With the vast majority of popular financial markets traded globally it is important to appreciate the economic indicators and how they can affect your positions.
In order to help, here is a guide to the key economic indicators.
- Chicago Purchasing Managers Index (Chicago PMI)
- Consumer Confidence Index
- Consumer Price Index (CPI)
- Durable Goods Orders
- Existing Home Sales
- Gross Domestic Product (GDP)
- Initial Jobless Claims
- Institute of Supply Managers (ISM) Manufacturing Index
- New Home Sales
- Nonfarm Payrolls
- Personal Income & Consumption
- Philly Fed
- Purchasing Managers Index (PMI)
- Producer Price Index
- Retail Sales
- International Trade
- UK Money Supply Data (M4)
Nonfarm Payrolls (NFP)
This is typically the indicator which impacts the markets the most in a given month.Some spread betting companies even offer a market on the actual number.
For more details, and the latest update, please see our NFP spread betting market guide.
Purchasing Managers Index (PMI)
On the first of the month, countries around the world lined up to publish the results of their latest surveys of manufacturing activity.The PMI quantifies companies’ responses to a series of questions about production, orders, sales and hirings.
The PMI is given as a figure between 0 and 100.
50 represents equilibrium, a reading above 50 represents growth and a reading below 50 represents contraction.
(US) Retail Sales
Indicator | US Retail Sales |
What is it? | This index measures the total sales of goods by all retail establishments in the US. These figures are not adjusted for inflation. The data is however adjusted for seasonal and holiday differences |
What does it Indicate? | This is the broadest indicator of broad consumer spending patterns |
Publication Date | Released around the 12th of the month at 1.30pm GMT |
Retail sales figures are viewed by many analysts as a preferential reading of economic health, due to the contribution of consumer spending to the GDP figure. This is particular true of the US.
In short, if consumers do not feel secure in their jobs or are feeling the pinch financially, they a likely to spend less and the economy struggles to grow.
As a result, retail sales can be seen to be a measure of both financial health of consumers, as well as confidence in the economy going forward.
Especially at times of high unemployment, low wage growth, poor economic growth, higher taxes and rising fuel costs.
More Economic Indicators
Indicator | Consumer Confidence Index |
What is it? | A survey of 5,000 consumers, about their attitudes concerning the present situation and expectations regarding economic conditions |
What does it Indicate? | This index can be helpful in predicting sudden shifts in consumption patterns |
Reading Guide | Changes of greater than 5 points are considered significant |
Publication Date | Released monthly on the last Tuesday of the month at 3.00pm GMT |
Data Period | Data relates to the prior month |
Indicator | Chicago Purchasing Managers Index (Chicago PMI) |
What is it? | Index based on surveys of more than 200 purchasing managers regarding the manufacturing industry in the Chicago area where the distribution of manufacturing firms in this area mirrors the national distribution |
What does it Indicate? | This helps to forecast the results of the ISM index, which is released the day after the Chicago PMI |
Reading Guide | Readings above 50% indicate an expanding factory sector |
Readings below 50% indicate a contracting factory sector | |
Publication Date | Monthly on the last business day of the month at 3.00pm GMT |
Data Period | Data is released for the current month |
Indicator | Consumer Price Index (CPI) |
What is it? | An index that measures the change in price of a representative basket of goods and services. This basket contains food, energy, clothing, housing, medical care, transportation and education |
What does it Indicate? | Core CPI (CPI excluding food and energy prices) is very closely monitored. This figure gives a clear picture of the underlying inflation trend |
Reading Guide | Larger than expected gains in the core CPI is a sign of inflationary pressure being generated in the US economy |
Publication Date | Released monthly around the 13th of the month at 1.30pm GMT |
Data Period | Data relates to the prior month |
Indicator | Durable Goods Orders |
What is it? | This is a government index that measures the dollar volume of orders, shipments and unfilled orders of durable goods. Durable goods are new or used items generally with a normal life expectancy of three or more years |
What does it Indicate? | This report gives information on the strength of demand of US manufactured durable goods. It is an early indicator of both consumer and business demand for equipment. A falling index suggests the opposite |
Reading Guide | An increasing index suggests demand is strengthening which is likely to result in rising production and employment. Increasing spending on investment goods reduces the prospect of inflation |
Publication Date | Released monthly around the 26th of the month at 1.30pm GMT |
Data Period | Data relates to the prior month |
Indicator | Existing Home Sales |
What is it? | A report measuring the selling rate of pre-owned houses and is considered a good indicator of activity in the housing sector |
Publication Date | Released monthly on the 25th or on the first business day thereafter at 3.00pm GMT |
Data Period | Data relates to the prior month |
Indicator | Gross Domestic Product (GDP) |
What is it? | Gross Domestic Product measures the value of all goods and services produced in the US in Dollar value, regardless of who owns the assets or the nationality of those used in producing the goods or services |
What does it Indicate? | GDP is a very important measure of the performance of the US economy |
Reading Guide | Higher GDP growth leads to accelerating inflation. Lower GDP growth indicates weakness in the economy |
Publication Date | Released monthly on the third of fourth week of the month at 1.30pm GMT |
Data Period | GDP is a quarterly figure so the data released in the second and third month of each quarter provide a revision on the monthly figures |
Indicator | Initial Jobless Claims |
What is it? | This index generated by the government tracks the number of people filing first-time claims for unemployment insurance |
What does it Indicate? | This data helps to predict trends in the US labour market |
Reading Guide | If the figure moves more than 30,000 claims, a significant movement in job growth is indicated |
Publication Date | Released weekly on Thursdays at 1.30pm GMT |
Indicator | Institute of Supply Managers (ISM) Manufacturing Index |
What is it? | The ISM Manufacturing Index is based on surveys of 300 purchasing manager’s nationwide representing manufacturing activity. It covers indicators such as new orders, production, employment, inventories, delivery times, prices, export orders and import orders. |
Reading Guide | Readings of 50% or above are typically associated with an expanding manufacturing sector and the economy is deemed to be healthy. |
Readings below 50% show contraction. The index is seasonally adjusted for effects of holidays etc. | |
Publication Date | Released on the first business day of the month at 3pm GMT. |
Indicator | New Home Sales |
What is it? | This report measures the number of newly constructed homes with a committed sale during the month. |
What does it Indicate? | This report is a good gauge of near-term spending for housing-related items and of consumer spending. |
Publication Date | Released around the last business day of the month at 3pm GMT |
Indicator | Personal Income & Consumption |
What is it? | Personal Income represents the income that households receive from all sources. Personal consumption outlines consumer spending which is divided into durable goods, non-durable goods and services |
Publication Date | Released on the first business day of each month at 1.30pm GMT |
Data Period | Data is for two months prior |
Indicator | Philly Fed |
What is it? | This is a manufacturing index which represents Pennsylvania, New Jersey and Delaware. This represents a cross section of US manufacturing activities |
Reading Guide | Readings above 50% indicate and expanding factory sector |
Values below 50% are indicative of contraction | |
Publication Date | Released on the third Thursday of the month at 3.00pm GMT |
Indicator | Producer Price Index |
What is it? | The PPI measures the average price of a fixed basket of good at the wholesale level. Core PPI or PPI excluding food and energy prices is important as it is a measure of economic stability. It gives an indication of the underlying inflation trends |
What does it Indicate? | Inflationary pressures are generated when core PPI posts larger than expected gains |
Publication Date | Released on the 11th of the month at 1.30pm GMT |
Indicator | Retail Sales |
What is it? | This index measures the total sales of goods by all retail establishments in the US. These figures are not adjusted for inflation. The data is however adjusted for seasonal and holiday differences |
What does it Indicate? | This is the broadest indicator of broad consumer spending patterns |
Publication Date | Released around the 12th of the month at 1.30pm GMT |
Indicator | International Trade |
What is it? | This shows the difference between exports and imports of US goods and services. Stronger exports are usually bullish for corporate earnings and the stock market |
Publication Date | Released around the 19th of the month at 1.30pm GMT. |
UK Money Supply Data (M4)
If the money supply is falling or just low-and-steady then growth prospects must be limited.If you are trading but less familiar with the money supply numbers, the ‘M4’ is classed as “the cash outside banks (ie in circulation with the public and non-banking firms) + private sector building society and retail bank deposits + private-sector building society and wholesale banking deposits as well as certificate-of-deposits”.
The M4 is generally discussed rather than the M0 which is classed as “cash outside the Bank of England and Banks’ operational deposits with Bank of England”. The different definitions of money supply are designed to reflect the differing stores of money. M4 numbers are often quoted because they represent the most illiquid measure of money supply.
Note: The above guide is not and does not pretend to be exhaustive however it does run you through some of the main indicators that professional traders look at.
Spread betting and CFD trading carry a high level of risk to your capital and you may lose more than your initial investment. Spread betting and CFD trading may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.