Economic Indicators For The US

Advance Retail Sales

Monthly measure of sales of goods to consumers at retail outlets. The figure is a significant market mover, valuable both for its timeliness and insight into consumer demand and consumer confidence. Consumer spending is vital to the US economy, accounting for more than two-thirds of all economic activity. Given that retail sales make up a hefty one third of such spending, the Advanced Retail Sales figure acts as a measure of consumer demand before GDP is released.

The figure has its limits, though. For instance, the timely release of the report comes at the cost of volatility in the figures and significant monthly revisions. It is not unusual for the figure to come out positive one month, only to be subsequently revised as negative. Retail Sales can also be volatile due to seasonality. Additionally, the report has been criticized for excluding service sector sales and failing to adjust for inflation. Despite these drawbacks, the figure still moves the market on release, mainly because of the importance of consumer spending to the US economy.

The Retail Sales figure is calculated as the total receipts of retail sales in nominal dollars based on a sample of stores throughout the month - returns, taxes and finance charges are excluded. It appears in the headlines as the annualize percentage change from the previous month.

Advance Retail Sales Less Autos - the Retail Sales figure is also reported excluding automobile sales. Given their high cost, auto sales contribute significantly to retails sales, comprising nearly a quarter of the figure. As a result, changes in automobile sales can produce high fluctuations in the retails sales report. Vehicle sales are prone to seasonal changes, thereby easily distorting retail sales trends. To provide a more accurate picture of retail sales the auto component is removed and followed more closely.

Relevance: Three Star Tends to move markets on release
Release schedule: 8:30 AM (EST); monthly, midmonth and approximately two weeks following the reporting month's end
Revisions schedule: Significant month to month revisions to adjust for data that was unavailable at the time of the original release. No adjustments are made for inflation.
Source of report: Census Bureau, Department of Commerce
Web address: http://www.census.gov
Address of release: http://www.census.gov/svsd/www/advtable.html
AKA: Monthly Advanced Retail Trade Survey, MARTS, Retail Sales Less Autos

Consumer Confidence

Assessment of consumer sentiment regarding business conditions, employment and personal income. Based on a representative sample of thousands of mail-in surveys, the Conference Board index has the largest pooling sample of any US measure of con sumer confidence. Consumer Confidence levels are generally linked with consumer spending. For instance, when consumer confidence is on the rise consumer spending tends to increase. Low or falling consumer confidence on the other hand is typically associated with decreased spending and consumer demand.

Some analysts criticize the Consumer Confidence figure for its volatile tendencies and weak connection to household expenditure, turning instead to the University of Michigan Consumer Confidence numbers. The volatility of the Consumer Confidence figure is attributed to two factors: its pooling size and the survey time frame focus. The Conference Board surveys an entirely new group of people each month, resulting in more erratic month to month figures. Additionally, the survey queries respondents on expectations for the following six months, a relatively short term evaluation. Conversely, the U. Michigan survey will re-poll many individuals and focuses on expectations for the next one to five years. The long term focus has a stabilizing effect on consumer confidence.

Survey results are printed in the headlines where 100 reflects a recent base year.

Relevance: Three Star Tends to move markets on release
Release schedule : 10:00 AM (EST); monthly, last Tuesday of the reporting month
Revisions schedule : Minor revisions
Source of report: Conference Board
Web address: www.conference-board.org
Address of release: http://www.conference-board.org/economics/indicators.cfm
Refer > Consumer Confidence Index
AKA: Consumer Confidence Index (CCI)

Consumer Price Index

Assesses changes in the cost of living by measuring changes consumer pay for a set of items. CPI serves as the headline figure for inflation. Simply put, inflation reflects a decline in the purchasing power of the dollar, where each dollar buys fewer goods and services. In terms of measuring inflation, CPI is the most obvious way to quantify changes in purchasing power. The report tracks changes in the price of a basket of goods and services that a typical American household might purchase. An increase in the Consumer Price Index indicates that it takes more dollars to purchase the same set basket of basic consumer items.

Inflation is generally bad news for the economy, causing instability, uncertainty and hardship. To address inflation, the Fed may raise interest rates. However, the Fed relies on the PCE Deflator as its primary gauge of inflation because the CPI does not account for the ability of consumer to substitute out of CPI's set. Price changes tend to cause consumers to switch from buying one good to a less expensive-other, a tendency that the fixed-basket CPI figure does not yet account for. Given that the PCE Deflator is a more comprehensive calculation, based on changes in consumption; it is the figure the Fed prefers.

The figure is released monthly, as either a month over month annualized percentage change, or percentage change for the full year. The figure is seasonally adjusted to account seasonal consumption patterns.

Technical Note: The CPI includes over 200 categories of goods and services included, divided into 8 main groups, each with a different weight: Housing, Transportation, Food, Medical Care, Education and Communication, Recreation, Apparel and Other Goods and Services.

CPI Excluding Food and Energy - CPI is also reported excluding food and energy; two of its most volatile components. These components are particularly sensitive to temporary economic factors like oil prices, natural disasters and seasonal affects. Consequently, CPI excluding Food and Energy provides a more stable figure, but at the cost of overlooking two significant sectors in the economy (together food and energy comprise nearly a quarter of the goods included in the CPI).

The figure is the monthly percent change in the index.

Relevance: Three Star Tends to move markets on release
Release schedule: 8:30 AM (EST); monthly
Revisions schedule: Annual revisions made in February
Source of report: Bureau of Labor Statistics, Department of Labor (US)
Web address: http://www.bls.gov
Address of release: http://www.bls.gov/cpi

Current Account Balance

Summarises the flow of goods, services, income and transfer payments in and out of the US. The report acts as a line-item record of how the US economy interacts with the world economy.

The Current Account is one of the three components that make up a country's Balance of Payments (Financial Account, Capital Account and Current Account), the detailed account of all international interactions. Where the other side of the Balance of Payments, Capital and Financial Accounts deal mainly with financial assets and investments, the Current Account gives a detailed breakdown of how the country intermingles with the rest of the global economy on a non-investment basis - tracking goods and services.

The Current Account tracks the trade balance (exports and imports for goods and services), income payments (such as interest, dividends and salaries) and unilateral transfers (aid, taxes and one-way gifts).

A positive value (current account surplus) indicates that the flow of capital from these components into America exceeds the capital leaving the country. A negative value (current account deficit) means that there is a net capital outflow from these sources.

Persistent Current Account deficits may lead to a natural depreciation of a currency, as trade, income and transfer payments usually reflect that dollars are leaving the country to make payments in a foreign currency (just as underlying surpluses act as an appreciating weight). Depreciation may be offset by capital flows into the country; the TICs or Net Foreign Security Purchases tracks such flows.

Trade balance is typically the largest element of the Current Account. For the past few decades the US has experienced high current account deficits primarily as a result of large trade deficits.

There are a number of factors that work to diminish the impact of the Current Account release on the market. The report is not very timely, released monthly and at least a month after the reporting period. In addition, many of the components that lead to the final Current Account, such as production and trade figures, are known well in advance. Since the report reflects data for a specific reporting month, any significant developments in the Current Account should plausibly have been already felt during that quarter and not during the release of data.

But, just like GDP and Trade Balance, Current Account is central to forecasting long term developments in foreign exchange rates. It gives a detailed picture of how the US economy interacts internationally, breaking down these exchanges into separate components that can be tracked and often anticipated. Thus the weight of the Current Account has led it historically to be one of the more important reports out of the United States.

The headline figure is expressed in billions of dollars.

Relevance: Three Star Tends to move markets on release
Release schedule: 8:30 AM (EST); monthly, in the second month following the reporting month
Revisions schedule: Moderate, benchmarking occurs in June
Source of report: Bureau of Economic Analysis, Department of Commerce (US)
Web address: http://www.bea.gov/
Address of release: http://www.bea.gov/bea/di/home/bop.htm
AKA: Current Account Surplus/ Deficit

Durable Goods Orders

Value of orders placed for relatively long lasting goods.

Durable Goods are expected to last more than three years. Such products often require large investments and usually reflect optimism on the part of the buyer that their expenditure will be worthwhile.

Because orders for goods have large sway over the actual production, this figure serves as an excellent forecast of US output to come.

Durable Goods are typically sensitive to economic changes. When consumers become sceptical about economic conditions sales of durable goods are one of the first to be impacted. This is because, in times of economic hardship, consumers delay purchases of durable items and spend only on necessities.

Conversely, when consumer confidence is restored, orders for durable goods rebound quickly.

The data is highly volatile as well, some volatility is eliminated with the Durable Goods Orders excluding Transportation figure, making it the more closely watched indicator.

The headline figure is expressed as a percentage change from previous months.

Durable Goods Orders Excluding Transportation - the Durable Goods Orders figure is also reported excluding transportation expenditures. Orders for items like civilian vehicles or aircrafts are fairly expensive and fluctuate idiosyncratically, distorting the Durable Goods Orders figure. Such goods are excluded to provide a better measure of durable goods orders.

Relevance: Three Star Tends to move markets on release
Release schedule: 8:30 AM (EST); monthly, 3 to 4 weeks after the reporting month
Revision schedule: previous two months, can be major
Source of report: US Census Bureau
Web address: www.census.gov
Address of release: http://www.census.gov/indicator/www/m3/adv
AKA: Advance Report on Durable Goods Manufacturer's Shipments, Inventories and Orders

Empire State Manufacturing Survey

Assesses business conditions and expectations of manufacturing executives in New York.

Although the survey is relatively new and New York has a considerably small number of manufacturers, the report has shown a promising correlation to the Philadelphia Fed Index and the market moving ISM Manufacturing Survey. Thus Empire serves as a useful earlier indicator of overall manufacturing in the US.

Results are calculated as the difference between percentage of positive and negative scores; zero acts as the breakeven point. A high figure is bullish for the dollar, indicating positive business sentiment conducive to growth in production. A low or negative number signals poor business conditions.

Relevance: Three Star Tends to move markets on release
Release schedule: Monthly, 8:30 AM (EST); approximately 15 days following the reporting month's end
Revisions schedule: Slight month to month revisions
Source of report: Federal Reserve Bank of New York
Web address: www.ny.frb.org
Address of release:www.ny.frb.org/research/regional_economy/empiresurvey_overview.html
AKA: NY Empire State Manufacturing Survey, ESMS

Employment (Non Farm Payrolls and Unemployment Rate)

One of the most widely anticipated reports on the US economic calendar, the Employment Situation is a timely report that gives a picture of job creation, loss, wages and working hours in the United States. Data in the report relies on the Household Survey and the Establishment (or Payroll) Survey. While the Household Survey is based on the interviews to US households, the Establishment Survey queries business establishments, making it the preferred source of data. The Employment Situation's has many significant figures such as: Change in Non Farm Payrolls, Unemployment, Manufacturing Payrolls and Average Hourly Earnings.

The headline figures for this report are reported monthly, as the total number of new jobs in thousands (say, 120K new jobs) and the unemployment rate.

Change in Non-farm Payrolls - monthly change in employment excluding the farming sector. Non-farm payrolls is the most closely watched indicator in the Employment Situation, considered the most comprehensive measure of job creation in the US. Such a distinction makes the NFP figure highly significant, given the importance of labor to the US economy. Specifically, political pressures come into play, as the Fed is responsible for keeping employment in a healthy range and utilizes interest rate changes to do so. A surge in new Non-farm Payrolls suggests rising employment and potential inflation pressures, which the Fed often counters with rate increases. On the other hand, a consistent decline in Non-farm Employment suggests a slowing economy, which makes a decline in rates more likely.

Unemployment Rate - the percentage of people registered as unemployed in the United States. The figure is calculated by dividing the number of unemployed individuals in the labor force by the total labor force. Where the headline figure Change in Non-Farm Payrolls generally moves the market upon release, the Unemployment Rate serves as the most popular snap-shot figure for current labor conditions in the US.

The unemployment figure can give insight into the economy's production, consumption, earnings and consumer sentiment. A lower unemployment rate equates to increased expenditure, as more people have jobs and wages to spend. Increased expenditure encourages economic growth, which can spark inflation pressures. Conversely, high levels of unemployment signal economic instability and weakened demand.

Persons are considered unemployed if they are able and willing to work but without a job and have actively sought employment within the last four weeks. The labor force includes all employed and unemployed individuals 16 years and older.

Manufacturing Payrolls - measures job creation or loss in manufacturing sector. Manufacturing Payroll is reported as the net change in jobs from the previous month's figure. The figure is significant as an indicator of the health of the manufacturing sector. A high Manufacturing Payrolls number can signal increased demand for manufactured goods and a subsequent increase in production.

Average Hourly Earnings - an indicator of how the average level of pay is changing. The Average Hourly Earnings figure provides insight into future spending and inflation. A High Average Hourly Earnings bodes well for future consumption, as workers have more disposable income. High figures may indicate inflationary pressures due to employee's additional potential to spend. The figure is either measured in hourly or weekly averages or as a percent change from the previous month.

Relevance: Three Star Tends to move markets on release
Release schedule: 8:30 (EST); monthly, usually first Friday of every month
Revisions schedule: previous two months, can be major, benchmark changes every 10 years
Source of report: Bureau of Labor Statistics, Department of Labor (US)
Web address: http://www.bea.gov
Address of release:http://www.bls.gov/news.release/empsit.toc.htm
AKA: Change in Non farm payrolls, New Job Creation, Payroll Data, Employment Rate, Unemployment Rate

Fed Governor Speaks

The seven members of the Board of Governors have voting power in all three monetary tools of the Federal Reserve- open market operations, the discount rate and reserve requirements. This makes the Board of Governors one of the most influential entities in governing US monetary policy. Their speeches are important opportunities for markets to better understand Fed goals for the US economy and monetary policy, as well as understand the stance Governors take on significant economic issues. If the overall sentiment of the Governors is different from expectations, markets tend to move immediately in response to potential changes in future policies.

Relevance: Three Star Tends to move markets on release
Release schedule: No set schedule
Source of report: Board of Governors of the Federal Reserve System
Web address: http://federalreserve.gov
Address of release: http://federalreserve.gov/newsevents.htm

Fed President Speaks

There are 12 Federal Reserve Presidents, each from a different district of the country. All Reserve Bank Presidents attend the meetings of the Federal Open Market Committee (FOMC), but only five are allowed to vote on monetary policy. Although markets pay attention to all Presidents for their assessment of overall economic health, particular interest is focused on the comments of the voting members. As one of the most influential monetary policy tool, open market purchases can affect the money supply and move short-term interest rates. Speeches made by voting members are opportunities for markets to better understand the FOMC and its monetary policy goals, but even non-voting members may give insight into the direction of monetary policy in their statements. If a speech suggest sentiment in the FOMC is different from expectations, markets tend to move immediately.

Markets focus heavily on the language used in speeches. If the President is cautious about the inflationary outlook for the economy ("Hawkish"), then the market sees a higher likelihood of future rate increases. Optimism in the President's outlook ("Dovish") would suggest to markets that inflation is in check and that future rate increases are less likely, with the possibility of declines in rates.

Technical Note: The Federal Open Market Committee (FOMC) consists of twelve members--the seven members of the Board of Governors of the Federal Reserve System; the president of the Federal Reserve Bank of New York; and four of the remaining eleven Reserve Bank presidents, who serve one-year terms on a rotating basis.

Relevance: Three Star Tends to move markets on release
Release schedule: Not set schedule
Source of report: Board of Governors of the Federal Reserve System
Web address: http://federalreserve.gov
Address of release: http://federalreserve.gov/newsevents.htm

FOMC Rate Decision

The announcement of whether the Federal Reserve has increased, decreased or maintained the key interest rate. The FOMC meets eight times per year to decide on monetary policy. After each meeting policy decisions are announced. The main task of the FOMC is to set the monetary stance by fixing the overnight borrowing rate, which essentially sets short-term lending rates in the US. Through this mechanism, the FOMC attempts to affect price levels in order to keep inflation within the target range while maintaining stable economic growth and employment.

The Federal Reserve's Cash Rate Target decision significantly influences financial markets. Changes in rates affect interest rates for consumer loans, mortgages, bonds and the exchange rate of the US Dollar. Increases in rates or even expectations of increases tend to cause the Dollar to appreciate, while rate decreases cause the currency to depreciate. Unlike most central banks, the Federal Reserve does not announce an official target inflation rate, arguing independence and flexibility is necessary to implement monetary policy effectively.

The Federal Reserve issues a statement with every rate announcement. Because the decision itself is usually highly anticipated, the wording of the FOMC statement is usually as important if not more important than the actual interest rate move made by the central bank. The FOMC statement contains the Fed's collective outlook on the economy as well as hints about future monetary policy while the change to interest rates is nothing more than a number. The statement provides clues on plans for the future. When it comes to interest rates, the future direction of rates is usually far more important than its current rate

Ramifications for the US Dollar:

Interest rate hike
: The US dollar generally rallies on the back of an interest rate hike because the hike increases the yield offered by US assets. This attracts foreign investment into the US which tends to be positive for the dollar. The strength of the reaction will depend on how much the market has already priced in the decision as well as the whether the FOMC statement hints at more rate hikes to come.

Interest rate cut: An interest rate cut tends to be perceived as bearish for the US dollar because the cut reduces the yield offered by US assets. The perception is that the economy has weakened enough that the Federal Reserve is forced to either reduce monetary tightening or increase the stimulus in the market to reignite growth. The strength of the reaction will depend on how much the market has already priced in the decision as well as the whether the FOMC statement hints that more rate cuts are to come.

Rates Left Unchanged: The reaction of the US dollar will depend upon whether the Fed is pausing after a prolonged tightening or easing cycle or has been pausing for some time. If it comes after a tightening cycle, it would be perceived as dollar bearish. If it is after an easing cycle, it would be perceived as dollar bullish. If they have been pausing for months already, the reaction would probably be more neutral.

Relevance: Three Star Tends to move markets on release
Release schedule: 2pm (EST); 8 times a year
Source of report: Board of Governors of the Federal Reserve System
Web address:http://federalreserve.gov
Address of release: http://federalreserve.gov/fomc/fundsrate.htm

Gross Domestic Product (GDP)

A gauge of the overall output (goods & services) of the US economy on the continental US. It is the most comprehensive overall measure of economic output and provides key insight as to the driving forces of the economy.
If the figure increases, then the economy is improving and the dollar tends to strengthen. If the number falls short of expectations or meets the consensus, dollar bearishness may be triggered. This sort of reaction is tied to interest rates, consumers will be affected by inflation and consequently interest rates will rise.

However, much like the CPI, a negative change in GDP is more difficult to trade; just because the pace of growth has slowed does not mean it has deteriorated. On the other hand, a better than expected number will usually result in the dollar rising as it implicates that a quickly expanding economy will sooner or later require higher interest rates to keep inflation in check. Overall though, the GDP has fallen in significance and its ability to move markets since most of the components of the report are known in advance.

Due to the untimeliness of this report and because data on GDP components is available beforehand, the actual GDP figure is usually well anticipated. But given its overall significance GDP has the tendency to move the market upon release, acting to confirm or upset economic expectations.

Robust GDP growth signals a heightened level of activity that is generally associated with a healthy economy. However, economic expansion also raises concerns about inflationary pressures, which may lead to monetary policy tightening.

Gross Domestic Product is calculated in the following way: GDP = C + I + G + (EX - IM)

C = private consumption
I = private investment
G = government expenditure
EX = exports of goods and services
IM = imports of goods and services

The figure is commonly reported in headlines as an annualised percentage, based on quarterly data.

The GDP can be reported in either real or nominal terms, real GDP being adjusted for inflation. It actually has three releases, an Advanced, Preliminary and Final figure. The Advanced figure is released four weeks following the quarter's end. One month later, the Preliminary GDP is released, followed by the Final GDP measure at the end of the quarter following the reporting quarter. As the most timely measure, the Advanced GDP tends to move markets the most.

Relevance: Three Star Tends to move markets on release
Release schedule: 8:30 AM (EST); Figures released monthly, around the 4th week following the reported month
Revisions schedule: Moderate monthly revisions, plus more substantial annual revisions at the end of July
Source of report: Bureau of Economic Analysis, Department of Commerce (US)
Web address: http://www.bea.gov
Address of release: http://www.bea.gov/bea/dn/home/gdp.htm
AKA: Gross Domestic Product, Production

Housing Starts

Gauges the change in the number of new houses built in the United States. Housing Starts are one of the earliest indicators of the housing market, only trailing Building Permits in timeliness.

Because high outlays are needed to start construction projects, an increase in Housing Starts implies an increase in investment and business optimism. Finally, the Housing Starts figure gives insight into consumer activity, since new home purchases typically require a large investment for consumers. Given such connections to consumer and corporate sentiment, real estate generally leads economic developments. A sharp drop in new home construction is a warning signal of economic slowdown. Conversely, a rebound in the Housing Starts paves the way for economic recovery.

Housing Starts data is differentiated by building types (single family houses, 2 to 4 residence units and 5 or more residence units). The single family housing starts is a more reliable economic indicator than multifamily housing starts, as single family house building is driven by demand and consumer confidence, whereas multifamily house building is more often motivated by speculative real estate investors. The report headline is expressed in volume of houses built. The figures are in the thousands of units.

Relevance: Three Star Tends to move markets on release
Release schedule: 8:30 AM (EST); monthly, two or three weeks after the reporting month
Source of report: US Census Bureau
Web address: www.census.gov
Address of release: www.census.gov/const/www/newresconstindex.html

ISM Manufacturing

Assesses the state of the US industry by surveying executives on expectations for future production, new orders, inventories, employment and deliveries.

Although manufacturing accounts for a relatively small portion of GDP, fluctuations in manufacturing tend to bear the most responsibility for changes in GDP. Consequently, developments in manufacturing often front run trends in the overall economy, making the ISM Manufacturing figure a leading indicator of economic turnarounds.

A pickup in demand for manufactured products after a period of recession, reflected by a higher ISM figure, strongly suggests a reversal upward. Conversely, a slowdown in manufacturing orders and production during a boom suggests a slowing of the economy.

The ISM Manufacturing Survey is valued for its timeliness and, during waning boom cycles, analyst point out that ISM tends to be one of the biggest market moving economic releases. The reasoning lies within the ISM's Prices Paid and Employment subcomponents. These components reflect sentiment towards inflation and labour conditions - two of the market's most significant health indicators.

The ISM data precedes other market data (like Non-Farm Payrolls or CPI), making the ISM a significant indicator.

The headline figure is expressed as a diffusion index based on survey responses. For each category (production, new orders etc.), the index is calculated by adding the percentage of executive responding "higher" with half the percentage of "no change" responses and subtracting the percentage of "lower" responses. The ISM manufacturing indicator is the aggregate of the results for all categories.

Values over 50 generally indicate an expansion, while values below 50 indicate contraction.

The ISM report also contains a price index, the ISM Prices Paid figure, which represents business sentiment regarding future inflation. A higher figure indicates stronger expectations of inflation.

Relevance: Three Star Tends to move markets on release
Release Schedule: 10:00 (EST); monthly, first business day after reporting month
Source of Report: Institute for Supply Management (U.S)
Web address: http://www.ism.ws
Address of release: http://www.ism.ws/ISMReport/index.cfm
Refer ISM Report on Business > Latest Manufacturing Data ROB
AKA: Institute for Supply Management (ISM) Manufacturing Survey

Minutes of FOMC Meeting

The Federal Open Market Committee (FOMC) began publishing the minutes for its monetary policy meetings in 2005. The detailed minutes from these meetings give some of the best insight into the monetary policy decision making process and what the FED thinks about economic developments inside and outside of the US.

Markets tend to focus most of their attention on the key points discussed during the meeting that suggest future interest rate changes. For example if the minutes state that high energy costs and a rapidly expanding housing market are fuelling inflation, then markets participants will tend to monitor these key sectors closely in order to gauge the likelihood of a rate increases in the future.

Because minutes come out three weeks after the FOMC meets, markets will discount some information in the report. Market participants tend to read into the overall mood the Federal Reserve gives during the meeting. If the FOMC is cautious about the inflationary outlook for the economy (characterized as "Hawkish"), then the market has a higher likelihood of future rate increases. If the Bank is optimistic ("Dovish") it suggests to markets that inflation is in check and that future rate increases are less likely.

Relevance: Three Star Tends to move markets on release
Release Schedule: Three weeks after the date of the policy decision
Source of Report: Board of Governors of the Federal Reserve
Web address: http://federalreserve.gov
Address of release: http://federalreserve.gov/fomc

Net Foreign Security Purchases (TIC)

Summarises the flow of stocks, bonds and money market funds to and from the United States.

The headline figure is the difference in value between American purchases of foreign securities and foreign purchases of American securities, expressed in millions of dollars. The Treasury International Capital or TIC statement is a major component of the American capital account and gives valuable insight into foreign demand for American investments and dollar.

A positive figure indicates that more capital is entering the US than leaving as sales of American securities to foreigners exceed American purchases of foreign securities. Such positive figures suggest that American security markets are competitive with those of other countries. Foreign security purchases are especially important in the case of a trade deficit, as a positive figure can offset the depreciating effect of a trade shortfall.

On the contrary, a negative or declining TICS figure reflects a declining capital flow picture. Outflows are indicative of weaker demand for US assets which puts downward pressure on the value of the dollar.

A key feature of the TIC data is its measurement of the types of investors the dollar has; governments and private investors.

Usually, a strong government holding of dollar denominated assets signals that governments are confident in the stability of the US dollar. Waning demand by Asian central banks, such as that of Japan and China, could be bearish for the US dollar. The market generally likes to see purchases be much stronger than the funding needs of that same month's trade deficit. As a side note, purchases by Caribbean central banks are generally seen to be less consistent since most hedge funds are incorporated in the Caribbean. Hedge funds generally have a much shorter attention span than other investors.

Relevance: Three Star Tends to move markets on release
Release schedule: 9:00 AM (EST); monthly, in the second month following the reporting month
Revisions schedule: Data are subject to revisions for 24 months following release
Source of report: US Treasury
Web address: http://www.treasury.gov
Address of release: http://www.treasury.gov/tic/ticsec2.html
AKA: US Transactions with Foreigners in Long-term Securities, Treasury International Capital, TIC or TICS

New Home Sales

Records sales of newly constructed residences in the United States. The figure is a timely gauge of housing market conditions counting home sales when initial housing contracts are signed. Because New Home Sales usually trigger a sequence of consumption, they have significant market impact upon release. In addition to the high expenditure of the new home, buyers are likely to spend more money on furnishing customizing and financing their home. Consequently, growth in the housing market spurs more consumption, generating demand for goods, services and the employees who provide them.

Generally the housing market is tracked by a number of reports that mark different stages of the construction and home sale process. The first stage is Building Permits, which precede Housing Starts, which lead to Construction Spending, MBA Mortgage Applications and, finally, New Home Sales and Existing Home Sales. As the headline housing figure, New Home Sales are believed to control for some of the volatility of other data. For instance, Building Permits and Housing Starts are considered more indicative of business confidence and production rather than consumer spending. And while Existing Home Sales figures are more indicative of consumer expenditures, they are lagging indicators with less predictive value. New Home Sales numbers are considered confirmatory of housing trends and still predictive of consumer spending.

New Home Sales is also a good indicator of economic turning points due to its sensitivity to consumer income. Buying a house is always a major expenditure, typically only undertaken when consumers have sufficient savings or are optimistic about future earnings. Historically, when economic conditions slow, New Home Sales are one of the first indicators to reflect the change. By the same token, New Home Sales undergo substantial growth when the economy has emerged from recession and wages have begun to pick up.

The report headline is the total amount of properties sold.

Relevance: Three Star Tends to move markets on release
Release schedule: 10:00 (EST); monthly, four weeks after the reporting month
Revisions schedule: frequent revisions cover the preceding three months
Source of report: US Census Bureau
Web address:http://www.census.gov
Address of release: http://www.census.gov/const/www/newressalesindex.html

Personal Consumption Expenditure Deflator (PCE Deflator)

A measure of inflation based on changes in personal consumption. Unlike the CPI, which is based on a fixed basket of goods, the Personal Consumption Expenditures (PCE) Deflator finds the average increase in prices for all domestic personal consumption. PCE Deflator has been shown to be a more comprehensive and consistent gauge of inflation in the US.

Price changes may cause consumers to switch from buying one good to another. Whereas the fixed-basket CPI does not account for altered spending habits caused by price changes, the PCE Deflator's ability to account for such substitutions makes it the preferred measure of inflation for the Federal Reserve. Thus, changes in the PCE offer insight on the direction of future monetary policy.

Technical Note: In reality, the CPI and PCE Deflator report very close figures. On average the two differ by about 0.3% annually, with the CPI tending to overstate inflation and the PCE understating it.

Relevance: Three Star Tends to move markets on release
Release schedule: 12:30 (GMT); monthly, four to five weeks after the reporting month
Revisions schedule: Moderate revisions in the months following the report as more complete data is available, plus annual revision in July or August.
Source of report: Bureau of Economic Analysis, Department of Commerce (US)
Web address: http://www.bea.gov
Address of release: http://www.bea.gov/bea/newsrel/pinewsrelease.htm
AKA: PCE Price Index, Chain Deflator, Implicit Price Deflator for Personal Consumption Expenditures , IPD for PCE, Chain-Type Price Index for Personal Consumption Expenditures , CTPIPCE

Philadelphia Fed Survey

Conducted since 1968 by the Philadelphia Fed, the survey questions manufacturers in the Third Federal Reserve District on general business conditions. The survey is an established report, valued for its timeliness, scope of coverage and tendency to forecast developments in the market moving ISM Manufacturing figure.

Higher Philadelphia Fed Survey figures indicate a positive outlook from manufacturers, suggesting increased production. Higher production contributes to economic growth, which is generally bullish for the dollar.

Results are calculated as the difference between percentage of positive and negative scores; zero acts as the centerline point.

Relevance: Three Star Tends to move markets on release
Release schedule: 12:00 PM (EST); monthly, the third Thursday of the reporting month
Revisions schedule: Annual revisions to historical data
Source of report: Federal Reserve Bank of Philadelphia
Web address: http://www.phil.frb.org
Address of release: http://www.phil.frb.org/econ/bos/bosschedule.html
AKA: Philadelphia Business Outlook Survey

Trade Balance

Refers to the difference between exports and imports of goods and services in the US. The trade balance is one of the biggest components of the US Balance of Payment, which gives valuable insight and heavy pressure on the value of the dollar.

A positive Trade Balance (surplus) indicates that exports are greater than imports. When imports exceed exports, the US experiences a trade deficit.

Because foreign goods are usually purchased using foreign currency, trade deficits usually reflect dollars leaking out of the country. Such currency outflows may lead to a natural depreciation of a dollar, unless countered by comparable capital inflows (US Net Foreign Security Purchases or TICs data reports on such capital flows). At a bare minimum, deficits fundamentally weigh down the value of the currency.

There are a number of factors that work to diminish the market impact of US Trade Balance. The report is not very timely, coming some time after the reporting period. Developments in many of the figure's components are also typically well anticipated. Lastly, since the report reflects data for a specific reporting month, any significant changes in the Trade Balance should plausibly have already been felt during that month and not during the release of data. However, because of the overall significance of Trade Balance data in forecasting trends in the Forex Market, the release has historically been one of the more important reports out of the US.

The headline figure for trade balance is expressed in billions of dollars.

Relevance: Three Star Tends to move markets on release
Release schedule: 8:30 AM (EST); monthly
Source of report: Bureau of Economic Analysis, Department of Commerce (US)
Web address: http://www.bea.gov
Address of release: http://www.bea.gov/bea/di/home/trade.htm
AKA: Net Exports

University of Michigan Consumer Sentiment Index

Assesses consumer confidence regarding personal finances, business conditions and purchasing power based on hundreds of telephone surveys. Especially valued for its quick turnaround, the University of Michigan Confidence survey is considered one of the foremost indicators of US consumer sentiment. The survey polls a smaller sample of consumers and is less established than the Conference Board Consumer Confidence Index.

Declining consumer confidence levels usually accompany any fall income or wages and precede drops in consumer spending. A low or falling U Mich Sentiment value is considered an early indicator of an economic downturn. As a result, investors, retailers and traders alike all watch the figure for insight into the general health of the economy. UMich figures have recently preceded turning in overall GDP.

The headline figure is calculated by subtracting the percentage of unfavourable replies from the percentage of favourable replies.

U. of Michigan Confidence (Preliminary) - early assessment of consumer sentiment regarding personal finances, business conditions and purchasing power. This preliminary figure incorporates approximately 60% of responses that are included in the final figure and is revised at the end of the month. The preliminary results are not intended for wide release but are regularly leaked to the press and often available to the financial community.

Relevance: Three Star Tends to move markets on release
Release schedule: 9:45 AM (EST); monthly, last Friday of the reporting month
Revisions schedule: Preliminary numbers are released on the second Friday of each month and revised Final figures on the last Friday of the month
Source of report: University of Michigan
Web address: http://www.umich.edu
Address of release:http://www.sca.isr.umich.edu
AKA: Michigan Sentiment

Personal Consumption Expenditure (PCE)

Comprehensive measure of how much consumers spend each month, counting expenditures on durable goods, consumer products and services. Personal Consumption is a comprehensive measure of GDP; consequently the figure is watched as an indicator for economic trends. Spending also has direct affect on inflationary pressures.

A healthy Personal Spending figure means that consumers are buying goods and services, fuelling the economy and spurring output growth. The report is particularly valued for forecasting inflationary pressures. Taken in excess these high levels of consumption and production may lead to an overall increase in prices. Indeed, the Fed uses a measure of inflation derived from the PCE as their primary gauge of inflation.

On the other hand, persistently low Personal Spending may result in decreasing levels of output and an economic downturn.

Because income is either spent or saved, Personal Spending (when reported as a percent of income rather than the headline percent change) has an inverse relationship to personal saving. Economists watch the growth of Personal Spending in relation to income and saving to determine if consumers are living beyond their means, which would influence levels of borrowing and future consumption.

The PCE figure is released in headlines as a percent change from the previous month.

Core Personal Consumption Expenditure - volatile items like food and energy can fluctuate widely due to seasonal and non-systemic factors. In order to provide a less erratic picture of Personal Consumption, food and energy items are excluded in the PCE core report.

The headline figure of PCE is expressed in percentage change in spending for the quarter.

Note: The Personal Consumption Expenditure figure is reported with the Personal Income and Outlays figure.

Relevance: Two Star Moderate market impact
Release schedule: 12:30 (GMT); monthly, four to five weeks after the reporting month
Revisions schedule: Moderate revisions in the months following the report as more complete data is available, plus annual revision in July or August.
Source of report: Bureau of Economic Analysis, Department of Commerce (US)
Web address: http://www.bea.gov
Address of release: http://www.bea.gov/bea/newsrel/pinewsrelease.htm
AKA: PCE, Personal Spending, Personal Consumption

Producer Price Index (PPI) - measures changes in the selling prices producers charge for goods and services and well as tracks how prices feed through the production process. Because producers tend to pass on higher costs to consumers as higher retail prices, the PPI is valuable as an early indicator of inflation. Simply put, inflation reflects a decline in the purchasing power of the Dollar, where each dollar buys fewer goods and services. The report also gives insight into how higher prices from raw materials flow toward the final product.

A rise in PPI signals an increase in inflationary pressures. Given the economic instability associated with rising price levels, the Fed often will raise interest rates to check inflation. A low or falling PPI is indicative of declining prices and may suggest an economic slowdown.

The headline figure is expressed in percentage change of producer price.

Notes: The PPI records prices at various stages of production: raw goods, intermediate goods and finished goods. Though intermediate and crude goods price do provide insight for future inflationary pressure, it is the price of finished goods that generates most interest for market participants. The finished goods data is able to gauge price pressure before the goods reach the retail market.

Core PPI, Excluding Food and Energy - the PPI is also reported without the volatile food and energy components. In addition to being seasonally volatile, the two comprise a significant portion of US goods. As a result, any sudden disruption in oil or food supplies will significantly distort the Producer Price Index inflation assessment. By excluding such entities, Core PPI is able to provide a truer, more consistent picture of US inflation trends.

Relevance: Two Star Moderate market impact
Release schedule: 12:30 (GMT); monthly, 2 weeks after the reporting month
Revision schedule: one monthly revision after four months, annual revisions every February
Source of report: Bureau of Labor statistics, Department of Labor
Web address: www.bls.gov
Address of release:
http://www.bls.gov/ppi

Unemployment Rate

The US Unemployment Rate reflects the percentage of people considered unemployed in the United States. Unemployment is the single most popularly used figure to give a snapshot of US labour market conditions. Because the Federal Reserve is under strict pressure to keep unemployment under control, high unemployment puts downward pressure on interest rates, as the Fed will look to bolster the economy to remedy the employment situation.

More generally, unemployment is indicative of the economy's production, private consumption, workers' earnings and consumer sentiment. A lower unemployment rate translates into more employed individuals with paychecks, which leads to higher consumer spending, economic growth and potential inflationary pressures. Conversely, high levels of unemployment are connected with lower incomes, lower spending and economic stagnation.

Note: The figure is calculated by dividing the number of unemployed individuals in the labour force by the total labour force. Technically, Unemployment Rate = (# Unemployed Persons in Labor Force) / (Total # Persons in Labor Force). Persons are considered unemployed if they are able and willing to work but without a job and have actively sought employment within the last 4 weeks. The labour force includes all employed and unemployed individuals 16 years and older. Thus Unemployment could technical alter based on changes in the number of people in the people in the workforce, or changes in the number of people looking for employment.

Relevance: Two Star Moderate market impact
Release schedule: 8:30 (EST); monthly, usually first Friday of every month,
Revisions schedule: previous two months, can be major, benchmark changes every 10 years
Source of report: Bureau of Labor Statistics, Department of Labor (US)
Web address: http://www.bls.gov/home.htm
Address of release: http://www.bls.gov/news.release/empsit.toc.htm

ABC Consumer Comfort Index

Assessment of consumer sentiment toward the economy based on telephone interviews of several hundred adults. The survey queries people on their personal financial situation and current willingness to spend.

The figure is released weekly, making the ABC Consumer Comfort Index the timeliest indicator of consumer sentiment. However, the index is relatively new and often overshadowed by the more established University of Michigan Consumer Sentiment and Conference Board Consumer Confidence indices. Nevertheless, the ABC Consumer Comfort Index is useful as an early suggestion of what more significant monthly figures will reveal.

Declining levels of consumer comfort usually accompany any fall in income and wages and precede drops in consumer spending. A low or falling ABC Consumer Comfort value is considered an early indicator of an economic downturn. As a result, investors, retailers and traders alike all watch the figure for insight into the general health of the economy.

Note: The index incorporates the most recent week's data with the results of the past three weeks, yielding a rolling four week average. Results are calculated as the difference in percent of positive and negative numbers.

Relevance: One Star Rarely affects markets
Release schedule: 6:30 PM (EST); Weekly, every Tuesday
Source of report: ABC News/Washington Post
Web address: www.abcnews.go.com
Address of release: www.abcnews.go.com/sections/business
Orhttp://www.washingtonpost.com/wp-srv/business/articles/consumerindexdata.htm
AKA: ABC Consumer Confidence Index, ABC/Post Consumer Comfort Index, ABC News/Money Magazine Consumer Comfort Index

Beige Book

Report on current economic conditions in each of the 12 Federal Reserve districts covering the entire US. Regional Banks in the Federal Reserve System gather anecdotal information based on surveys of executives, economist and market participants. The Beige Book summarizes this data into a relatively short document, giving a picture of economic trends and challenges faced by different parts of the nation.

In addition to providing useful information on the economy, the report is also a window into how FOMC members may vote at the next interest rate policy meeting. Because each report is based on anecdotal information as much as statistics, it is subjective and may reflect opinions of district governors. As the only comprehensive report made available to the public, the Beige Book provides a rare opportunity for markets to better understand the Federal Reserve and its views on the economy.

Relevance: One Star Rarely affects markets
Release schedule: 2pm (EST); 8 times a year, 2 Wednesdays before each FOMC meeting
Source of report: Board of Governors of the Federal Reserve System
Web address: http://federalreserve.gov
Address of release: http://federalreserve.gov/policy.htm(click "Beige Book") orhttp://www.minneapolisfed.org/bb

Building Permits

The number of new building projects authorized for construction. Because receiving a Building Permit is the first step in the construction process, the figure is used as the earliest indicator for developments in the housing market. Additionally, because of the high outlays needed for construction projects an increase in Building Permits implies an increase in investment and corporate optimism. Finally, the figure gives insight into consumer activity, since new home purchases are associated with an increase in sales of "big ticket" durable goods. Given such connections to consumer and corporate sentiment, real estate generally leads economic developments - thriving at the start of a boom and waning at the onset of recession.

Considering the above, one would expect the Building Permits figure to significantly move markets. After all, Building Permits is a part of the Conference Board's Leading Indicators index used to forecast US growth. However, the timeliness of the figure comes at a cost. The report is far removed from end market impacts, making it a less market-moving figure.

The report headline number is expressed in total volume of permits issued and percentage change from

Relevance: One Star Rarely affects markets
Release schedule: 8:30 AM (EST); monthly, two or three weeks after the reporting month
Source of report: US Census Bureau
Web address: www.census.gov
Address of release: www.census.gov/const/www/newresconstindex.html

Business Inventories

Unsold goods held by manufacturers, wholesalers and retailers. Business Inventories are often able to show economic turning points. A significant decrease in inventories implies that the economy is on the verge of rapid growth because stockrooms for businesses are empty and need to be replenished, which triggers higher production overall.

Inventories are also useful when examined in conjunction with total business sales. Rising inventories paired with slackening business sales are indicative of troubled economic times. When business sales slow, retailers' inventories increase and they are forced cut back on wholesale orders. Wholesalers, affected by the fear of swelling inventories, will slow or even shut down production in factories.

Recent technological advancements allow firms to manage inventories more efficiently, keeping inventory levels lower. Accordingly, declines in inventory stores are often indicative of productivity increases rather than changes in demand. But these logistical advances put particular emphasis on growing inventories. Increases in stocks of goods signal declining demand in America.

While the Business Inventories figure is released with the Advanced Retail Sales report, the Advanced Retail Sales report features a lag time of merely two weeks. The Business Inventories' lag time is three times as long, making it an indicator that follows rather than leads the overall pace of the economy. Market participants tend to focus more on the Advanced Retail Sales figures.

The headline number is expressed as a percentage change from the previous month.

Relevance: One Star Rarely affects markets
Release schedule: 8:30 AM (EST); monthly, midmonth and six weeks after the reported month
Review schedule: Spring or summer, small revisions cover several years span
Source of report: US Census Bureau
Web address: www.census.gov
Address of release: http://www.census.gov/mtis/www/mtis.html
AKA: Manufacturing and Trade Inventories and Sales

Capacity Utilization

Measures the extent to which US manufacturing companies make use of their installed productive capacity (factories and machinery). Capacity Utilization reflects overall growth and demand in the economy, rising when the economy is vibrant and falling when demand softens. High capacity utilization also exerts inflationary pressures as scarce resources are in higher demand. However, it may also lead to new capital investments, such as new plants, that promote growth in the future.

Relevance: One Star Rarely affects markets
Release schedule: 9:15 AM (EST); monthly
Source of report: Federal Reserve Board
Web address: http://federalreserve.gov
Address of release: http://federalreserve.gov/releases/g17/current

Chicago PMI

Monthly measure of the business conditions based on surveys of purchasing managers across Illinois, Indiana and Michigan. Released on the last business day of the reporting month, the report's significance has recently declined, with its only significance being that it precedes the more anticipated ISM report. Subsequently, it is used to predict the ISM report as the Chicago survey retains a high correlation with the broader economic release.

Referring to a benchmark of 50, the report is considered to reflect expansion when printing a reading of 50 or higher. Conversely, a reading of 49 and lower would be indicative of contraction.

Relevance: One Star Rarely affects markets
Release schedule: 10:00 AM (EST); monthly, on the final business day of the reporting month
Revisions schedule: Seasonal adjustments made in January
Source of report: National Association of Purchasing Management, Chicago Affiliate
Web address: http://www.kingbiz.com/about_barometer.asp
Address of release: http://www.kingbiz.com/library.asp
AKA: Chicago Purchasing Managers Index, Chicago Business Barometer

Construction Spending

Construction spending gauges the level of construction activity in the United States. The Construction Spending report looks at both residential and non-residential construction. The construction industry makes a significant contribution to the United States GDP in the form of investment expenditure as well as stimulus of industries related to building. Furthermore, since builders are unlikely to pour money into construction projects unless they feel the economy favours their investment, changes in business sentiment like this are usually quickly seen in construction figures. However, the report has little significance for market participants because of its untimely release. By the time the report is announced other reports, such building permits and building starts have already provided similar information.

The report headline is the percentage change from the previous month.

Technical note: The construction industry is a major force to the United States economy, even without including non-construction businesses that are tied to building, such as finance, the furnishing industry, appliance industry and other manufacturing. Private Construction activity can be an effective indicator of business confidence.

Relevance: One Star Rarely affects markets
Release schedule: 10:00 AM (EST); monthly, five weeks after the reported month
Revision schedule: Previous two months with new release, can be major
Source of report: US Census Bureau
Web address: http://www.census.gov
Address of release: http://www.census.gov/const/www/c30index.html

EIA Crude Oil Stocks

Measure of inventories of crude oil stored for future use. The figure relies on the Energy Information Administration's Monthly Crude Oil Report which surveys companies that store 500 or more barrels of crude oil. Because companies with smaller stores are excluded, the figure systematically underestimates actual crude oil stores. Nonetheless, the report is significant as changes in crude oil inventories provide insight into oil demand and prices.

A significant decrease in inventories suggests the supply of oil is possibly strained, which puts upward pressure on oil prices. Any increase in oil prices will act as an inflationary pressure as increased oil prices are fed through the economy. But because any affects of Oil Stocks would take some time to feed through the economy, the report typically does not affect the market.

The figure is reported monthly, either in thousands of barrels per month or as a percentage change from the previous month.

Relevance: One Star Rarely affects markets
Release schedule: 10:00 AM (EST); monthly, one week after the reporting month's end
Revisions schedule: Little or no revisions
Source of report: Energy Information Administration, Official Energy Statistics (U.S)
Web address: (no set address)
AKA: Crude Oil Inventories

Existing Home Sales

Records sales of previously owned homes in the United States. This report provides a fairly accurate assessment of housing market conditions and because of the sensitivity of the housing market to business cycle twists, it can be an important indicator of overall conditions at times when housing is particularly important to the economy.

While used home sales are not counted in GDP, they do affect the United States economy. Sellers of used homes often use capital gains from property sales on consumption that stimulate the economy. Higher levels of consumer spending may also increase inflationary pressures, even as they help grow the economy.

The existing home sales report is not as timely as other housing indicators like New Home Sales or Building Permits. By the time the Existing Home Sales are recorded, market conditions may have changed.

The headline is the total value of properties sold.

Relevance: One Star Rarely affects markets
Release schedule: 10:00 AM (EST); monthly, mid-month and covers the same month
Source of report: National Association of Realtors
Web address: http://www.realtor.org
Address of release: http://www.realtor.org/Research.nsf/Pages/EHSdata

Export Price Index

Tracks price changes of US export goods. The figure is used to determine whether a change in the headline Export figure is representative of an increase of goods sold to foreign nations or just an increase in the price of export goods. The United States exports account for approximately a tenth of the nation's GDP. The headline figure is the percentage change in the index from either the previous month or year.

Relevance: One Star Rarely affects markets
Release schedule: 8:30 AM (EST); monthly, released monthly around the middle of the month
Revisions schedule: Monthly revision to the previous three months
Source of report: Bureau of Economic Analysis, Department of Commerce (US)
Web address: http://www.bls.gov
Address of release: http://www.bls.gov/mxp/home.htm#publications
AKA: Import/Export Price Index

Factory Orders

Dollar volume of new orders, shipments, unfilled orders and inventories as reported by domestic manufacturers. Factor Orders is not a widely watched economic release. The Advance Release on Durable Goods Activity reported one week earlier tends grab more market attention, given that durable goods make up more than half of factory orders.

Factory Orders does provide a comprehensive look at the manufacturing sector. Specifically, the New Orders figure can act as a gauge of demand across industries while Shipments are indicative of supply. The Unfilled Orders and Inventory figures reconcile the balance between New Orders and Shipments; high Shipments are indicative of an excess of demand relative to supply, high Inventories signal an excess of supply over demand.

Figures are reported in billions of dollars and also in percent change from the previous month.

The New Orders figure measures the value of orders received by manufacturers for new products from both domestic and foreign sources. The total value of products shipped is calculated in Shipments while Unfilled Orders measures the value of goods backlogged for order but not yet shipped. Lastly, Inventories gauges the amount of unsold goods held by manufacturers.

Relevance: One Star Rarely affects markets
Release schedule: 10:00 AM (EST); monthly, 4-5 weeks following the end of the reporting month
Source of report: Census Department, Department of Commerce
Web address: www.census.gov
Address of release: www.census.gov/indicator/www/m3/prel/index.htm
AKA: Manufacturers' Shipments, Inventories and Orders, M3

Goods and Services Imports

Measures the value of goods and services that enter the United States for sale from another country. The figure is reported in headlines in billions of dollars. All else constant, a high or rising Goods and Services Imports figure will reduce the trade balance.

Relevance: One Star Rarely affects markets
Release schedule: 7:30 AM (EST); Monthly
Source of report: Bureau of Economic Analysis, Department of Commerce (US)
Web address: http://www.bea.gov
Address of release: http://www.bea.gov/bea/di/home/trade.htm
AKA: Imports

GDP Price Index

Released with the GDP, the GDP Price Index measures the change in the prices of goods and services that are included in US GDP. The GDP Price Index is an indicator for inflation calculated by comparing the current GDP to GDP in the reference year.

A high or rising GDP Price Index, like other indicators of inflation, puts pressure on the Federal Reserve to raise interest rates. These rate hikes generally strengthen the dollar as they increase the return for many dollar-denominated securities.

The GDP price index differs from other more popular inflation measures, like CPI or PCE Deflator, in that it includes all products accounted for by GDP and does not include changes in import prices. Furthermore, the report is only released quarterly and commands little market attention because of its lack of timeliness.

The headline figure is the annualised percentage change.

Relevance: One Star Rarely affects markets
Release schedule: 8:30 AM (EST); Figures released monthly, around the 4th week following the reported month
Revisions schedule: Moderate monthly revisions, plus more substantial annual revisions at the end of July
Source of report: Bureau of Economic Analysis, Department of Commerce (US)
Web address: http://www.bea.gov
Address of release: http://www.bea.gov/bea/dn/home/gdp.htm
AKA: Gross Domestic Product, Production

Import Price Index

Tracks changes in the prices paid for goods imported to the United States. The figure is significant in relation to the trade balance, the difference between the total value of exports and the total value of imports. A positive trade balance (surplus) acts as an appreciating weight on the dollar, reflecting demand for dollars in exchange for exports. Conversely, a negative value (deficit) puts downward pressure on the dollar's value. Given such impacts, traders assess changes in import prices to gain insight on the trade balance. The Import Price Index becomes useful in determining whether a change in import volume has actually sprung from a higher foreign demand or from a real increase in prices for foreign goods.

The US is a net importer nation, where imports a significant part of the nation's GDP. Accordingly, a major price swing in foreign goods can have significant impact on the US inflation.

The headline figure is the percentage change in the index from either the previous month or for the year. Import Price Index Excluding Petroleum gives a better overall assessment to the import price change in the United States since petroleum price is highly volatile.

Relevance: One Star Rarely affects markets
Release schedule: 8:30 AM (EST); monthly, released monthly around the middle of the month
Revisions schedule: Monthly revision to the previous three months
Source of report: Bureau of Economic Analysis, Department of Commerce (US)
Web Address: http://www.bls.gov
Address of release: http://www.bls.gov/mxp/home.htm#publications
AKA: Import/Export Price Index, Import Price Index Excluding Petroleum

Industrial Production

Measures changes in the volume of output produced by the manufacturing, mining and utility sectors. Because industrial production is a measure of output volume rather than dollar value, the figure is not distorted by inflation and is considered a more "pure" indicator for US industry. Though industrial production only accounts for a relatively small portion of GDP, it accounts for most of the volatility in GDP and is considered highly sensitive to changes in interest rate and consumer demand. Therefore understanding trends in this figure are important to forecasting GDP. High or rising Industrial Production figures suggest increased production and economic expansion. However, uncontrolled levels of production and consumption can spark inflation.

The figure varies significantly month to month due to the fact that seasonal and weather-related factors often alter factory production and utility demand. Because of this volatility, the report has limited market impact.

The figure is calculated as a weighted aggregate of goods and reported in headlines as a percent change from previous months.

Relevance: One Star Rarely affects markets
Release schedule: 9:15 AM (EST); Monthly, approximately 15 days following the reporting month's end
Revisions schedule: Modest revisions 3 months following the release plus annual revisions in the early fall
Source of report: Federal Reserve Board
Web address: www.federalreserve.gov
Address of release: www.federalreserve.gov/releases/g17/current

ISM Non-Manufacturing

Gauge of business conditions in non-manufacturing industries, based on measures of employment trends, prices and new orders. Though non-manufacturing sectors make up the majority of the economy, the ISM Non-Manufacturing has less market impact because non-manufacturing data tends to be more cyclical and predictable. However, these sectors do account for a considerable portion of CPI. As a result, the figure gives insight into conditions which can impact output growth and inflationary pressures.

The ISM Non-Manufacturing Index is based on a sample survey of purchasing and supply executives, weighted according to industry contribution to GDP. The Index is calculated using 50% as the centreline between positive and negative expectations; the figure is reported in headlines as the percent change.

Note: There are 10 separate indexes reported, but Business Activity is considered the most important. The other nine indexes are: New Orders, Supplier Deliveries, Employment, Inventories, Prices, Backlog of Orders, New Export Orders, Imports and Inventory Sentiment.

The pricing component of ISM Non-Manufacturing is isolated to form the ISM Non-Manufacturing Prices report. The figure acts as a more focused indicator of inflation; consistently high figures are a strong indicator for a general price increase in the economy.

Relevance: One Star Rarely affects markets
Release schedule: 10:00 AM (EST); monthly, third business day after reporting month
Source of report: Institute for Supply Management (U.S)
Web address: http://www.ism.ws
Address of release: http://www.ism.ws/ISMReport/index.cfm
Refer ISM Report on Business > Latest Non-Manufacturing Data ROB
AKA: Institute For Supply Management (ISM) Non-Manufacturing Survey, ISM Services, Institute For Supply Management (ISM) Services

Leading Indicators

Composite index designed to forecast trends in the overall economy. The index is based on ten key indicators known to precede changes in the economy. Though the index has a less than perfect historical record, it still is a worthwhile forecasting tool. Given the high volume of economic data, the Leading Indicators Index is useful by condensing ten indicators into one value headline figure.

Headline numbers will be a percentage annual growth of the overall composite. As high values are indicative of economic growth, such figures bode well for the overall US Economy. Uncontrolled growth lead by this figure however may raise concerns about inflation and economic stability.

Note: The indicators included in the figure are (in order of decreasing weight): interest rate spread, M2 money supply, average manufacturing workweek, manufacturers' new orders, S&P 500, average weekly unemployment claims, vendor performance, housing permits, consumer expectations and manufacturer's new orders for non-defence capital goods.

Relevance: One Star Rarely affects markets
Release schedule: 10:00 AM (EST); monthly, three weeks following the end of the reporting month
Source of report: Conference Board
Web address: www.globalindicators.org
Address of release: http://www.conference-board.org/economics/indicators.cfm
Refer > US Leading Indicators
AKA: Index of Leading Indicators, LEI

MBA Mortgage Applications

Gauges demand for mortgage application in the US. Tracking new home mortgages and refinances, MBA Mortgage Applications Survey serves at a current indicator for the US housing market. Growth in mortgages suggests a healthy housing market. Due to the multiplier effect housing has on the rest of the economy, rising activity suggests increased household income and economic expansion. The headline figure is the weekly percentage change in the MBA Mortgage Applications figure.

Among the various indices measured in the survey, the purchase index and refinancing index most accurately reflect where the housing market is headed. The purchasing index measures the change in existing home sales in all mortgage applications, while the refinance index measures the mortgage refinancing activity in all mortgage applications.

Note: Due to volatility in the sector, markets also focus on the four week moving averages.

Relevance: One Star Rarely affects markets
Release schedule: 7:00 AM (EST); weekly, every Wednesday with previous week report
Revisions schedule: At this point we are unclear
Source of report: Mortgage Bankers Association
Web address: http://www.mortgagebankers.org
Address of release: http://www.mortgagebankers.org/NewsandMedia/PressCenter
AKA: Mortgage Applications Survey

Monthly Budget Statement

Monthly report of the deficit or surplus held by the US government. The report provides detailed information on federal receipts and outlays based off accounting reports of Federal entities, disbursing officers and Federal Reserve Bank reports. A positive Monthly Budget Statement (surplus) indicates that receipts exceed outlays. Conversely, a negative figure (deficit) is indicative of government debt.

Relevance: One Star Rarely affects markets
Release schedule: 2:00 PM (EST); monthly, approximately 15 workdays following the reporting month's end
Source of report: Financial Management Service, US Department of Treasury
Web address: http://fms.treas.gov
Address of release: http://www.fms.treas.gov/mts
AKA: Monthly Treasury Statement, Treasury Budget, MTS

NAHB Housing Market Index

A timely gauge of home sales and expectations for future home building. Based on a small sample of homebuilders, the Housing Market Index is a timely indicator of future US home sales. However, as the index is not as comprehensive as formal housing reports like new home sales or MBA mortgage applications, the index acts more like a supplemental indicator for predicting housing trends.

As such, the NAHB Housing Market Index is still able to provide general insight to where the housing market is heading. Given that new home sales reflect 'big ticket' items that require construction and investment, the housing market is often viewed as an indicator of the direction of the economy as a whole. Growth in the housing market will spur subsequent spending, generating demand for goods and services and the employees who provide them.

The report headline is expressed in percentage change from the previous month.

Technical Note: The NAHB Housing Market Index divides the Single-Family Sales data into three categories: Present, Next 6 Months and Prospective Buyers Traffic.

Relevance: One Star Rarely affects markets
Release schedule: 1:00 PM (EST); monthly, mid-month and covers the same month
Source of report: National Association of home Builders
Web address: www.nahb.org(type "HMI" in search box)

Non-Farm Productivity and Unit Labour Costs

Report on the efficiency of industrial workers. Key figures released in this report include Productivity and Unit Labor Costs.

Non-farm Productivity -Measures the output produced for each hour of labour worked. Non-farm Productivity is considered the most accurate gauge of overall business health, given farming data's small and volatile contribution to GDP. To businesses, higher productivity indicates efficient use of employees and capital. Given that labour costs make up more than two-thirds of the average businesses expenses, high productivity can allow a firm to fulfil consumer demand with less labour costs, boosting profitability. Thus trends in this report can precede investment spending and business growth. Also if prices raw materials increase, improved productivity can save a firm from passing higher costs to the end consumer. Given such business effects, healthy productivity growth bodes well for the economy as a whole, signalling increased production capability and business growth.

Productivity is reported as output per hour per worker, categorized into industry figures.

The Non-Farm Productivity number is generated by comparing the number of hours worked (Employment Situation report) to Gross Domestic Product data.

Unit Labour Costs -Measures changes in the actual dollar cost firms pay for employees to make a uniform output. Since labour costs make up such a sizeable portion of business' production costs, trends in this figure are significant to wage pressures. High or rising labour costs are often passed to consumers in higher final prices, causing inflation. As a result, rising Unit Labour Costs often act as an early indicator of inflation, making it the key indicator in the Productivity and Costs report.v The figure is reported in headlines as a percentage change from previous quarters.

Relevance: One Star Rarely affects markets
Release schedule: Quarterly, 8:30 AM (EST); approximately 5 weeks following the end of reporting quarter
Revisions schedule: First revision occurs one month after release, the second two months later; revisions are often dependent on updated GDP and employment data.
Source of report: Bureau of Labour Statistics, Department of Labour
Web address: http://www.bls.gov
Address of release: http://www.bls.gov/lpc
AKA: Non-farm Productivity, Productivity, Unit Labor Costs

Pending Home Sales

Tracks residential housing contract activity of existing single-family homes. The Pending Home Sales report is an advanced read on trends in the US housing market. Housing is typically correlated to the overall state of the economy; particularly indicative of economic turning points. A sharp drop in housing demand typically acts as a warning signal of economic slowdown as buyers are reluctant to purchase houses when interest rates are high, disposable income is low, or consumer confidence is low. Conversely, a rebound in the housing market is often a leading indicator of an economic recovery.

The report headline is expressed in percentage change in pending home sales from previous month.

Relevance: One Star Rarely affects markets
Release schedule: 10:00 AM (EST); monthly, 4 weeks after reporting month
Source of report: National Association of Realtors
Web address: http://www.realtor.org
Address of release: http://www.realtor.org/Research.nsf/Pages/PHSdata

Personal Income

Broad gauge of employee earnings in the US. Personal Income measures the pre-tax income households receive from employment, investments and transfer payments. As wages and salaries make up the majority of Personal Income, the figure can provide insight on the US employment situation. However, because Personal Income is released after the headline employment figure and earnings figures, its impact on the market is muted. The figure is still useful in gauging the purchasing ability of consumers, though, as rising Personal Income allows for strong consumers spending. Such spending drives output growth and fuels the US economy.

Relevance: One Star Rarely affects markets
Release schedule: 8:30 AM (EST); monthly,
Revisions schedule: Moderate revisions in the months following the report as more complete data is available, plus annual revision in July or August.
Source of report: Bureau of Economic Analysis, Department of Commerce (US)
Web address: http://www.bea.gov
Address of release: http://www.bea.gov/bea/dn/home/personalincome.htm

Richmond Fed Manufacturing Survey

Assesses regional manufacturing conditions for the Richmond Fed District. Based on mail-in surveys from a representative sample of manufacturing plants, the Richmond Fed Index seeks to track industrial performance. The report puts particular emphasis on inflationary pressures.

Though the Richmond Fed Manufacturing Survey is valued for its quick turnaround, it is still released after the ISM survey. As a result, the figure is often used to affirm or question the ISM report and has little impact on markets. The Richmond Fed Manufacturing Survey also asks manufacturing executives to stress price expectations. Some markets participants use this data as an early gauge to CPI and PPI reports released a few days later.

The headline figure is a three-month average, calculated by finding the percentage difference between positive and negative responses for the last three months, using a zero boom/bust centreline.

The survey covers such topics as shipments, order volume, backlog volume, capacity utilization, vendor lead time, employees, average workweek, wages, inventory levels and capital expenditures. The Fifth District includes the District of Columbia, Maryland, both Carolinas and most of the Virginias.

Relevance: One Star Rarely affects markets
Release schedule: 10:00 AM (EST); monthly, second Tuesday of the month following the reporting month
Revisions schedule: Annual seasonal adjustments
Source of report: Federal Reserve Bank of Richmond
Web address: http://www.richmondfed.org
AKA: Federal Reserve Bank of Richmond : Manufacturing Activity for the Fifth District

Wholesale Inventories

The stock of unsold goods held by wholesalers. Wholesalers act as intermediaries between manufacturers or importers and retailers. Wholesalers sell directly to retailers, who strive to act in accordance (ideally) with consumer demand. Consequently, high Wholesale Inventories indicate that unsold goods are piling up, suggesting that retailers are facing lagging consumer demand and unwilling to purchase goods. Conversely, declining Wholesale Inventories suggest retailers are buying more goods to meet strong or rising demand. Because Wholesale Inventories reflect the demand retailers have for their manufacturers' wares, the report offers an early indication of the potential strength of consumer spending.

Wholesale Inventories are reported in headlines as a percent change from the previous month.

Relevance: One Star Rarely affects markets
Release schedule: 10:00 AM (EST); monthly, two months after the reported month
Revision schedule: Annual benchmark revisions on May 6 th
Source of report: US Census Bureau
Web address: www.census.gov
Address of release: http://www.census.gov/mwts/www/mwts.html

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