Economic indicators are financial and economic data published regularly by the states and individuals. This statistics is a key factor for the financial market assessment. Thus, the economic indicators are an important aspect for the accuracy of financial forecasts and for the analysis of the financial market in general. This information will be helpful for successful trading.
1. The Consumer Price Index (CPI) 2. The Producer Price Index (PPI) 3. Trade Balance 4. Gross Domestic Product (GDP) 5. Unemployment Rate 6. Industrial Production Capacity 7. State Budget Deficit/Surplus 8. Durable Goods Orders 9. Public Monetary and Fiscal Policy 10. Interest Rate 11. Gold and Foreign-Exchange Reserves 12. Public Dept
1. The Consumer Price Index (CPI) The Consumer Price Index (CPI) is one of the most significant indicators of inflation. This index reflects the changes in the prices of basic goods and services in the consumer basket (food, clothes, energy, transport, fuel, medical care).
2. The Producer Price Index (PPI) The Producer Price Index (PPI) measures the average fluctuations in the prices determined by the producers at all stages of manufacture (for semi-finished goods and raw materials), excluding taxes, services and imported goods.
3. Trade Balance Trade balance is the ratio of the value of imported goods and services to exported goods and services. It is a part of the balance of payments (the ratio of financial flows coming from abroad to the ones going abroad).
4. Gross domestic product (GDP) Gross domestic product (GDP) is an indicator that reflects the market value of all goods and services produced in the country in all sectors of the economy within a year without the separation of the resources used for their production. As a rule, the decrease of the GDP is followed by the decline of the national currency. The GDP growth leads to the appreciation of the currency.
5. Unemployment Rate The unemployment rate is calculated as the ratio of the total number of unemployed to the labour force. The general economic situation is characterized by the indicators of employment. If the unemployment rate exceeds its natural level, it is a marker of the economic recession in the country, which, in its turn, affects the exchange rate.
6. Industrial Production Capacity Industrial production capacity is considered to be one of the main indicators reflecting the state of the national economy. This index shows the changes in the volume of production and utilities (except the construction sector). Its increase is a sign of the strengthening of the national economy.
7. State Budget Deficit/Surplus The ratio of the government expenditures to the revenue is characterized by the indicator of the state budget. If the government expenditures exceed the revenue, it causes the budget deficit. If the revenue exceeds the expenses, it causes the budget surplus. Such indicators as the budget deficit and surplus reflect the dynamics of the economic growth and the economic situation in general.
8. Durable Goods Orders Durable goods orders give a general idea of the consumers' confidence in the economic situation. It concerns the consumers of the products with a lifetime of at least 3 years. Being an indicator of the level of consumption in the country, this factor is very important for the financial market. Its decline causes the decline of the rate of the national currency. Its growth increases the activity of investors and producers.
9. Public Monetary and Fiscal Policy Fiscal policy is the government activity in the field of taxation and budget expenditure. One of the possible expected results of this policy is the growth of aggregate demand and, as a consequence, strengthening of the national economy. Monetary policy is a type of a stabilization policy, aimed at smoothing the fluctuations in the economy by increasing or decreasing the money supply. Rising the interest rates, it constrains the inflation, reducing them – it stimulates the economic growth. The consistency and the interaction between fiscal and monetary policies are the key to the successful implementation of stabilization policies in general.
10. Interest Rate The interest rate is the rate applied by the central bank to all the transactions with other lending institutions. It is a significant factor for the changes of exchange rates. The central bank uses the interest rates as a tool of economic management. When the rates rise, the business activity reduces and the inflation decreases and vice versa.
11. Gold and Foreign-Exchange Reserves Gold and foreign-exchange reserves are external assets in the form of currency and gold under the control of the central bank, as well as the state-owned gold and foreign currency in the international monetary organizations. Financial reserves are a tool of the control of the exchange rate dynamics by means of the interventions in the foreign exchange market.
12. Public Dept Public debt can be defined as a government debt, which is the result of the financial borrowings in order to cover the budget deficit. With an increase of the budget deficit or a lack of funds for its service, the government can resort to the debt restructuring.Any alterations in this indicator lead to the changes in the various sectors of the national economy and financial market.