It represents the ratio between the amount of payments received from abroad and the amount of payments going abroad. In other words, it shows the total foreign trade operations, trade balance, and balance between export and import, transfer payments. If coming payment exceeds payments to other countries and international organizations the balance of payments is positive. The surplus is a favorable factor for growth of the national currency. It has a limited impact on the market.
Balance of trade
It represents the difference between exports and imports. The indicator is published monthly. It has a low impact on the market.
Business climate indicator
The indicator reflects the results of a survey in the business sector of the euro-zone and their views on the current economic situation. It is published monthly at 5:00 AM (EST).
Consumer confidence index
It is an indicator designed to measure consumer confidence, which is defined as the degree of optimism on the state of the economy that consumers are expressing through their activities of savings and spending. Global consumer confidence is not measured. Country by country analysis indicates huge variance around the globe. In an interconnected global economy, tracking international consumer confidence is a lead indicator of economic trends. A strong consumer confidence report, especially at a time when the economy is lagging behind estimates, can move the market by making investors more willing to purchase equities. The idea behind consumer confidence is that a happy consumer - one who feels that his or her standard of living is increasing - is more likely to spend more and make bigger purchases, like a new car or home.
It is a highly subjective survey, and the results should be interpreted as such. People can grab onto a small situation that garners a lot of mainstream press, such as gas prices, and use that as their basis for overall economic conditions, fair or not. There are no real data sets here, and people are not economists, so they cannot be counted on to realize that, for example, because gas prices may only represent 5% of their expenses, they should not sour their entire economic outlook.
Economic sentiment indicator
This indicator is the most important in assessing the prospects for economic growth. It is a composite index and its calculation is very difficult. Its meaning has the same impact on the market as the industrial confidence index and the index of consumer confidence. In calculation it also uses in the index of confidence in the construction and the price index for shares. Being an integral value for the majority of survey indices, it can have a great impact on the market.
Gross domestic product
It is the main indicator that reflects the state of the national economy. According to the Keynesian model of economic development, GDP can be represented as the following: GDP = C + I + S + (E - M), where C - consumption, I - investment, S - public expenditure, E - Exports, M - imports. GDP is expressed as an index against the previous period, and in terms of absolute value of sum of the prices of manufactured goods and services. GDP represents the sum of volumes of consumption, investment, government spending, exports and net imports. GDP growth leads to an increase in the national currency. The bond market depends on GDP but security prices vary slightly due to the predictability of GDP based on monthly statistics of its constituents.
GDP is the main indicator reflecting the state of the national economy. It has a significant impact on the market. The index value is quite volatile from quarter to quarter cause of which is greater fluctuations in net exports and inventories. Therefore, economists consider the value of sales volume of the end product excluding inventories that represent unsold product, and their growth can greatly increase the value of GDP.
Harmonized index customer price (HICP)
The Harmonized Index of Consumer Prices (HICP) is an indicator of inflation and price stability for the European Central Bank (ECB). It is a consumer price index which is compiled according to a methodology that has been harmonized across EU countries. The euro area HICP is a weighted average of price indices of member states who have adopted the euro. The primary goal of the ECB is to maintain price stability, defined as keeping the HICP below but close to 2% for the medium term. In order to do that, the ECB can control the short term interest rate through Eonia, the European over night index average, which affects market expectations. The HICP is also used to assess the convergence criteria on inflation which countries must fulfill in order to adopt the euro. In the United Kingdom, the HICP is called the CPI and is used to set the inflation target of the Bank of England.
The HICP differs from the US CPI in two primary aspects. First, the HICP attempts to incorporate rural consumers into the sample while the US maintains a survey strictly based on the urban population. In actuality, the HICP does not fully incorporate rural consumers since it only uses rural samples for creating weights; prices are often only collected in urban areas. The HICP also differs from the US CPI by excluding owner-occupied housing from its scope. The US CPI calculates "rental-equivalent" costs for owner-occupied housing while the HICP considers such expenditure as investment and excludes it. The Bureau of Labor Statistics, the producer of the US CPI, has recently calculated an experimental index designed for direct comparison with the HICP.
Import prices
The indicator reflects the change in the import prices during the month. It is an indicator of the inflation. Published monthly. The index is closely kept an eye on by the market.
Industrial production
It shows the level of changes in industrial production in the country. The indicator takes into account manufacturing and mining industries. It is published monthly. The indicator is paid attention by the market.
Manufacturing orders
The indicator shows changes in the number of orders for the products of German enterprises. It represents the prospects for economic development. Published monthly.
Manufacturing production
It shows the change in volume of products produced by the manufacturing industry. Published monthly. The indicator is paid attention by the market.
M3 money supply
It includes the amount of cash in circulation, check deposits, long-term deposits. Bundesbank and European Central Bank believe that it is one of the most important indicators of inflation. A maximum acceptable value of the indicator is usually determined, and in case of exceeding this value there is an increase in interest rates. In 2003 the goal of the ECB on the growth of the M3 was 4.5% per year. It is necessary to monitor forecasts of the level changes. The reaction of the market may be substantial. It is published monthly.
New industrial orders
It reflects changes in the demand for manufactured products and services. It is an indicator of industrial production in the future. Published monthly at 5:00 AM (EST)
PMI
The index is one of the diffusion indexes. It is based on a survey with the question of whether the conditions of the business with relation to new orders, prices, labor market, terms of order fulfillment, etc. A respondent choose on the three types of response: "no", "yes", "no change". Such indexes effectively follow the dynamics of the economic cycle.
Drop in the index after a period of growth predicts a transition of business-cycle from the stage of expansion to recession, and upward turn after a drop predicts the beginning of recovery. The close correlation between the diffusion indexes with economic dynamics assessed by long-term statistics allows you to use them even for predicting future values of GDP.
Such indexes are published by almost all countries of G7. German PMI started publishing in 1998. The combined Euro-zone PMI has been published since 1999.
The value of 50 indicates that during the period there has been neither an increase nor decline in the business sector. The value above this figure means the growth in the sector. If the value of the indicator is below 50, it means that the economy contracts.
The indicator has a significant impact on the market. It is useful to analyze not only changes in the overall index, but also changes in the most important components.
PMI services
The meaning of the index is the same as the industrial PMI, but business optimism in the service sector is studied. The value of 50 indicates that during the period there has been neither an increase nor decline in the business sector. The value above this figure means the growth in the sector. If the value of the indicator is below 50, it means that the economy contracts.
The index has a significant impact on the market, sometimes its effect is stronger than the industrial PMI, as in developed countries 70% of GDP is made by the service sector.
Producer price index
It represents changes in the prices for the "basket" of goods produced in the industry. It measures average changes over time in prices received by domestic producers for their output. The index of industrial prices is considered to be more credible when it does not take into account food and energy industry sectors (core PPI). The PPI is one of the oldest continuous systems of statistical data published by the Bureau of Labor Statistics, as well as one of the oldest economic time series compiled by the Federal Government.
The main groups' contributions are as follows:
- Consumer goods (mainly cars) - 40%
- Food - 23%
- Energy products (mainly gasoline and other fuels) - 14%.
It is published at 5:00 AM (EST) on the 2nd working day of the month.
Retail trade
The index shows the change in the volume of sales in the retail trade. It is an indicator of consumer spending and, therefore, as an indicator of consumer demand and consumer confidence it can serve as a key point for the foreign exchange market in reversal points of the business cycle. Published monthly at 5:00 AM (EST)
Foreign trade
The indicator represents the difference between exports and imports of goods and services to the in terms of their prices. Published monthly at 5:00 AM (EST).
Industrial Production
The indicator reflects the change in industrial production and the activity of industrial sectors. Published monthly at 5:00 AM (EST).
Inflation (HICP)
It is calculated on the basis of consumer price indices (CPI) of the countries that are members of the territorial entity. The harmonized consumer price index smoothes the differences in the coverage of goods and services involved in the calculation of national consumer price indices. Published monthly at 5 AM (EST).
Unemployment rate
The unemployment rate is the percent of able-bodied population who actively look for a job but cannot find it. Published monthly at 5:00 AM (EST)
