Five Indicators That You Should Be Watching
#1. Institute For Supply Management Manufacturing Index
This indicator is released at 10:00 A.M. ET on the first of the month. It covers the prior month, and the stock sectors affected are manufacturing, and raw materials.
Even though manufacturing only makes up 10% of jobs in the U.S. and 17% of the economy, this index is still a highly sensitive leading indicator for predicting where the economy is heading. Manufacturing trends usually start before those in services, which makes up a much larger section of the economy, so this report is worth watching. The index is a survey of purchasing managers at manufacturing firms, which takes into account new orders, inventories, employment and commodities, among other things. The basic question being asked: "Are you producing more?" The report gives investors a snapshot of industrial output as well as possible rising durable goods orders, employment rate or commodities shortages.
#2. The Employment Report.
This indicator is released at 8:30 A.M. ET on the first Friday of the month. It covers the previous month, and affects all stock sectors across the board.
This report is one of the most timely economic indicators since it's released within days of the previous month's close. It is valued for its ability to help investors predict possible upcoming trends. For example, a rising unemployment rate will weaken consumer buying power. As a result, the loss in power and confidence will stop consumer spending. This can affect virtually every sector of the stock market and, ultimately, gross domestic product. The report is the result of two separate surveys - one of 60,000 households; the other of close to 400,000 individual worksites - measuring labor and the unemployment rate, as well as other employment-related data, such as hourly earnings, average workweek, and nonfarm payrolls.
#3. Retail Sales Index
This indicator is released at 8:30 A.M. ET around the 13th of the month. It covers the previous month, and the stock sectors affected are retail, employment, and manufacturing.
With retail sales making up over one-third of GDP, this index is a great way to measure the economy's health. The consumer is the most important part of the economy, and retail sales is a comprehensive survey of what the consumer was up to each month. This "advance" report represents the total goods sold from a number of various-sized retailers, from public companies like the Gap to mom-and-pop hardware stores. The reports are revised three months back at each release and revisions are often large. In an attempt to be more accurate, the report is broken down to exclude auto sales because they have a frequent tendency to fluctuate from month to month.
#4. Consumer Price Index
This index is released at 8:30 A.M. ET generally on the 15th of the month. It covers the previous month, and the stock sectors affected are retail, manufacturing, and raw materials.
The most trusted indicator for measuring inflation, the Comsumer Price Index tallies the cost of a fixed basket of goods and services from month to month, including everything from Kellogg's cereal and General Electric light bulbs to transportation costs, such as Delta Air Lines flight. In order to get a more accurate CPI, financial markets often stick to the "core rate," which excludes ever-changing food and energy prices. If inflation is the rate at which the price of goods and services is rising, then a high CPI means that inflation is going up.
#5. Housing Starts And Building Permits
This indicator is released at 8:30 A.M. ET around the 16th of the month. It covers the prior month, and the stock sectors affected are raw materials, employment, and construction.
Housing starts can give an investor a good idea of coming supply and raw materials orders, a possible rise in the employment rate as well as new home sales, which is an indicator in its own right. New home sales make up a big part of GDP, so to see a rise would indicate a healthy economy. It's one of the leading indicators, meaning that its changes come before larger trends in the economy, as opposed to coincident or lagging indicators, which would change with or behind the economy. The report also shows whether or not small builders and entrepreneurs have confidence that the homes they're building will be bought in the future.
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This indicator is released at 10:00 A.M. ET on the first of the month. It covers the prior month, and the stock sectors affected are manufacturing, and raw materials.
Even though manufacturing only makes up 10% of jobs in the U.S. and 17% of the economy, this index is still a highly sensitive leading indicator for predicting where the economy is heading. Manufacturing trends usually start before those in services, which makes up a much larger section of the economy, so this report is worth watching. The index is a survey of purchasing managers at manufacturing firms, which takes into account new orders, inventories, employment and commodities, among other things. The basic question being asked: "Are you producing more?" The report gives investors a snapshot of industrial output as well as possible rising durable goods orders, employment rate or commodities shortages.
#2. The Employment Report.
This indicator is released at 8:30 A.M. ET on the first Friday of the month. It covers the previous month, and affects all stock sectors across the board.
This report is one of the most timely economic indicators since it's released within days of the previous month's close. It is valued for its ability to help investors predict possible upcoming trends. For example, a rising unemployment rate will weaken consumer buying power. As a result, the loss in power and confidence will stop consumer spending. This can affect virtually every sector of the stock market and, ultimately, gross domestic product. The report is the result of two separate surveys - one of 60,000 households; the other of close to 400,000 individual worksites - measuring labor and the unemployment rate, as well as other employment-related data, such as hourly earnings, average workweek, and nonfarm payrolls.
#3. Retail Sales Index
This indicator is released at 8:30 A.M. ET around the 13th of the month. It covers the previous month, and the stock sectors affected are retail, employment, and manufacturing.
With retail sales making up over one-third of GDP, this index is a great way to measure the economy's health. The consumer is the most important part of the economy, and retail sales is a comprehensive survey of what the consumer was up to each month. This "advance" report represents the total goods sold from a number of various-sized retailers, from public companies like the Gap to mom-and-pop hardware stores. The reports are revised three months back at each release and revisions are often large. In an attempt to be more accurate, the report is broken down to exclude auto sales because they have a frequent tendency to fluctuate from month to month.
#4. Consumer Price Index
This index is released at 8:30 A.M. ET generally on the 15th of the month. It covers the previous month, and the stock sectors affected are retail, manufacturing, and raw materials.
The most trusted indicator for measuring inflation, the Comsumer Price Index tallies the cost of a fixed basket of goods and services from month to month, including everything from Kellogg's cereal and General Electric light bulbs to transportation costs, such as Delta Air Lines flight. In order to get a more accurate CPI, financial markets often stick to the "core rate," which excludes ever-changing food and energy prices. If inflation is the rate at which the price of goods and services is rising, then a high CPI means that inflation is going up.
#5. Housing Starts And Building Permits
This indicator is released at 8:30 A.M. ET around the 16th of the month. It covers the prior month, and the stock sectors affected are raw materials, employment, and construction.
Housing starts can give an investor a good idea of coming supply and raw materials orders, a possible rise in the employment rate as well as new home sales, which is an indicator in its own right. New home sales make up a big part of GDP, so to see a rise would indicate a healthy economy. It's one of the leading indicators, meaning that its changes come before larger trends in the economy, as opposed to coincident or lagging indicators, which would change with or behind the economy. The report also shows whether or not small builders and entrepreneurs have confidence that the homes they're building will be bought in the future.
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posted by Bob Moser at
8:02 PM
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