other people are selling assets, they may be more likely to sell those assets as well, even if they have no reason to believe that the assets are not worth their current price.

This can lead to a self-fulfilling prophecy, as the selling pressure drives down the price of the assets, which in turn leads to more selling.

Financial contagion can have a big impact on the economy, leading to a decline in economic activity, financial instability, and even a global recession.

Understanding Financial Contagion

Financial contagion occurs when economic or financial disturbances in one country, industry, or asset class spread to other areas, resulting in a domino effect that can lead to a global crisis.

Like a virus spreading through a population, financial contagion can cause significant damage to the global economy, affecting investors, businesses, and consumers alike.

The transmission of financial contagion can be facilitated through various channels, including:

Trade links: Economic downturns in one country can affect its trading partners, leading to a decline in demand for goods and services, and consequently, a slowdown in global growth.
Financial markets: A crash in one financial market can prompt investors to sell off assets in other markets, causing a widespread decline in asset prices.
Investor sentiment: Panic or loss of confidence in one market can lead investors to reassess risks across the board, resulting in a flight to safety and increased volatility.
Cross-border lending: As financial institutions in one country face difficulties, they may cut back on lending to foreign borrowers, leading to a credit crunch and economic slowdown in the affected countries.

What Causes a Financial Contagion?

There are a number of factors that can contribute to financial contagion, including:

Common exposures: When financial institutions are exposed to the same assets or risks, they are more likely to be affected by a shock to those assets or risks. For example, if a number of banks are invested in the same mortgage-backed securities, they will all be affected if the value of those securities declines.
Herding behavior: When investors and traders see that others are selling assets, they may be more likely to sell those assets as well, even if they have no reason to believe that the assets are not worth their current price. This can lead to a self-fulfilling prophecy, as the selling pressure drives down the price of the assets, which in turn leads to more selling.
Lack of transparency: When information about financial institutions and markets is not readily available, it can be difficult for investors to make informed decisions. This can lead to uncertainty and volatility in the markets, which can make it more likely that a shock will lead to contagion.

Historical Examples

Several instances of financial contagion have occurred throughout history, with some of the most notable examples being:

The 1997 Asian Financial Crisis: The crisis began in Thailand and quickly spread to other Southeast Asian countries, leading to massive currency devaluations, stock market crashes, and economic recessions.
The 2008 Global Financial Crisis: Triggered by the collapse of the U.S. housing market, the crisis rapidly spread across the world, leading to bank failures, stock market crashes, and a global economic recession.

Mitigating Financial Contagion

Preventing or mitigating the effects of financial contagion is a challenging task, as it often requires international cooperation and coordination. Some potential measures include:

Strengthening financial regulation and supervision: By strengthening financial regulation, governments can make it more difficult for financial institutions to take on excessive risk. This can help to reduce the likelihood that a shock to one institution will lead to problems at other institutions.
Improving transparency and information sharing: By improving information disclosure, governments and financial institutions can make it easier for investors to make informed decisions. This can help to reduce uncertainty and volatility in the markets, which can make it less likely that a shock will lead to contagion.
Diversifying economic and financial links: Encouraging trade and investment diversification can help reduce the concentration of risks and make economies more resilient to shocks.
Managing systemic risk: Systemic risk is the risk that a failure at one financial institution could lead to the failure of other institutions and a systemic crisis. By managing systemic risk, governments and financial institutions can reduce the likelihood of a systemic crisis.

Financial contagion is a complex issue with no easy solutions. However, by understanding the causes of contagion and taking steps to mitigate the risk, governments and financial institutions can help to reduce the likelihood of a major financial crisis.

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Gross Domestic Product (GDP)

GDP stands for Gross Domestic Product.

GDP is the total value of the goods and services produced in a country over a specified period.

It is one of the most comprehensive and closely watched economic statistics since it is used as a gauge of our economy’s overall size and health.

When compared with prior periods, GDP tells us whether the economy is expanding by producing more goods and services, or contracting due to less output.

It also tells us how one country’s economy is performing relative to other countries’ economies around the world.

A country’s GDP takes into account all of the private and public spending and output.

It includes government spending, business and consumer consumption, investments, and net exports (calculated as total exports minus total imports). GDP is typically calculated yearly but can be for any time period.

GDP is usually reported on a quarterly basis and can have a major impact on financial markets.

The total value of goods and services produced within the borders of the United States, regardless of who owns the assets or the nationality of the labor used in producing that output.

In contrast, GNP, or Gross National Product, measures the output of the citizens of the US and the income from assets owned by US entities, regardless of where located.

The growth of output is measured in real terms, meaning increases in output due to inflation have been removed.

The first basic concept of GDP was invented at the end of the 18th century. The modern concept was developed by the American economist Simon Kuznets in 1934 and adopted as the main measure of a country’s economy at the Bretton Woods conference in 1944.

What does”Gross” stand for?

“Gross” (in “Gross Domestic Product”) indicates that products are counted regardless of their subsequent use.

A product can be used for consumption, for investment, or to replace an asset. In all cases, the product’s final “sales receipt” will be added to the total GDP figure.

In contrast, “Net” doesn’t account for products used to replace an asset (in order to offset depreciation). “Net” only shows products used for consumption or investment.

What does “Domestic” stand for?

What is the difference between GDP vs. GNP vs. GNI?

Domestic (GDP)

“Domestic” (in “Gross Domestic Product”) indicates that the inclusion criterion is geographical: goods and services counted are those produced within the country’s border, regardless of the nationality of the producer.

For example, the production of a Japanese-owned factory in the United States will be counted as part of the United States’ GDP.

National (GNP)

In contrast, “National” (in “Gross National Product”) indicates that the inclusion criterion is based on citizenship (nationality): goods and services are counted when produced by a national of the country, regardless of where the production physically takes place.

In the example, the production of a Japan-owned factory in the United States will be counted as part of Japan’s GNP (Gross National Product) in addition to being counted as part of the U.S. GDP.

Nation (GNI)

GNI (Gross National Income) is a metric similar to GNP since both are based on nationality rather than geography.

The difference is that, when calculating the total value, GNI uses the income approach whereas GNP uses the production approach to calculate GDP.

Both GNP and GNI should theoretically yield the same result.

What does “Product” stand for?

“Product” (in “Gross Domestic Product“) stands for production, or economic output, of final goods and services sold on the market.

Included in GDP:

Final goods and services sold for money. Only sales of final goods are counted because the transaction concerning a good used to make the final good. For example, the purchase of steel used to build a car is already incorporated in the final good total value (price at which the car is sold).

Not included in GDP:

unpaid work: work performed within the family, volunteer work, etc.
non-monetary compensated work
goods not produced for sale in the marketplace
bartered goods and services
black market
illegal activities
transfer payments
sales of used goods
intermediate goods and services that are used to produce other final goods and services

Nominal (Current) GDP vs Real (Constant) GDP

Nominal GDP (or “Current GDP”) = face value of output, without any inflation adjustment

Real GDP (or “Constant GDP”) = value of output adjusted for inflation or deflation. It allows us to determine whether the value of output has changed because more is being produced or simply because prices have increased. Real GDP is used to calculate GDP growth.

Why is GDP important?

GDP is an important measurement of a country’s economic growth, health, and size, and influences the direction of the financial markets.

The pace at which our economy is growing affects business conditions and investment decisions, as well as whether workers can find jobs.

When GDP is rising, the economy is typically deemed to be doing well. Employment can be expected to increase as companies hire more workers, which means people have more money to spend. This then generates more business and keeps the cycle going.

When GDP is shrinking, the opposite occurs: businesses cut back on production and expansion, and workers are laid off.

When the GDP doesn’t grow fast enough, businesses aren’t incentivized to expand and hire more workers, which in turn feeds the stagnant or downward cycle.

Policymakers will look to GDP when contemplating decisions on interest rates, tax, and trade policies.

By monitoring trends in the overall growth rate as well as the unemployment rate and the rate of inflation, policymakers are able to assess whether the current stance of monetary policy is consistent with that primary goal.

How to Calculate GDP

GDP can be calculated in three ways: using the production, expenditure, or income approach. All methods should give the same result.

Production approach: the sum of the “value-added” (total sales minus the value of intermediate inputs) at each stage of production.
Expenditure approach: the sum of purchases made by final users.
Income approach: the sum of the incomes generated by production subjects.

By far the most widely used approach is the expenditure approach where:

GDP = consumption + investment + government spending + (exports /imports)

Expenditure Components of GDP

C is Personal Consumption Expenditures	Also known as consumer spending, or the tally of all goods and services that consumers buy—from grocery items to health care coverage.
I is Gross Private Investment	Includes business spending on fixed assets such as machinery, equipment, and buildings, plus inventory investment; also incorporates consumers’ home purchases.
G is Government Purchases	Comprises federal, state, and local government spending for the provisioning of goods and services—from schools and roads to national defense.
X-M is Exports minus Imports	Or, net exports: the value of exports to other countries minus the value of imports into the U.S. (The dollar value of imports is subtracted to ensur

In currency terms, the GDP level of different countries may be compared by converting their value in national currency, either by using the current currency exchange rate, where the GDP is calculated by exchange rates prevailing on the international currency markets.

This method offers better indications of that country’s international purchasing power and relative economic strength.

Another method of comparison is using the purchasing power parity exchange rate, whereby the GDP is calculated by the PPP (purchasing power parity) of each currency relative to a selected standard, i.e. the US dollar.

This method offers a view of the actual living standards of lesser developed countries as it compensates for the weaknesses of the local currencies in world markets.

GDP is usually calculated by the national statistical agency of the country following the international standard.

In the United States, GDP is measured by the Bureau of Economic Analysis within the U.S. Commerce Department.

The international standard for measuring GDP is contained in the System of National Accounts, compiled in 1993 by the International Monetary Fund (IMF), the European Commission, the Organization for Economic Cooperation and Development (OECD), the United Nations (UN), and the World Bank.

GDP Growth Rate

The GDP growth rate measures the percentage change in real GDP (GDP adjusted for inflation) from one period to another, typically as a comparison between the most recent quarter or year and the previous one.

It can be a positive or negative number (negative growth rate, indicating economic contraction).

GDP per capita

GDP per capita is calculated by dividing nominal GDP by the total population of a country.

It expresses the average economic output (or income) per person in the country.

The population number is the average (or mid-year) population for the same year as the GDP figure.

Frequency:

Quarterly

Availability:

Data is typically released during the final week of the month.

The first or advance estimate is released during the final week of the month immediately following the end of a calendar quarter.

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Gross National Product (GNP)

Gross national product (GNP) is the market value of all the final goods and services produced by a country’s residents in a given year.

It is calculated by adding up the value of all goods and services produced by a country’s businesses, plus the value of all income earned by a country’s residents from investments abroad, minus the value of all income earned by foreign residents from investments in the country.

Gross National Product (GNP) is an economic indicator that helps us understand the overall health of a nation’s economy. It also is used to compare the economic performance of different countries.

What is GNP?

GNP measures the total value of goods and services produced by a country’s residents, both domestically and abroad, during a specific time period.

It is a critical component of a nation’s overall economic performance and differs from Gross Domestic Product (GDP) as it considers the income generated by residents both inside and outside of the country.

In recent years, GNP has been replaced by gross domestic product (GDP) as the primary measure of economic output. GDP is similar to GNP, but it excludes income earned by a country’s residents from investments abroad.

GDP is a more accurate measure of a country’s economic activity within its borders.

GNP has a number of limitations as a measure of economic well-being. For example, it does not take into account the distribution of income within a country. It also does not take into account the value of non-market goods and services, such as the value of housework and volunteer work.

How to Read the GNP

Here is the formula for calculating GNP:

GNP = GDP + Net factor income from abroad

Where:

GDP = Consumption + Investment + Government spending + Net exports
Net factor income from abroad = Income earned by residents from investments abroad – Income earned by foreign residents from investments in the country
Consumption = The value of all goods and services purchased by households
Investment = The value of all new capital goods produced in the country
Government spending = The value of all goods and services purchased by the government
Net exports = The value of all goods and services exported by the country minus the value of all goods and services imported by the country

The GNP data is usually presented as a percentage change from the previous period, such as quarterly or annually. It can be expressed in nominal terms, which represents the current market value, or in real terms, which takes inflation into account.

To better understand the report, consider the following:

Percentage change: A positive percentage change signifies economic growth, while a negative percentage change indicates a contraction.
Comparison to GDP: Comparing GNP to GDP can provide insights into the extent to which a country’s residents are earning income from international activities.
Industry breakdown: Examining the contributions of various industries to GNP can help identify the sectors driving economic growth or facing challenges.

Why is GNP important?

GNP is important for various reasons:

Economic health: GNP is a vital indicator of a country’s economic well-being, allowing policymakers and analysts to assess the overall performance of the economy.
International comparisons: GNP enables comparisons between countries to determine relative economic strength.
Policy decisions: Policymakers use GNP data to implement and evaluate economic policies and strategies, such as fiscal and monetary policies.
Investment decisions: Investors and businesses use GNP as a guide for investment decisions, as it provides insights into the stability and growth potential of a country’s economy.

Who publishes the GNP data?

In the United States, the GNP data is prepared and published by the Bureau of Economic Analysis (BEA), a division of the Department of Commerce.

In other countries, the report is typically produced by the respective national statistical agency or central bank.

When is GNP released?

GNP data is typically released on a quarterly basis, with preliminary, revised, and final estimates published at different intervals.

Data is made publicly available on the websites of the respective statistical agencies or central banks, as well as through various financial news sources and data providers.

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Halifax House Price Index

The Halifax House Price Index (HPI) is a widely recognized measure of the UK housing market.

It tracks the change in the average price of residential properties in the United Kingdom and provides valuable insight into the health of the housing sector.

What is the Halifax House Price Index?

The Halifax House Price Index is a monthly house price index. The index shows the average house price in the UK, as well as the change in house prices over time. It is broken down by region and type of property.

The Halifax HPI was first introduced in 1983 as a response to the growing need for accurate and reliable data on house prices in the United Kingdom.

At the time, the housing market was undergoing significant changes, with increasing demand for housing, and property prices becoming a topic of interest for both industry professionals and the general public.

The index was initially created by the Halifax Building Society, which later merged with the Bank of Scotland in 2001, forming HBOS plc. In 2009, Lloyds Banking Group acquired HBOS, and Halifax became a division of the Bank of Scotland plc.

Since its inception, the Halifax HPI has been widely acknowledged as a reliable and valuable source of information on the UK housing market.

It is used by policymakers, financial institutions, property developers, and individual investors to gain insights into the health of the housing sector and make informed decisions.

How is the Halifax House Price Index calculated?

The HPI is calculated using data from the Halifax mortgage database, which covers a wide range of property types and geographic locations across the UK.

The methodology of the Halifax HPI has evolved over time to ensure accuracy and relevance. Initially, the index was calculated using a simple average of house prices.

However, in 1992, Halifax introduced a “standardized” methodology, which took into account the mix of properties sold in a particular period, such as the size, type, and location of the properties.

This change aimed to provide a more accurate representation of the overall market trend.

In 2016, Halifax further refined its methodology by adopting a hedonic regression model. This approach accounts for various property attributes, such as the number of bedrooms, bathrooms, and other features, to provide a more accurate reflection of house prices.

The model also adjusts for seasonal variations in housing market activity.

How to Understand the Halifax House Price Index

The Halifax HPI report includes several key data points:

Monthly change: The percentage change in average house prices compared to the previous month.
Annual change: The percentage change in average house prices compared to the same month in the previous year.
Average house price: The current average house price in the United Kingdom.
Historical data: The HPI provides a historical view of house price movements, allowing for comparison over time.

To analyze the report, pay attention to the trends in the monthly and annual changes in house prices.

Rising house prices may indicate a healthy and growing housing market while falling prices could signal a decline in the market or potential issues in the economy.

Why is the Halifax House Price Index important?

The Halifax HPI is a crucial tool for policymakers, financial institutions, property developers, and individual investors.

It offers valuable information about the state of the UK housing market, which can impact consumer spending, investment decisions, and monetary policy.

The index can also serve as a benchmark for investors in the property market or for those considering purchasing a home, as it provides an overall view of price trends.

Who publishes the Halifax House Price Index?

The Halifax House Price Index is sourced from the mortgage database of Halifax, a division of Bank of Scotland plc.

The data used in the index calculation is based on approved mortgage applications, ensuring a representative and accurate reflection of the UK housing market.

When is the Halifax House Price Index released?

The Halifax HPI is published on a monthly basis, usually during the first week of each month.

The report is available on the Halifax website and can be accessed free of charge.

In addition to the latest report, historical data, and supplementary information are also available on the website, providing a comprehensive view of the UK housing market over time.

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Housing Starts

The Housing Starts data is an economic indicator that measures the number of new residential construction projects started within a given period.

This data provides valuable insights into the health of the housing market and the broader economy, as housing starts typically correlate with economic growth, employment, and consumer spending.

Declining housing starts show a slowing economy, while increases in housing activity can pull an economy out of a downturn.

Housing starts are considered to be a leading indicator, meaning it detects trends in the economy looking forward.

What is Housing Starts data?

Housing starts are calculated based on the number of new residential construction projects, such as single-family homes, apartments, and condominiums, that have begun within a specific month.

The data is typically broken down into three categories:

Single-Family Housing Starts: The number of new single-family homes that have started construction.
Multi-Family Housing Starts: The number of new multi-family residential buildings, such as apartments and condominiums, that have started construction.
Total Housing Starts: The combined number of single-family and multi-family housing starts.

The Housing Starts data is closely related to other housing market indicators, such as building permits and new home sales, which provide additional context for analyzing the state of the housing market.

How to Read the Housing Starts data

The Housing Starts data is usually presented as a seasonally adjusted annual rate (SAAR), which represents the total number of housing starts that would occur over a year if the current month’s pace were to continue.

The report may also include month-over-month and year-over-year percentage changes in housing starts, allowing for easy comparison of trends over time.

When analyzing the report, it is important to consider factors such as seasonal variations and regional differences in housing activity.

Additionally, housing starts can be volatile from month to month, so it is often helpful to examine longer-term trends to gain a better understanding of the underlying dynamics of the housing market.

Why is the Housing Starts data important?

The Housing Starts report is important for several reasons:

Economic Health: Housing starts are closely tied to economic growth, as increased residential construction typically indicates a b economy and growing demand for homes. Conversely, a decline in housing starts can signal economic weakness.
Employment: The housing market is a significant source of employment, both directly through construction jobs and indirectly through related industries. An increase in housing starts can lead to job growth, while a decrease can result in job losses.
Consumer Spending: Housing starts have a significant impact on consumer spending, as new home construction often leads to increased demand for home furnishings, appliances, and other related goods and services.

Who publishes the Housing Starts data?

The Housing Starts report is published by the U.S. Census Bureau and the Department of Housing and Urban Development.

The data is collected through the Building Permits Survey and the Survey of Construction, which gather information from thousands of permit-issuing authorities and construction contractors across the country.

When is the Housing Starts data released?

The Housing Starts report is released monthly, usually around the middle of the month following the reporting period.

The data is available on the Census Bureau’s website and through various financial news outlets and data providers.

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ifo Busines Climate Index

The ifo Business Climate Index is an economic indicator that gauges the overall business sentiment and outlook in Germany, the largest economy in Europe.

Published monthly by the ifo Institute for Economic Research, the index provides insights into the health of the German economy and its potential impact on the broader European economy.

Economists, investors, and policymakers closely monitor the index to anticipate future economic trends.

What is the ifo Busines Climate Index?

The ifo Business Climate Index was first published in 1949. It is one of the longest-running economic indicators in the world.

The ifo Business Climate Index is based on a survey of around 9,000 German firms across various sectors, including manufacturing, construction, wholesale, and retail.

The survey asks participants to assess their current business situation and their expectations for the next six months.

The ifo Institute then calculates the index by combining these two components—current assessment and business expectations—into a single value.

The index is designed to provide an early indication of economic trends and to help forecast future economic performance.

A rising index suggests improving business sentiment and a potential expansion in economic activity.
A declining index may signal deteriorating conditions and a potential economic contraction.

How to Read the ifo Busines Climate Index

The ifo Business Climate Index is reported as a number between 0 and 250.

A reading above 100 indicates that more companies expect their business situation to improve,
A reading below 100 indicates that more companies expect their business situation to deteriorate.
A reading of 100 indicates that the balance of opinion is neutral, with an equal number of companies expecting their business situation to improve and deteriorate in the next six months.

To interpret the index:

Review the current value of the index and compare it to the previous month’s value.
Consider the index’s trend over time to gauge the overall direction of business sentiment.
Analyze the subcomponents of the index (current assessment and business expectations) to identify specific areas of strength or weakness within the German economy.
Keep an eye on significant changes in the index, as these can signal potential shifts in economic conditions.

Why is the ifo Busines Climate Index important?

The ifo Business Climate Index is an important indicator of the health of the German economy, which plays a significant role in the overall performance of the European economy.

A b German economy can have positive effects on neighboring countries, while a weakening economy may signal broader issues in the eurozone.

It is often used by policymakers and investors to gauge the future direction of the German economy. The index is also used by businesses to make decisions about investment and hiring.

Who publishes ifo Busines Climate Index?

The ifo Business Climate Index is published monthly by the ifo Institute for Economic Research, a leading research institution based in Munich, Germany.

The institute is well-regarded for its expertise in economic analysis and forecasting.

When is the ifo Busines Climate Index released?

The ifo Business Climate Index is available on a monthly basis.

The index is available on the ifo Institute’s website, where you can access the latest data, historical data, and detailed analysis.

The website also provides various tools and visualizations to help users better understand the index and its implications for the German and European economies.

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Import Price Index

The Import Price Index measures the average change over time in the prices paid by U.S. residents for imported goods and services.

It is a key indicator of inflation, as it reflects the prices of goods and services that are used in the production of U.S. goods and services, as well as the prices of goods and services that are consumed by U.S. households.

What is the Import Price Index?

The U.S. Import Price Index is published by the Bureau of Labor Statistics (BLS) as part of the U.S. International Price Program.

The index measures the average change in prices for imported goods and services over time, providing insights into the cost of foreign products consumed by U.S. residents.

The data is collected from a wide range of sources, including importers, exporters, and government agencies, and is classified according to the Harmonized System (HS) classification.

How to Read the Report

The U.S. Import Price Index report provides a percentage change in the index on a monthly, quarterly, and annual basis.

The data is typically presented in two ways:

Headline import prices: This figure represents the overall change in import prices, including all goods and services.
Core import prices: This measure excludes volatile items such as food and energy, providing a more stable view of underlying price trends.

Why are Import Prices important?

Understanding import prices is essential for several reasons:

Inflation: Changes in import prices can directly impact domestic inflation rates. When import prices rise, the cost of goods and services may increase, leading to higher consumer price inflation.
International trade: Import prices can also influence trade balances. If the cost of imported goods and services rises, domestic demand for these items may decrease, potentially leading to an improved trade balance.
Monetary policy: Central banks monitor import prices to gauge inflationary pressures and make informed decisions about monetary policy, such as setting interest rates or implementing quantitative easing measures.

Who publishes the Import Price Index?

The Bureau of Labor Statistics (BLS) is responsible for collecting and publishing the Import and Export Price Indexes, including the import price data.

The BLS gathers price information from a variety of sources, such as importers, exporters, and government agencies, to create a comprehensive view of price movements in international trade.

When is the Import Price Index released?

The U.S. Import Price Index report is usually released monthly by the BLS, with a lag of approximately two weeks after the end of the reference period.

The data is made available on the BLS website, where users can access historical data, analysis, and supporting documentation.

Additionally, the report is widely covered by financial news outlets and data providers, making it easily accessible for market participants and the general public.

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Industrial Productionx

The Industrial Production Index is a crucial economic indicator that measures the output of various sectors within an economy, such as manufacturing, mining, and utilities.

By monitoring changes in industrial production, you can gain insights into the overall health of the economy, the performance of specific industries, and the demand for goods and services.

What is Industrial Production?

The Industrial Production Index tracks the real output of various sectors in an economy, expressed as a percentage of the output in a base year.

The index typically includes the following components:

Manufacturing: This sector includes the production of durable and nondurable goods, such as vehicles, machinery, and consumer goods.
Mining: This sector encompasses the extraction of minerals, ores, and other natural resources.
Utilities: This sector covers the production of electricity, gas, and water.

The Industrial Production Index is often used in conjunction with other economic indicators, such as Capacity Utilization, which measures the extent to which an economy’s productive capacity is being used, and the Purchasing Managers’ Index (PMI), which gauges the health of the manufacturing sector.

How to Read Industrial Production

The Industrial Production Index is important for several reasons:

Economic Health: Changes in industrial production can signal shifts in the overall health of an economy, as increased output typically indicates b demand for goods and services, while decreased output may signify economic weakness.
Employment: The industrial sector is a significant source of employment, and changes in production levels can impact job growth or job losses.
Investment Decisions: Investors and businesses can use the Industrial Production Index to identify trends and assess the performance of specific industries, guiding investment decisions and resource allocation.

Who publishes Industrial Production?

The Industrial Production Index is published by the Federal Reserve in the United States and by various other national statistical agencies in other countries.

Data is collected through surveys and other sources, such as production and shipment records from factories, mines, and utilities.

When is Industrial Production released?

The Industrial Production Index is released monthly, typically around the middle of the month following the reporting period.

The data is available on the Federal Reserve’s website, as well as through various financial news outlets and data providers.

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Initial Jobless Claims

The Initial Jobless Claims is a U.S. report that measures the number of individuals who filed for state unemployment insurance for the first time during the previous week.

There are two types of jobless claims:

Initial claims
Continued claims

The two categories represent the total number of individuals that filed for unemployment insurance during a given week.

The Initial Jobless Claims is provided by the Employment and Training Administration of the Department of Labor, and the report comes out for viewing on a weekly basis, each Thursday.

Continuing Jobless Claims measures the number of individuals who have already received unemployment benefits and are continuing to apply for them.

The report provides information on the data from the previous week, ending on Saturday before.

What is Initial Jobless Claims?

The Initial Jobless Claims report, also known as the Initial Claims report, measures the number of people who filed for unemployment benefits for the first time.

Initial Jobless Claims Example

An initial claim is a claim filed by an unemployed individual after a separation from an employer.

The claim is a request to seek eligibility for the Unemployment Insurance program.

The unemployment insurance claims that newly unemployed workers file are reported in the Initial Jobless Claims report.

What is Unemployment Insurance?

Unemployment Insurance (UI) provides unemployment benefits, usually in the form of weekly payments to eligible workers.

UI is administered jointly by the U.S. Department of Labor and individual states.

Each state develops its own system for delivering benefits.

According to the U.S. Department of Labor, in order to qualify for unemployment benefits, the individual must:

Be unemployed through no fault of their own.
Meet specific state eligibility requirements.

States have different requirements for unemployment recipients to prove they are ready to work but are unable to find a job.

Since not everyone who applies for unemployment insurance is approved, it’s important to note that jobless claims does NOT necessarily reflect the number of people who will actually receive unemployment benefits,

Local employment offices forward their insurance claims data to state employment offices, who then aggregate the data and send it to the U.S. Department of Labor.

The Department of Labor then releases this newly collected data to the public every Thursday.

This number can be a predictor of how the economy is doing.

Why is the Initial Jobless Claims report important?

Because of its weekly frequency, the Initial Jobless Claims report provides clues about what’s going on in the job market.

It is viewed as a leading economic indicator because there’s usually an inverse relationship between initial claims and employment.

As initial claims FALL, the employment rate tends to increase. An improving employment rate can signal higher disposable income, leading to higher consumption (more spending on goods and services), which means ber economic growth.
As initial claims RISE, the employment rate tends to decline. A declining employment rate can signal lower disposable income, leading to lower consumption (less spending on goods and services), which means weaker economic growth.

It can provide an early warning and alert traders and investors about changing job market conditions.

When looking at the Continuing Jobless Claims numbers, it is important to remember that not everyone who is jobless is entitled to unemployment benefits.

How to read the Initial Jobless Claims report

The initial jobless claims reading is compared to consensus forecasts:

A better-than-expected initial jobless claims reading (known as a “beat”) means a lower reading than the market consensus.
A worse-than-expected jobless claims reading (known as a “miss”) means a higher reading than the market consensus.

The market reaction to the initial jobless claims reading depends on the current economic environment and how it may affect future monetary policy by the U.S. central bank or fiscal policy by the U.S. federal government.

In general, the market reaction tends to be positive when initial jobless claims come out lower than expected.

A change of at least 30,000 claims up or down is considered significant. Anything less is seen as normal fluctuations.

If the number of people filing for unemployment benefits increases on a sustained basis or is relatively high, it means a large number of people are losing their jobs and applying for unemployment insurance.

If there is a significant increase in these claims, it could potentially be pointing to slowing job growth, as unemployment rises.

In such a case, investors and traders will infer that the economy is not doing well and the next NFP report may come out weak.

Alternatively, a decline in the Initial Jobless Claims is indicative of a healthy economy and future NFP reports should reflect a more positive picture.

When the number decreases significantly, it can be a sign that the economy is accelerating in job growth and is economically sound.

The report also provides a four-week moving average to help smooth claims data as week-to-week changes can be volatile.

Most analysts see a four-week moving average of more than 400,000 claims as signs of economic weakness.

Increases in new claims over several months often predict a decrease in GDP growth.

With the Continuing Jobless Claims, a rise in this number has negative implications for the NFP, since it will affect consumer spending, discouraging economic growth.

Generally speaking, a high reading is seen as negative for the labor market while a low reading is seen as positive.

A Continuing Jobless Claims number greater than 3 million is considered worrying.

When workers start filing for unemployment insurance, traders anticipate a slowdown in the economy and buy government bonds, which pushes interest rates lower.

Lower interest rates may weaken the U.S. dollar (depending on the relative strength of the U.S. economy versus other countries).

For example, even if the employment situation is deteriorating in the U.S. based on the Initial Jobs Claim report, if the employment situation is even worse in other countries, then the U.S. dollar may not budge (and might even strengthen).

Where to find it?

On BabyPips.com’s economic calendar, you can find its event listing.

What time is it released?

Initial Jobless Claims is released weekly, on Thursdays, at 8.30 am ET.

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ISM Manufacturing Survey (PMI)

The ISM Manufacturing Survey, formally known as “Manufacturing ISM ® Report On Business” is based on responses from purchasing managers in the manufacturing sector.

The report monitors activity in production, new orders, supplier deliveries, inventory, employment, prices, imports, and exports.

It’s the first piece of news on the economy every month and provides the earliest clues of how the economy has fared during the previous four weeks.

What is the ISM Manufacturing Survey?

The ISM Manufactury Survey is a monthly indicator of the health of U.S. manufacturers based on a survey of purchasing managers.

Each month, the Institute of Supply Management (ISM) surveys purchasing managers about the current condition of their businesses and publishes a report.

Institute for Supply Management is the oldest, and the largest, supply management association in the world.

The ISM selects companies that represent the industry and geographic distribution of U.S. manufacturers for its surveys.

The survey questions require purchasing managers to answer “better, worse, or the same” or “increase, decrease, or no change.”

The ISM takes the answers to each question into a diffusion index, which has a scale that ranges from 0 to 100, with 50 as its midpoint.

If the index is above 50, there were more answers of “better” or “increasing” compared to those who answered, “worse” or “decreasing”.
If the index is below 50, there were more answers of “worse” or “decreasing” compared to those who answered, “better” or “increasing”.

Why is the ISM Manufacturing Survey important?

People in charge of buying stuff for their company are called purchasing managers.

Manufacturing companies need supplies to make products. A sample of items they might order includes cables, packing boxes, and computers.

Purchasing managers keep up with new customer orders. They make sure that the factory has a sufficient inventory of materials to keep production operating on schedule.

They’re also knowledgeable about commodity pricing, availability of supplies, and delivery times for raw materials used in production.

If there’s an increase in demand for manufactured products, purchasing managers respond by increasing orders for production materials and other supplies.

If manufacturing sales slow, these corporate buyers will cut back on industrial orders.

Because of their position, you can essentially get a solid measure of manufacturing activity by following what purchasing managers are doing.

This is important because manufactured goods make up almost half of the total economy.

The ISM Manufacturing Survey has a b history of anticipating manufacturers’ profits before other economic reports and is used to predict turning points in the economy.

How is the ISM Manufacturing Survey calculated?

The ISM mails out questionnaires every month to about 400 member companies around the country, representing 20 different industries.

Corporate purchasing managers are asked to assess if activity is rising, falling, or unchanged in the following fields:

New orders: Measures the change in order quantities from the previous month.
Production: Reports production levels compared to the previous month.
Employment: Reports the rate or increase or decrease of overall employment levels compared to the previous month.
Supplier deliveries: Asks whether suppliers are delivering materials quicker or slower compared to the previous month.
Inventories: Measures increases or decreases in manufacturers’ inventory levels compared to the previous month.
Customers’ inventories: Measures the inventory levels of manufacturing customers.
Commodity prices: Reports rising or falling prices for raw materials.
Backlog of orders: Reports whether order backlogs are growing or shrinking.
New export orders: Measures the level of orders provided outside the U.S. compared to the previous month.
Imports: Measures the rate of change for raw material imports compared to the previous month.

The PMI serves as the headline index and provides an overall view of the manufacturing sectors.

Before September 1, 2001, “PMI” stood for Purchasing Managers’ Index. ISM now uses only the acronym, PMI, due to ISM’s name change.

The index is a compilation based on the answers to the first five queries in the above list.

They are weighted as follows to compute the index: order (30%), manufacturing production (25%), employment (20%), supplier deliveries (15%), and inventories (10%). The bottom five provide additional coverage of how manufacturing is performing.

When is it released?

The ISM Manufacturing Survey is released on the first business day of each month at 10:00 am ET.

How do you read it?

Here is how you interpret the results:

Above 50: Both manufacturing and the economy are expanding.

Below 50 but above 43: Manufacturing activity is contracting, yet the overall economy may still be growing.

Below 43 on a sustained basis: Both manufacturing and the economy are likely to be in recession. Expect the Fed to lower rates to try and stimulate economic growth.

How does it affect the forex market?

ISM Manufacturing Survey

A PMI reading above 50 is bullish.

A trend of rising PMI values usually means a growing economy. Economic growth usually leads to higher interest rates, which is bullish for the U.S. dollar.

A PMI reading below 50 is bearish.

A trend of falling PMI values usually means a slowing economy. Economic decline usually leads to lower interest rates, which is bearish for the U.S. dollar.

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Ivey Purchasing Managers Index

The Ivey Purchasing Managers Index (Ivey PMI) is an economic indicator that reflects the health of the Canadian economy by measuring the level of activity in the purchasing sector.

The index is designed to provide insights into the overall business conditions, signaling the strength of demand for goods and services and offering valuable information for policymakers, investors, and businesses alike.

What is the Ivey Purchasing Managers Index?

The Ivey PMI is published by the Ivey Business School at Western University in collaboration with the Purchasing Management Association of Canada (PMAC).

It is based on a monthly survey of purchasing managers across Canada, covering various sectors, including manufacturing, construction, services, and public administration.

The Ivey PMI is calculated using five main components:

New Orders
Inventory Levels
Production
Supplier Deliveries
Employment

A value above 50 indicates expansion in the purchasing sector, while a value below 50 signals contraction.

How to Read the Ivey Purchasing Managers Index

The index is seasonally adjusted to account for fluctuations due to seasonal factors.

The Ivey PMI report typically includes the following information:

Headline Index: The headline index is the primary measure of the health of the purchasing sector, with values above 50 indicating expansion and values below 50 signaling contraction.
Sub-indices: The report also provides data on the five main components (new orders, inventory levels, production, supplier deliveries, and employment), allowing for a more in-depth analysis of specific aspects of the purchasing sector.
Industry Breakdown: The report may include a breakdown of the index by industry, offering insights into the performance of various sectors within the Canadian economy.

When analyzing the Ivey PMI, it is important to consider factors such as historical trends, comparison to other economic indicators, and the potential impact of external factors, such as global economic conditions and government policies.

Why is the Ivey Purchasing Managers Index important?

The Ivey PMI is an important economic indicator for several reasons:

Early Signal: As a leading indicator, the Ivey PMI provides an early signal of changes in business conditions and overall economic health.
Demand Indicator: The index reflects the strength of demand for goods and services, offering insights into consumer and business spending.
Investment Decisions: Investors and businesses can use the Ivey PMI to identify trends and assess the health of various sectors within the Canadian economy, guiding investment decisions and resource allocation.

Who publishes the Ivey Purchasing Managers Index?

The Ivey PMI is published by the Ivey Business School at Western University in collaboration with the Purchasing Management Association of Canada (PMAC).

Data is collected through a monthly survey of purchasing managers across various sectors in Canada.

When is the Ivey Purchasing Managers Index released?

The Ivey PMI is released on a monthly basis, typically during the first week of the following month.

The data is available on the Ivey Business School website, as well as through various financial news outlets and data providers.

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Job Openings and Labor Turnover Survey (JOLTS)

The Job Openings and Labor Turnover Survey (JOLTS) is a monthly report that looks at job openings, new hires, and people leaving their jobs in the US.

It is an essential economic indicator that provides insights into the labor market’s health and the overall economy.

What is Job Openings and Labor Turnover Survey (JOLTS)?

The Job Openings and Labor Turnover Survey (JOLTS) is a monthly report that measures job vacancies, hires, and separations in the United States.

The survey collects data from approximately 16,000 business establishments across various industries and regions. JOLTS provides a detailed picture of the labor market by tracking the number of job openings, the number of people hired, the number of employees who quit or were laid off, and other forms of labor turnover.

Why is Job Openings and Labor Turnover Survey (JOLTS) important?

JOLTS is considered a valuable economic indicator as it provides insights into the labor market’s dynamics, which can affect consumer spending, business investments, and overall economic growth.

Job openings: A high number of job openings can signal a robust job market and increased demand for workers.
Quits: A high number of quits may indicate workers’ confidence in finding better opportunities.
Layoffs: A high number of layoffs can point to a weakening economy or struggling industries.

By analyzing JOLTS data, policymakers, economists, and investors can make informed decisions based on the labor market’s current conditions and trends.

Who publishes the Job Openings and Labor Turnover Survey (JOLTS)?

The JOLTS report is produced by the U.S. Bureau of Labor Statistics (BLS), a division of the Department of Labor.

The BLS is responsible for collecting, analyzing, and disseminating essential economic information related to the U.S. labor market.

The JOLTS survey is conducted using a sample of establishments across various industries, ensuring the report is representative of the broader labor market.

When is the Job Openings and Labor Turnover Survey (JOLTS) released?

The JOLTS report is typically released on a monthly basis, around the middle of the month following the reference month. For example, the report for January would be released in mid-February.

The BLS publishes the report on its website, making it easily accessible to the general public.

This frequent release allows for the tracking of trends and changes in the market, as well as the ability to identify potential turning points or emerging patterns that may impact the broader economy.

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Leading Economic Indicators

Leading economic indicators serve as valuable tools to gauge the future direction of an economy.

By identifying trends and potential turning points in the business cycle, these indicators help policymakers, businesses, and investors make well-informed decisions.

What are Leading Economic Indicators?

Leading economic indicators are statistical data points that change ahead of the overall economy, making them useful for predicting economic trends.

These indicators can help government policymakers assess the health of an economy and develop appropriate fiscal and monetary policies.

Key Leading Economic Indicators

Several leading economic indicators can provide insights into the future direction of an economy.

The following are some of the most commonly used indicators:

1. Stock Market Indices

Stock markets often respond to changes in economic conditions before the broader economy does. A rising stock market can indicate investor optimism about future economic growth, while a declining market may signal pessimism about the economy’s prospects.

2. Manufacturing Data

Reports such as the Purchasing Managers’ Index (PMI) and new orders for durable goods can provide insights into the health of the manufacturing sector, which tends to be sensitive to shifts in economic conditions.

3. Building Permits

An increase in the number of building permits issued can signal future growth in construction and real estate, as it reflects developers’ confidence in the market.

4. Consumer Sentiment

Measures of consumer confidence, such as the Consumer Confidence Index (CCI), can provide insights into consumers’ future spending behavior, which is an important driver of economic growth.

5. Initial Jobless Claims

A decrease in the number of jobless claims can signal an improving labor market and a strengthening economy.

6. Yield Curve

The difference in interest rates between short-term and long-term government bonds, also known as the yield curve, can provide insights into investor expectations about future economic growth and inflation.

7. Leading Economic Index (LEI)

The LEI is a composite index that combines several leading indicators to provide a more comprehensive view of the future direction of the economy.

Interpreting and Using Leading Economic Indicators

While leading economic indicators can be valuable tools for predicting economic trends, it is essential to recognize their limitations.

No single indicator can accurately predict future economic conditions, and leading indicators can sometimes produce false signals.

To mitigate these limitations, it is often recommended to analyze multiple indicators and consider additional economic data when making decisions based on leading indicators.

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New Home Sales

The New Home Sales report is an economic indicator that provides valuable insights into the health of the housing market and the overall state of the economy.

It provides an important snapshot of housing demand. Even though it shows what happened in the past, many economist consider it to be one of the leading indicators of the economy.

What is New Home Sales data?

The New Home Sales report, also known as the New Residental Sales report, is a monthly measure of the number of newly constructed homes that have been sold in the United States. It tracks the sales of single-family homes, which are residential structures designed to house one family.

The data in the report includes the number of homes sold, the median and average sales prices, and the inventory of unsold homes.

By monitoring the sales of new homes, the report provides a snapshot of the housing market’s performance and an indication of the level of demand for new construction.

Why is New Home Sales data important?

Nearly 15% of the U.S. GDP comes from the housing market, which is a big chunk of the economy as a whole.

The New Home Sales report is considered an important economic indicator, as it offers insights into the health of the housing market, which is a significant driver of economic growth.

A b housing market can signal increased consumer confidence, job growth, and overall economic expansion,
A weak housing market may indicate economic weakness or reduced consumer spending.

Additionally, new home sales can have a ripple effect on other sectors of the economy, such as construction, finance, and consumer goods, as they influence demand for related products and services.

By analyzing the New Home Sales data, economists, investors, and policymakers can make informed decisions based on the housing market’s current conditions and trends.

Who publishes the New Home Sales data?

The New Home Sales report is produced by the U.S. Census Bureau, a division of the Department of Commerce, in collaboration with the Department of Housing and Urban Development (HUD).

The Census Bureau is responsible for collecting, analyzing, and disseminating economic data related to various aspects of the U.S. economy, including housing.

The New Home Sales data is derived from the Survey of Construction, which gathers information from builders, contractors, and other sources involved in residential construction.

The purpose of the Survey of Construction is to provide current national and regional statistics on starts, completions, and characteristics of new, privately-owned single-family and multifamily housing units and on sales of new single-family houses

When is New Home Sales released?

The New Home Sales report is typically released on a monthly basis, on the 12th workday of the month following the reference month. For example, the report for January would be released on the 12th workday of February.

The Census Bureau publishes the report on its website, making it easily accessible to the general public.

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iNon-Farm Payrolls (NFP)

NFP is part of a monthly report representing how many people are employed in the US, in manufacturing, construction, and goods companies.

It is an important economic indicator related to employment in the U.S.

What is NFP?

NFP stands for Non-Farm Payrolls, which is actually part of the Employment Situation report, released by the Bureau of Labor Statistics, an agency for the U.S. Department of Labor (DOL).

The NFP is a part of the monthly Employment Situation Report that estimates the number of jobs gained (excluding farm workers) in the U.S. in the previous month.

The Employment Situation Report also includes the Labor Force Participation Rate, the Unemployment Rate, Average Hourly Earnings, and Average Workweek Hours, among many other statistics.

The Bureau of Labor Statistics measures labor market activity, working conditions, price changes, and productivity in the U.S. economy to support public and private decision making.

The NFP component usually gets the most attention because it measures the actual number of paid employees (full and part-time) in business and government establishments.

NFP gets its name from the jobs that aren’t included: farmworkers, and those employed in private households or non-profit organizations.

The data is usually delivered on the first Friday of any given month and can create high volatility in the financial markets.

Lots of analysts release their forecasts for NFP figures in advance of the actual release.

This causes a great deal of speculation prior to each report.

What is non-farm employment change?

Non-farm employment change is another term for non-farm payrolls.

Because the NFP figure displays how many jobs have been added or lost in the sectors covered by the report, it is sometimes known as non-farm employment change instead of NFP.

Why is NFP important?

The report provides fresh insight into the overall health of the U.S. economy and how the labor market is doing.

If the labor market is growing, that means more people are making money, and the more spending there will be.

More spending results in a higher Gross Domestic Product (GDP) which is the broadest measure of the economy.

Employment figures can also have an impact on interest rates.

Higher employment usually leads to higher interest rates because of central banks’ monetary policies aimed at balancing inflation with growth.

Interest rates are a significant factor for forex traders.

Learn more: Why Interest Rates Matter to Forex Traders

How to Read the NFP?

The NFP measures the number of jobs created or lost in the U.S. economy over the prior month.

For example, -1000K means 100,000 jobs were lost in all non-agricultural businesses.

To get a feel for the employment situation, it’s good to review the history of previous NFP releases.

Observe the long-term trend in the NFP figures and see if it’s in an uptrend or downtrend.

Keep track of the ranges and see if the recent reports were near historic highs or lows.

Where to find it?

On BabyPips.com’s economic calendar, you can find its event listing.

What time is NFP released?

NFP is released on the first Friday of every month, at 8.30 am ET.

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PCE Price Index

The Personal Consumption Expenditures (PCE) price index measures the prices people in the United States pay for goods and services.

The Bureau of Economic Analysis (BEA) produces the PCE price index.

The change in the PCE price index is known for capturing rising (or falling) prices across a wide range of consumer goods and services and reflecting changes in consumer behavior.

For example, if the price of butter and eggs goes up, consumers may buy less butter and eggs.

The Core Personal Consumption Expenditure (PCE) price index tracks changes in the prices of goods and services bought by consumers for their own use, but excludes food and energy.

What is PCE?

The PCE price index measures inflation in the U.S., tracking the change in prices of goods and services purchased by consumers.

The PCE Price Index is like the Consumer Price Index (CPI) from the Bureau of Labor Statistics.

The two indexes are made differently and serve different purposes, so their inflation rates are different.

Between the two, the PCE price index is the preferred gauge of inflation by the Federal Reserve.

What’s the difference between PCE and CPI?

In the U.S., there are two primary measures of inflation:

Personal Consumption Expenditures Index (PCE) released by the Bureau of Economic Analysis (BEA)
Consumer Price Index (CPI) released by the Bureau of Labor Statistics (BLS)

Why the need for two?

While both indices use a basket of goods to measure inflation, there are some differences between them:

Comprehensiveness

The CPI only looks at the money spent out of pocket on goods and services.

It does not include other costs that are not directly paid for such as medical care paid for by employer-provided insurance, Medicaid, or Medicare).

All of these are included in the PCE.

Formula

The PCE is less volatile than the CPI because the way it is calculated smooths out these price swings.

Prices that go up and down a lot, like airfare and fuel, are more likely to change the CPI formula.

Data Sources

The PCE gets its information from the GDP report and from suppliers, while the CPI gets its information from surveys of households.

The PCE also tracks how much all U.S. households and nonprofits spend on goods and services. The CPI only looks at households in cities.

Why is the PCE the Fed’s preferred measure of inflation?

The PCE has a wider range of goods and services that are covered.

It’s also responsive to what to include or exclude n the basket of goods and services.

For example, if the price of milk goes up, and people buy less milk, the PCE uses a new basket of goods that accounts for people buying less milk.

In contrast, the CPI is less responsive to changes in consumer preferences.

PCE data can be revised more than CPI data, which can only be adjusted for seasonal factors and for the five years before.

In summary, the PCE includes a broader range of goods and services from a broader range of buyers than the CPI. It attempts to track what is actually purchased and represents how consumers’ purchasing patterns change when relative prices change.

This results in smoother price changes in the PCE.

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Pending Home Sales

The Pending Home Sales report is an economic indicator that offers valuable insights into the future direction of the housing market in the United States

It looks at the number of signed contracts for existing houses, condos, and co-ops. Since a home is usually under contract for a month or two before it’s sold, the PHS leads the Existing-Home Sales report by a month or two.

What is the Pending Home Sales report?

The Pending Home Sales report tracks the number of home sales in the United States for which a contract has been signed but the transaction has not yet closed.

This report, published by the National Association of Realtors (NAR), is considered a forward-looking indicator of housing market activity, as it provides insights into the future direction of the real estate market.

The Pending Home Sales Index (PHSI) is a key component of the report. The index measures the change in pending home sales relative to a base period.

An increase in the index value suggests a growing number of pending home sales, which may eventually lead to higher closed sales and a ber housing market.
A decrease in the index value could indicate a weakening market with fewer sales expected to close in the coming months.

Why is the Pending Home Sales report important?

The Pending Home Sales report holds significant importance for several reasons:

Housing market health: Pending home sales serve as a barometer for the housing market’s future performance. A rising PHSI typically signals an upcoming increase in closed sales and a healthier real estate market, while a falling PHSI may indicate a slowdown.
Economic activity: As pending home sales often lead to closed sales, they can have a cascading effect on other sectors, including construction, finance, and consumer spending on home-related goods and services.
Policy decisions: The Federal Reserve and other policymakers closely monitor the Pending Home Sales report to gauge the health of the housing market and the overall economy. This information can impact interest rates, monetary policy, and fiscal measures.

Who publishes the Pending Home Sales report?

The Pending Home Sales report is published by the National Association of Realtors (NAR), a leading trade association representing real estate professionals in the United States.

The NAR compiles the data based on the number of contracts signed but not yet closed, using a large sample of Multiple Listing Services (MLS) data from across the country.

When is the Pending Home Sales report released?

The Pending Home Sales report is typically released on a monthly basis and is available to the public through the National Association of Realtors’ website.

The NAR provides a press release, a summary of the findings, and historical data for interested parties to analyze and utilize in their decision-making processes.

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Personal Income

The Personal Income report provides valuable insights into Americans’ financial health and future consumer spending.

In today’s complex economic environment, it is crucial for individuals, businesses, and policymakers to stay informed about key economic indicators that can impact decision-making processes.

One such economic indicator is the “Personal Income” report, which offers a wealth of information on the financial well-being of consumers and the overall state of the economy

What is the Personal Income report?

The Personal Income report refers to a comprehensive measure of the income earned by individuals, households, and unincorporated businesses.

This includes wages and salaries, rental income, interest and dividend income, as well as transfer payments from the government (such as social security benefits).

Personal income is a crucial component of the overall economic landscape, as it reflects the amount of money available for consumers to spend or save.

Why is the Personal Income report important?

The Personal Income report is essential for several reasons:

Consumer spending: As personal income increases, consumers are more likely to spend money on goods and services, driving economic growth. Consumer spending accounts for a significant portion of a country’s Gross Domestic Product (GDP), making it a critical factor in assessing economic health.
Inflation: A consistent increase in personal income can lead to higher demand for goods and services, potentially causing inflation. Central banks and policymakers closely monitor personal income levels to manage inflation expectations and adjust monetary policies accordingly.
Investor sentiment: Investors pay close attention to personal income levels as an indicator of consumer confidence and the overall health of the economy. Strong personal income growth may translate to a bullish outlook for equities, while weak growth or decline may signal bearish sentiment.

Who publishes the Personal Income report?

In the United States, the Personal Income report is compiled and released by the Bureau of Economic Analysis (BEA), a division of the U.S. Department of Commerce.

The BEA collects data from various sources, including government agencies, businesses, and households, to calculate personal income levels accurately.

When is the Personal Income report released?

The Personal Income report is typically released on a monthly basis, providing timely insights into the current state of the economy.

The data is usually published towards the end of the month, with a one-month lag. For instance, the report for January would be released towards the end of February.

The BEA’s website provides access to the latest Personal Income report, along with historical data and detailed breakdowns of various income components.

Additionally, the Personal Income report is often covered by financial news outlets and economic analysis platforms, making it readily available to the general public.

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Personal Spending

The Personal Spending report is an economic indicator that offers insights into consumer expenditure patterns and the overall health of the U.S. economy.

It measures the total amount of money that consumers spend on goods and services, which is a key driver of economic growth.

What is the Personal Spending report?

Personal Spending, also known as consumer spending or personal consumption expenditures (PCE), is the total value of goods and services purchased by households within a specific period.

It includes expenditures on durable goods (such as automobiles and furniture), nondurable goods (like clothing and food), and services (including healthcare, education, and leisure).

Personal Spending is a significant component of a country’s Gross Domestic Product (GDP) and serves as an essential indicator of economic growth and consumer confidence.

Why is the Personal Spending report important?

The Personal Spending report is important for several reasons:

Economic growth: Personal Spending is a primary driver of economic growth, as it constitutes a large portion of a country’s GDP. An increase in consumer spending typically signals a healthy economy, while a decline may indicate economic stagnation or recession.
Monetary policy: The Federal Reserve and policymakers monitor personal spending trends to gauge inflationary pressures and adjust monetary policies accordingly. High consumer spending can lead to inflation, prompting the central bank to tighten monetary policy, while low spending may lead to a loosening of monetary policy to stimulate growth.
Market sentiment: Investors and financial market participants pay close attention to Personal Spending reports to assess consumer confidence and overall economic health. Strong consumer spending may indicate a bullish market outlook, while weak spending can signal bearish sentiment.

Who publishes the Personal Spending report?

In the United States, the Personal Spending report is compiled and published by the Bureau of Economic Analysis (BEA), a division of the U.S. Department of Commerce.

The BEA collects data from various sources, including retail sales reports, service provider surveys, and household expenditure surveys, to calculate Personal Spending levels accurately.

When is the Personal Spending report released?

The Personal Spending report is typically released on a monthly basis, offering timely insights into consumer expenditure patterns and the state of the economy.

Data is usually published with a one-month lag, meaning the report for January would be released towards the end of February.

The BEA’s website provides access to the latest Personal Spending report, along with historical data and detailed breakdowns of expenditure components.

Additionally, financial news outlets and economic analysis platforms frequently cover the Personal Spending report, making it easily accessible to the general public.

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Producer Price Index (PPI)

The Producer Price Index (PPI) is an economic indicator that measures the change in the selling prices, or wholesale prices, received by domestic producers for their output.

It helps to gauge inflationary pressures in the economy and provides insight into the health of various industries.

The PPI is not as widely used as the CPI, but it is still considered to be a good indicator of inflation.

This indicator reflects the change in manufacturers’ cost of inputs (such as raw materials).

Formerly known as the “Wholesale Price Index”, the PPI is a basket of various indexes covering a wide range of areas affecting domestic producers.

Each month approximately 100,000 prices are collected from 30,000 production and manufacturing firms.

It is not as b as the CPI in detecting inflation, but because it includes goods being produced it is often a forecast of future CPI releases.

The report is released in the second week of every month and includes data on the previous month.

For example, June’s report includes data on May.

What is PPI?

The report is generated through a mail survey of several randomly-selected retailers (with proportional preference given to size.)

Where possible, actual transaction prices for the products included are used in generating the report.

The report expresses prices through a percentage index of a baseline level of production (rather than through a dollar amount).

The report also expresses changes in the index from month to month and the index change from the previous year.

The PPI is likely to be different from the CPI for any given time period because producers sell both consumer goods and intermediate goods to other businesses at different stages.

Even for finished goods, the price that the producers get and the price that the buyers pay are often different. This is because the price that the buyers pay includes taxes, subsidies, and distribution costs.

The index is calculated by comparing the current selling prices of a representative basket of goods and services to their prices in a base period.

There are three main types of PPI:

Commodity Index: It measures price changes at the commodity level, such as raw materials and intermediate goods.
Industry Index: It tracks price changes within specific industries, allowing for detailed analysis of sectoral trends.
Stage of Processing Index: It captures price movements at different stages of production, providing insight into inflationary pressures at various points in the supply chain.

The industry and commodity-based indexes are extremely extensive, allowing a high level of specificity when looking for data on a particular asset.

Why is PPI important?

The PPI is important for several reasons:

Inflation Indicator: PPI is a leading indicator of consumer price inflation. A rise in producer prices often translates to higher costs for consumers, while a drop signals lower inflationary pressures.
Business Planning: Businesses use PPI data to adjust their pricing strategies, manage costs, and forecast future demand for their goods and services.
Economic Analysis: Policymakers and investors analyze PPI trends to assess the overall health of the economy, identify potential inflationary risks, and make informed decisions regarding monetary policy and investment strategies.

Traders mainly use the PPI as an indicator of price inflation over time. Although the similarly-functioning Consumer Price Index (CPI) is considered to be a more useful measure of present inflation, the PPI’s inclusion of goods in production makes it a potential leading indicator of future price inflation in certain industries.

One key drawback of the PPI is that it excludes all data on imported goods, making it difficult to detect the influence of one country’s market on another with respect to currency prices.

Who publishes the PPI?

In the United States, the PPI is published by the Bureau of Labor Statistics (BLS), which is part of the Department of Labor.

In other countries, similar agencies or statistical organizations are responsible for compiling and releasing PPI data.

When is the PPI released?

PPI data is typically released monthly, with some countries also publishing quarterly or annual reports.

In the United States, the BLS releases the PPI report on a monthly basis, usually around the middle of the following month.

The data is available on the BLS website and through various financial news outlets and data providers.

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Redbook Index

The Redbook Index is a proprietary indicator of growth in retail sales and provides advanced estimates of trends in retail sales ahead of official releases and company reports.

It is an economic indicator that offers insights into the health of the retail sector, consumer spending trends, and the overall state of the economy.

What is the Redbook Index?

The Redbook Index, also known as the Johnson Redbook Index, is a weekly measure of comparable-store sales growth in the U.S. retail sector.

It tracks sales data from a sample of large retailers, such as department stores, discount stores, and chain stores.

The report provides insights into consumer spending patterns and trends, offering a snapshot of the retail sector’s performance.

The Redbook Inex is usually divided into two segments:

Redbook Average
Redbook Same-Store Sales Index

The Redbook Average tracks sales growth across all participating stores, while the Redbook Same-Store Sales Index focuses on sales growth within stores that have been open for at least one year.

Why is the Redbook Index important?

The Redbook Index is considered an important economic indicator as it provides insights into consumer spending, which is a major driver of economic growth in the United States.

By monitoring the performance of the retail sector, economists, investors, and policymakers can gauge the overall health of the economy, as well as identify potential shifts in consumer behavior.

A b Redbook Index can signal increased consumer confidence and a robust economy, while a weak report may indicate economic weakness or reduced consumer spending.

Who publishes the Redbook Index?

The Redbook report is produced by Redbook Research, an independent research firm specializing in the collection and analysis of retail sales data.

The firm gathers data from a sample of large general merchandise retailers across the United States, ensuring that the report is representative of the broader retail sector.

Redbook Research compiles and analyzes the data, producing the weekly Redbook report, which is then released to the public.

When is the Redbook Index released?

The Redbook report is typically released on a weekly basis, usually on Tuesdays at 8:55 a.m. Eastern Time.

The report is available through various financial news outlets, as well as on Redbook Research’s website.

By providing timely and up-to-date information on the retail sector’s performance, the Redbook report enables economists, investors, and policymakers to stay informed and make data-driven decisions.

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Retail Sales

The Retail Sales report is a monthly measurement of the total sales of goods and services by retail stores in the United States.

It serves as a key indicator of consumer spending, which makes up a significant portion of the country’s Gross Domestic Product (GDP).

Retail sales are a crucial component of the U.S. economy, offering insights into consumer spending patterns and overall economic health.

Policymakers, investors, and businesses use this report to gauge the health of the economy and make informed decisions.

What is Retail Sales?

The U.S. Retail Sales report captures sales data from various retail establishments, including department stores, supermarkets, gas stations, and online retailers.

The report typically excludes sales from the service sector, such as restaurants and hotels.

The data is collected by the U.S. Census Bureau through a monthly survey. called the Monthly Retail Trade Survey (MRTS).

The MRTS surveys approximately 13,000 retail businesses across the United States, representing various retail sectors.

The survey collects data on sales, inventories, and other key performance indicators from these businesses. The collected data is then processed, analyzed, and adjusted for seasonal factors by the Census Bureau.

How to Read the Retail Sales report

The U.S. Retail Sales report is published as a percentage change from the previous month and is usually adjusted for seasonal factors.

The report also provides a year-over-year comparison. It’s important to consider the following when reading the report:

Headline Retail Sales: This figure represents the total sales for the month, including both durable and non-durable goods.
Core Retail Sales: This figure excludes sales from the volatile automobile and gasoline sectors, providing a clearer picture of underlying consumer spending trends.
Revisions: The report is subject to revisions as more accurate data becomes available. Keep an eye on revisions, as they may alter the interpretation of the data.

What is Retail Sales important?

The Retail Sales report is a vital economic indicator for several reasons:

Consumer Spending: As a measure of consumer spending, the report can provide insights into the overall health of the economy. Strong retail sales growth can signal a robust economy, while weak growth may indicate economic stagnation or decline.
Business Cycle: Changes in retail sales can offer clues about the current state of the business cycle, helping policymakers and investors make more informed decisions.
Investment Decisions: Retail sales data can influence stock market trends and inform investment decisions, as b sales may boost company revenues and share prices.
Monetary Policy: The Federal Reserve uses retail sales data to assess the health of the economy and guide monetary policy decisions, such as interest rate adjustments

Who published the Retail Sales report?

The U.S. Retail Sales report is published by the U.S. Census Bureau, a division of the U.S. Department of Commerce.

The Census Bureau is responsible for collecting and publishing economic data related to retail sales, among other key economic indicators.

When is the Retail Sales report released?

The U.S. Retail Sales report is usually released on a monthly basis, around two weeks after the end of the reference month.

The exact release dates can be found on the U.S. Census Bureau’s website.

It’s important to note that the Retail Sales report is subject to revisions as more accurate and complete data becomes available. These revisions may be made in subsequent reports, providing a more accurate picture of retail sales trends over time.

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S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index is an influential gauge of the U.S. housing market.

This index offers vital insights into the health of the real estate sector and has significant implications for the broader economy, policymakers, and investors.

What is the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index?

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, developed by economists Karl Case and Robert Shiller, tracks changes in the value of residential real estate across the United States.

The index is based on a repeat-sales methodology, which compares the sale prices of the same homes over time, factoring in quality and size.

This approach eliminates the potential bias introduced by fluctuations in the types of homes sold during different periods.

The index is published as a monthly report and includes both a national composite index, which covers all nine U.S. Census divisions, and individual metropolitan area indices for 20 major cities.

How to Read the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index

When interpreting the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, consider the following factors:

Index levels: Monitor the index levels, which indicate the current state of the housing market. A rising index suggests increasing house prices, while a falling index signals declining house prices.
Year-over-year changes: Assess the year-over-year percentage changes in the index, which can provide insights into housing market trends and the overall health of the economy.
Regional variations: Examine the data for individual cities or regions to identify localized trends and potential investment opportunities.
Seasonal adjustments: Be aware of seasonal factors that can impact the index, such as increased home sales during the spring and summer months.

Why is the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index important?

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index plays a crucial role in understanding the housing market and its impact on the economy:

The index serves as a benchmark for assessing the health of the real estate sector and its contribution to overall economic growth.
Policymakers use the index to evaluate the effectiveness of housing policies and make informed decisions about interest rates and other macroeconomic policies.
Investors and financial institutions use the index to identify investment opportunities, manage risk, and allocate resources in the real estate market.

Who publishes the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index?

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index is compiled and published by S&P Dow Jones Indices, a leading provider of financial market indices, in collaboration with CoreLogic, a leading property data and analytics company.

The index is based on data collected from public records and multiple listing services, ensuring its accuracy and reliability.

When is the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index released?

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index is typically released on a monthly basis, with a two-month lag from the end of the reporting period.

The report is publicly available on the S&P Dow Jones Indices website, making it accessible to anyone interested in the data.

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Tankan Survey

The Tankan Survey is a comprehensive and influential economic report published by the Bank of Japan (BOJ) that provides valuable insights into the country’s economic condition.

The survey is closely watched by policymakers and analysts as it offers a snapshot of Japan’s business sentiment and serves as a leading indicator of the country’s economic performance.

It is considered a big market mover for JPY currency pairs.

What is the Tankan Survey?

Tankan is the Japanese abbreviation for Tanki Keizai Kansoku Chousa, the Short-Term Economic Survey of Enterprises in Japan.

The Tankan Survey has been conducted by the BOJ since 1957.

It is carried out on a quarterly basis, with results released in the first month of each quarter (January, April, July, and October).

The survey covers thousands of large, medium, and small-sized enterprises across various industries, including manufacturing and non-manufacturing sectors.

The main focus of the Tankan Survey is to assess business sentiment by measuring the “diffusion index” or “DI.”

How to Read the Tankan Survey

The Tankan Survey contains several diffusion indices, with the most significant one being the Business Conditions DI for large manufacturers.

The DI is calculated by subtracting the percentage of firms reporting unfavorable business conditions from those reporting favorable conditions.

The resulting figure can range from -100 (all firms report unfavorable conditions) to +100 (all firms report favorable conditions).

A positive DI indicates that more firms report favorable conditions, suggesting economic optimism and growth.
A negative DI implies that more firms report unfavorable conditions, indicating economic pessimism and contraction.

Changes in the DI are crucial, as they can signal shifts in economic trends, influencing monetary policy decisions by the BOJ and other market participants’ actions.

Why is the Tankan Survey important?

The Tankan Survey is a vital economic indicator for Japan, as it offers insights into business sentiment, capital expenditure plans, and employment conditions.

The survey results can impact financial markets, particularly the Japanese yen’s exchange rate, as investors and analysts use the data to gauge the country’s economic health and potential monetary policy shifts.

Strong Tankan Survey results can lead to yen appreciation, while weak results may cause depreciation.

Who publishes the Tankan Survey?

The Bank of Japan (BOJ) is responsible for conducting the Tankan Survey and compiling the data.

The BOJ ensures the survey’s accuracy and reliability by surveying a large and diverse sample of enterprises, guaranteeing a comprehensive representation of Japan’s business landscape.

When is the Tankan Survey released?

The Tankan Survey is published quarterly, with results released in the first month of each quarter (January, April, July, and October).

The report is publicly available on the Bank of Japan’s website, where interested parties can access the data and analyze the survey results.

Additionally, financial news outlets and market analysis platforms often provide coverage of the Tankan Survey upon its release, offering insights and interpretations of the report’s findings.

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TIC (Treasury International Capital)

The Treasury International Capital (TIC) data is an economic indicator that tracks cross-border investments in the United States.

The data provides insights into foreign investors’ appetite for U.S. securities, which can have significant implications for the country’s financial markets and the U.S. dollar.

What is the TIC data?

The TIC data captures the transactions of long-term and short-term U.S. securities by foreign residents and foreign securities transactions by U.S. residents.

The data is collected on a monthly basis and is essential for understanding the flow of capital in and out of the United States.

By monitoring these flows, policymakers and investors can gain insights into the overall demand for U.S. assets and the health of the U.S. economy.

How to read TIC data

The TIC report consists of two main sections: long-term securities transactions and short-term securities transactions. Long-term securities include U.S. Treasury bonds, government agency bonds, corporate bonds, and equities.

Short-term securities cover U.S. Treasury bills and other debt instruments with maturities of less than one year.

When reading the TIC report, the primary focus is on the net foreign purchases of long-term U.S. securities, which is the difference between foreign purchases of U.S. securities and U.S. purchases of foreign securities.

A positive figure indicates that foreign investors are buying more U.S. securities than U.S. investors are buying foreign securities, leading to a net capital inflow.
A negative figure suggests a net capital outflow.

Why is the TIC data important?

The TIC report is essential for several reasons:

It helps gauge foreign demand for U.S. securities, which can impact interest rates and the U.S. dollar’s value.
A sustained net capital inflow indicates confidence in the U.S. economy, while a net outflow may signal concerns about the country’s economic prospects.
The data can influence U.S. monetary policy, as foreign investment in U.S. securities affects the money supply and credit conditions.

For these reasons, the TIC data is closely watched by policymakers, investors, and analysts to assess the U.S. economy’s health and the potential implications for financial markets.

Who publishes the TIC data?

The U.S. Department of the Treasury is responsible for compiling and publishing the TIC report.

The Treasury collects data from various sources, including banks, securities brokers, and other financial institutions, to ensure the report’s accuracy and comprehensiveness.

When is the TIC data released?

The TIC data is published monthly, usually around the 15th of each month, with a lag of around 45 days from the reporting period.

The data is publicly available on the U.S. Department of the Treasury’s website, where interested parties can access the data and analyze the results.

Additionally, financial news outlets and market analysis platforms often provide coverage of the TIC report upon its release, offering insights and interpretations of the report’s findings.

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Total Vehicle Sales

Total Vehicle Sales is an economic indicator that tracks the number of new vehicles sold within a specific period, typically reported monthly.

This report offers valuable insights into consumer demand, purchasing power, and overall economic health.

It is a leading indicator of economic activity, as it reflects consumer confidence and spending.

What is Total Vehicle Sales?

The automotive industry is a major contributor to the global economy, providing employment, driving innovation, and influencing various other sectors such as steel, rubber, and electronics.

Vehicle sales are closely linked to consumer confidence, as people are more likely to purchase a new vehicle when they feel financially secure and optimistic about the future.

This means that Total Vehicle Sales data serves as a useful barometer for the overall economic climate.

How to Read the Report

Total Vehicle Sales include data on the number of new vehicles sold in the United States, as well as data on the types of vehicles sold and the prices paid.

This report is e usually presented as a seasonally adjusted annual rate (SAAR), which is the number of vehicles sold in a given month, multiplied by 12, and adjusted for seasonal fluctuations.

This allows for a more accurate comparison of sales trends across different periods.

The report typically breaks down the data by category, such as cars, trucks, and SUVs, and sometimes by manufacturer or region.

By analyzing these details, one can gain insights into consumer preferences, regional demand, and the performance of specific vehicle manufacturers.

Why is Total Vehicle Sales important?

Total Vehicle Sales data holds importance for various reasons:

Economic health: High vehicle sales often indicate a robust economy with b consumer spending, while declining sales could signal an economic slowdown.
Consumer confidence: Vehicle sales are closely tied to consumer confidence, making it an essential indicator of the public’s overall financial sentiment.
Industry performance: The report can reveal the performance of individual car manufacturers, allowing investors to make informed decisions about investing in the automotive sector.
Monetary policy: Central banks and policymakers use vehicle sales data to assess economic conditions and make decisions on interest rates and other monetary policies.

Who publishes Total Vehicle Sales data?

Total Vehicle Sales data is collected and published by various sources, including government agencies, industry associations, and private research firms.

In the United States, for example, the data is compiled by organizations like the Bureau of Economic Analysis.

When is the Total Vehicle Sales data released?

Total Vehicle Sales reports are usually released on a monthly basis, with a lag of a few days to a couple of weeks after the end of the reporting month.

In the United States, the total vehicle sales report is available on the Bureau of Economic Analysis website. The report is released on the first business day of each month

The exact release schedule depends on the source and country. To access the data, you can check official government websites, and industry associations, or subscribe to financial news outlets and research firms that track and report vehicle sales data.

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Trade Balance

Trade Balance measures the difference in value between the value of a nation’s exports and imports.

It s a key economic indicator that provides insights into a country’s international trade performance.

A positive trade balance indicates that a country is exporting more goods than it is importing, while a negative trade balance indicates that a country is importing more goods than it is exporting.

What is Trade Balance?

The trade balance or “balance of trade” is calculated by subtracting the value of a country’s imports from the value of its exports.

When exports exceed imports, the trade balance is said to be in surplus, indicating a positive net flow of goods and services.
When imports exceed exports, the trade balance is in deficit, signaling a negative net flow.
When imports equal exports, the trade balance is balanced.

It’s important to note that a trade deficit is not inherently negative, as it may indicate robust domestic demand and a growing economy.

However, a persistent trade deficit could signal an overreliance on foreign goods and services, which may have long-term consequences on a country’s economic growth and stability.

The trade balance is derived primarily from three factors:

The price of goods in a country
Tax and tariff levies on imported or exported goods
The exchange rate between two currencies

Information on the net exports in a country can help to predict future trends in inflation and foreign investment.

Nations with trade surpluses (exports greater than imports), such as Japan, tend to see their currencies appreciate, while countries with trade deficits (imports greater than exports), such as the US, tend to see their currencies weaken.

How to Understand Trade Balance

The trade balance is reported as a monthly figure, and it is seasonally adjusted. This means that the data has been adjusted to account for seasonal fluctuations, such as changes in consumer demand or production patterns.

The trade balance is also reported as a rolling 12-month figure. This means that the data is averaged over the past 12 months.

When analyzing the trade balance report, consider the following factors:

Surplus or deficit: Assess whether the trade balance shows a surplus, deficit, or balanced trade, as this can indicate the overall health of the economy.
Trends: Examine the report’s historical data to identify trends and patterns in a country’s trade performance, which can reveal potential shifts in global trade dynamics.
Sector breakdown: Review the report’s sector-specific data to gain insights into the performance of various industries and their contributions to the overall trade balance.
Geographical distribution: Investigate the geographical distribution of trade partners to better understand the country’s trade relationships and potential risks or opportunities.

Why is the Trade Balance important?

The trade balance is an important economic indicator for several reasons:

It offers insights into a country’s competitiveness and the health of its economy.
Policymakers use the trade balance to inform decisions on monetary, fiscal, and trade policies.
Investors and financial institutions rely on trade balance data to evaluate a country’s investment climate and potential risks or opportunities.
A nation’s trade balance has a direct impact on its currency value in the foreign exchange market.

Who publishes the Trade Balance report?

The trade balance is typically reported by government agencies responsible for trade and commerce.

These agencies compile and analyze data from customs and other relevant sources to produce accurate and reliable trade balance reports.

For example, in the U.S., the trade balance is reported by the U.S. Bureau of Economic Analysis (BEA). The BEA collects data on the value of exports and imports from a variety of sources, including customs declarations, port records, and surveys of businesses.

When is the Trade Balance report released?

Trade balance reports are usually released on a monthly basis, with a lag of a few weeks from the end of the reporting period.

The reports are publicly available on the respective government agency’s website, providing easy access to anyone interested in the data.

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University of Michigan Consumer Sentiment (MCSI)x

The University of Michigan Consumer Sentiment (MCSI) is an index is based on a survey of personal consumer confidence in economic activity

Consumer optimism is directly related to consumer spending, which makes up a large part of a country’s economic activity.

Consumer sentiment can foreshadow the cyclical turning points in the economy.

The Index was created and published with the following objectives:

To assess near-time consumer attitudes on the business climate, personal finance, and spending
To promote an understanding of, and to forecast changes in, the national economy
To provide a means of incorporating empirical measures of consumer expectations into models of spending and saving behavior
To gauge the economic expectations and probable future spending behavior of the consumer
To judge the consumer’s level of optimism/pessimism

Why is it important?

it gauges consumer attitudes on their financial and income situations.

Consumer spending accounts for more than two-thirds of the economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future.

The more optimistic that consumers feel about the economy and their own personal finances, the more likely they are to spend.

With this in mind, it’s easy to see how this index of consumer attitudes gives insight into the direction of the economy.

Economists and analysts look to this survey over the Conference Board’s Consumer Confidence Index for an early clue on the NFP.

This is because the data includes interviews conducted up to a day or two right before the official release.

This makes it a good real-time measure of consumer mood.

According to the University of Michigan, the surveys “have proven to be an accurate indicator of the future course of the national economy.”

How to read it?

Also referred to as the Index of Consumer Sentiment (ICS), the report created by the University of Michigan’s Consumer Survey Center that measures consumer optimism regarding the US economy.

Each month, 500 households are telephoned and surveyed on their financial conditions and attitudes about the economy. Fifty core questions are asked.

They are asked about their view on three things:

Their own financial situation
The short-term general economy
The long-term general economy

Consumer sentiment is directly related to the strength of consumer spending.

Consumer confidence and consumer sentiment are two ways of talking about consumer attitudes.

Among economic reports, consumer sentiment refers to the Michigan survey while consumer confidence refers to The Conference Board’s survey.

The Michigan index is almost identical to the Conference Board Consumer Confidence index, though there are two monthly releases, a preliminary and final reading.

Like the Conference Board index, it has two subindexes: expectations and current conditions. The expectations index is a component of the Conference Board’s Leading Indicators index.

Where to find it?

On BabyPips.com’s economic calendar, you can find its event listing.

The index figures are published twice a month consisting of a preliminary release mid-month and a final report at month’s end.

What time is it released?

The preliminary release is at 10:00 am ET on the second Friday of each month

The final release is at 10:00 am ET on the fourth Friday of each month.

USD Event Preview

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Westpac-MI Consumer Sentiment

The Westpac-Melbourne Institute (MI) Consumer Sentiment Index is an economic indicator that measures the confidence of Australian consumers.

By analyzing consumer sentiment, the index provides insights into the potential direction of consumer spending and economic growth,

What is the Westpac-MI Consumer Sentiment?

The Westpac-MI Consumer Sentiment Index is a monthly survey conducted jointly by Westpac Banking Corporation and the Melbourne Institute of Applied Economic and Social Research.

The survey gathers the opinions of around 1,200 Australian households, assessing their views on current and future economic conditions, personal financial situations, and their willingness to make significant purchases.

The index is calculated as a weighted average of the responses to these questions.

How to Understand the Westpac-MI Leading Index

The Westpac-MI Consumer Sentiment Index is expressed as a single number, with 100 serving as the neutral baseline.

A reading above 100 indicates that optimistic consumers outnumber pessimistic ones, suggesting increased consumer confidence and potential growth in consumer spending.
A reading below 100 indicates that pessimistic consumers outnumber optimistic ones, suggesting decreased consumer confidence and potential decline in consumer spending.

Why is the Westpac-MI Consumer Sentiment important?

The Westpac-MI Consumer Sentiment Index is an essential tool for understanding the overall confidence of Australian consumers.

Consumer confidence is a significant driver of economic growth, as higher confidence levels often lead to increased consumer spending, which in turn stimulates economic activity.

Conversely, lower confidence levels can lead to decreased consumer spending, contributing to economic stagnation or contraction.

Who publishes the Westpac-MI Consumer Sentiment?

The Westpac-MI Consumer Sentiment Index is jointly published by Westpac Banking Corporation, one of Australia’s largest banks, and the Melbourne Institute of Applied Economic and Social Research, a reputable economic research institute affiliated with the University of Melbourne

When is the Westpac-MI Consumer Sentiment released?

The Westpac-MI Consumer Sentiment Index is released monthly, usually on the second Wednesday of the month.

The data can be accessed through the Westpac website and the Melbourne Institute’s website, as well as through major financial news outlets and data providers. Some providers may require a subscription to access the data.

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Westpac-MI Leading Index

The Westpac-Melbourne Institute (MI) Leading Index is a composite economic indicator that is designed to predict future economic activity in Australia.

It is an important resource for investors, policymakers, and business leaders who want to better understand Australia’s economic outlook.

What is the Westpac-MI Leading Index?

The Westpac-MI Leading Index is a composite economic indicator developed through a collaboration between Westpac Banking Corporation and the Melbourne Institute of Applied Economic and Social Research.

The index measures the likely pace of economic activity in Australia, relative to the long-term trend, three to nine months into the future.

The components in the Westpac-MI Leading Index are:

S&P/ASX 200 share price index
Dwelling approvals
US industrial production
RBA Commodity Prices Index (A$)
Aggregate monthly hours worked
Westpac-MI Consumer Confidence Index
Westpac-MI Unemployment Expectations Index
Yield spread (10Y bond – 90D bill)

The index is calculated by taking a weighted average of the components. The weights are determined by how well each component has historically predicted future economic activity.

How to Understand the Westpac-MI Leading Index

The Westpac-MI Leading Index is expressed as a percentage, which represents the deviation of the index from its long-term trend.

A positive reading indicates that the economy is expected to grow at a faster pace than the long-term trend, suggesting a period of economic expansion.
A negative reading indicates that the economy is expected to grow at a slower pace than the long-term trend, suggesting a period of economic slowdown or contraction.

Why is the Westpac-MI Leading Index important?

The Westpac-MI Leading Index is a leading indicator, which means that it tends to move before the overall economy in Australia.

It is a valuable tool for businesses and policymakers who want to track the health of the Australian economy.

The index can be used to predict future economic growth and inflation, and it can also be used to make decisions about investment and hiring.

Who publishes the Westpac-MI Leading Index?

The Westpac-MI Leading Index is jointly published by Westpac Banking Corporation, one of Australia’s largest banks, and the Melbourne Institute of Applied Economic and Social Research, a reputable economic research institute affiliated with the University of Melbourne.

When is the Westpac-MI Leading Index released?

The Westpac-MI Leading Index is released monthly, usually on the third Wednesday of the month.

The data can be accessed through the Westpac website and the Melbourne Institute’s website, as well as through major financial news outlets and data providers. Some providers may require a subscription to access the data.

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Yield Curve

The yield curve is used as a leading economic indicator and is commonly mentioned in the financial media during times of potential recession.

The yield curve is used as a benchmark for debt in the bond market, most commonly correlating with bank lending and mortgage rates.

It is also used to predict any upcoming changes in GDP in which the three-month, two-year, five-year, 10-year, and 30-year U.S. Treasuries are compared.

The yield curve can either be normal, inverted, or flat and each of these “slopes” usually correlates directly with the state of the economy.

What is the Yield Curve?

The yield curve is a graphical representation that shows the relationship between interest rates (or yields) and the time to maturity for a set of similar debt securities, usually government bonds.

It plots interest rates (or yields) on the vertical axis and the time to maturity on the horizontal axis.

The most commonly analyzed yield curve is for U.S. Treasury bonds, but yield curves can be created for other types of bonds as well.

Yield Curve Shapes

A yield curve can take different shapes, but the three primary ones are:

Normal Yield Curve: This is the most common shape of the yield curve, where short-term interest rates are lower than long-term interest rates. This indicates that investors expect the economy to grow and inflation to rise over time, so they demand higher interest rates for longer-term investments to compensate for the increased risk.
Inverted Yield Curve: In this case, short-term interest rates are higher than long-term interest rates. This situation is relatively rare and often signals an upcoming economic slowdown or recession, as investors expect interest rates to fall in the future due to declining growth and inflation.
Flat Yield Curve: When the difference between short-term and long-term interest rates is minimal, the yield curve appears flat. This can indicate a period of economic uncertainty or a transition between economic phases, such as moving from expansion to contraction.

Its shape and changes over time provide valuable insights into market expectations and economic conditions.

Usually, yield curves slope upwards, meaning short-term rates are lower than long-term rates. This makes sense because investors typically want a higher return for committing their money for more extended periods.

When the economy is overheating, the central bank, like the Fed, might try to curb inflation by raising interest rates. This action can lead to a flattened yield curve.

So, what causes the curve to invert? An inverted yield curve happens when short-term rates are higher than long-term rates. A few reasons can explain this phenomenon:

Rising short-term rates combined with weak economic conditions: In this case, the central bank might increase short-term rates to control inflation, but investors still have concerns about the economy’s health, which keeps long-term rates low.
Lower expectations for future economic growth: If investors believe that the economy will grow at a slower pace in the future compared to its current rate, they might demand lower long-term rates, leading to an inverted yield curve.

Why is the Yield Curve important?

The yield curve is important for several reasons:

Economic Indicator: The shape of the yield curve can provide valuable insights into the market’s expectations for future economic growth, inflation, and interest rates. For example, an inverted yield curve is often seen as a warning sign of an upcoming recession.
Monetary Policy: Central banks, like the Federal Reserve in the U.S., monitor the yield curve to assess the effectiveness of their monetary policy and make adjustments as needed. The shape of the yield curve can influence central banks’ decisions on interest rates and other policy tools.
Borrowing Costs: The yield curve affects borrowing costs for individuals, businesses, and governments. For example, a steep yield curve might lead to higher mortgage rates, while an inverted yield curve could result in lower long-term borrowing costs for corporations.
Investment Decisions: The yield curve can help investors make decisions about which bonds to invest in, based on their risk tolerance and investment time horizon. By comparing yields across different maturities, investors can identify potential opportunities or risks in the bond market.

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ZEW Indicator of Economic Sentiment

The ZEW Indicator of Economic Sentiment is an economic indicator that helps traders and policymakers gauge the outlook for the economy in Germany and the eurozone.

It is calculated based on a monthly survey of financial market experts. By analyzing the sentiment of financial market experts, the ZEW Indicator provides insights into the future direction of economic growth.

What is the ZEW Indicator of Economic Sentiment?

The ZEW Indicator of Economic Sentiment is a monthly survey conducted by the Zentrum für Europäische Wirtschaftsforschung (ZEW), or the Centre for European Economic Research.

The survey is based on the opinions of approximately 300 financial market experts, who assess the economic outlook for Germany and the eurozone for the next six months.

The ZEW Indicator captures the difference between the percentage of analysts who hold a positive outlook and the percentage who hold a negative outlook.

How to Understand the ZEW Indicator of Economic Sentiment

The ZEW Indicator of Economic Sentiment is a diffusion index, which means that it is calculated as the difference between the percentage of experts who are optimistic about the economy and the percentage of experts who are pessimistic about the economy.

The ZEW Indicator of Economic Sentiment is expressed as a single number, which can range from -100 to +100.

A positive reading indicates that more financial experts have a positive outlook for the economy than those who have a negative outlook, signaling optimism.
A negative reading suggests that more financial experts have a negative outlook for the economy, indicating pessimism.

Why is the ZEW Indicator of Economic Sentiment important?

The ZEW Indicator of Economic Sentiment is an important tool for understanding the overall sentiment of financial market experts and their expectations for the economy.

As a leading economic indicator, it provides valuable insights into the potential direction of economic growth, which can inform investment decisions, policy-making, and business planning.

Who publishes the ZEW Indicator of Economic Sentiment?

The ZEW Indicator of Economic Sentiment is published by the Centre for European Economic Research (ZEW), an independent, non-profit research institute based in Mannheim, Germany.

ZEW is well-respected for its economic research and is a leading source of economic data and analysis in Europe.

When is the ZEW Indicator of Economic Sentiment released?

The ZEW Indicator of Economic Sentiment is released monthly, usually on the second or third Tuesday of the month.

The data can be accessed through the ZEW website, as well as through major financial news outlets and data providers. Some providers may require a subscription to access the data.

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