The APICS Index is a monthly survey of manufacturing firms that indicates trends in production. An index level of 50, signals that there has been zero growth in manufacturing. Every additional 10 point jump over the 50 point mark reflects 4% in national growth
TopOption has collected the top market indicators you can follow, to stay up-to-date and in-the-know about the major factors that are influencing global markets.
What Are Market Indicators?
Market indicators are reports that are issued on a regular basis, which help determine the strength of an economy and allow traders to predict the way the market will move. Some market indicators, such as the GDP (Gross Domestic Product), relate to the entire economy, while other indicators, such as Retail, or Home Sales relate specifically to a particular market sector.
Market indicators and the Economic Calendar
All the primary market moving events listed below appear on the TopOption Economic Calendar.
An economic calendar is a critical tool for traders, listing hour by hour, each of the main market-shaping events of the day ahead.
The calendar shows when the market indicator reports are published, explaining their significance, rating the importance of each report, and showing their real and predicted impact on affected currencies.
To see when each of the upcoming market indicators will be published, and how they are likely to influence the various assets traded on the binary options market click here.
To find out more about each market indicator, click on the relevant item in the list:
- Market Indicators
The Balance of Trade or International Trade Balance is measured by subtracting the number of imports from the number of exports. A trade surplus occurs when the country exports more than it imports, whereas, the reverse scenario is known as a trade deficit. In a weak economy, a trade surplus can be advantageous, as it creates jobs, although in a strong economy, a trade deficit, can lead to more competitive pricing and lowered inflation. The BOT has a strong impact on the GDP, currency values, inflation and employment. The U.S. Department of Commerce publishes monthly and quarterly results.
Business inventory figures are reported by the US Department of Commerce. They show how much inventory is being bought, and therefore, indicate sales volume. If a company is getting through its inventory stock then this indicates high sales and is a positive sign for the economy. Not buying inventory indicates that a business is not using up its stock and signals a low sales volume.
Released on a monthly basis, the Construction Spending Report is published by the US Department of Commerce. It measures the amount of new residential and commercial construction in the public as well as in the private sector, serving as a good indicator for the GDP report, which incorporates the new construction investment figures into its GDP calculations.
The Chain Store Sales Reports show monthly sales volume from US chain stores. Each month, the figures are presented as a percentage change from the same month in the previous year. These figures account for approximately 10% of all retail sales and indicate trends in consumer spending levels.
Consumer spending makes up more than 65% of GDP and can help predict the general health of the economy and the direction of the stocks and bonds markets. The stock market is strengthened by high levels of consumer spending, yet inflation, stemming from strong spending can negatively impact the bonds market.
The Conference Board, a renowned non-profit business group, publishes the Consumer Confidence Index (CCI). The CCI looks at the spending power, financial stability and confidence in the economy of the average consumer by surveying over 5,000 households each month. A confident consumer will make more high value purchases, as they feel secure in their economic future. The report can actually impact the market, as a confident public, even in periods of slow growth, can make investors more willing to buy equity.
The Consumer Price Index (CPI) is one of the single most influential market indicators available, looking at the current prices of a constant set of products that average consumers use on a daily basis, including milk and toothpaste among others. The CPI signals the direction of US inflation and can strongly impact the movements of fixed-income and equity markets.
Durable Goods Orders refer to orders for higher priced products used in industry, such as raw steel, heavy machinery computer equipment, tanks, and airplanes. This is a significant market indicator, as an enterprise will only invest in such expensive items when they are confident about the health of their company and the economy as a whole. One large order in a single sector can drastically impact month on month results, so some releases will not include specific sector orders, such as those for defense and/or transport. Comparing durable goods orders for the entire year with those of the previous year is the most reliable means of evaluating the results, which are a strong indicator for the GDP growth rate, which is also evaluated based on annual figures.
Existing Home Sales refer to the volume of home re-sales each month (closed sales on existing, as opposed to newly constructed houses). These sales are a good indicator of the country’s economic health as a home is an expensive purchase and a sign of buyers’ faith in their financial stability.
Factory orders for all goods, durable and non-durable, signal the level of growth in production and manufacturing. They are published by the US Department of Commerce, Census Bureau, and are released monthly. Factory orders indicate the country’s production capability, showing whether the number of new orders is rising or falling, whether orders are going unfilled, how many shipments are made, and how much inventory is in stock for future production.
Of all the market indicators, GDP is probably the most significant indicator of a country’s economic health, showing its rate of growth. Monthly statistics are published showing economic output, but GDP is measured annually, showing the total market value of all the goods and services that the country has produced over the last year. It measures the trade balance, (exports minus imports), private and governmental purchases, and any investments.
Three versions of the GDP report are released, an advance report, a preliminary report the following month, and the final report another month later. Any significant discrepancies in those numbers can impact the movement of markets.
The report presents the results in two separate formats. One is the Current Dollar GDP, which shows the market value of goods and services produced over the year, according to today’s rates. The other is the Constant Dollar GDP, or Real GDP, which calculates the quantity of goods and services that make up the year’s economic output. It converts the results into a standard permanent dollar value, which allows for comparisons between years, without having to take factors such as inflation into account.
The IFO Business Climate Index is a monthly market indicator for the German economy published by the IFO Institute for Economic Research, surveying over 7,000 enterprises in manufacturing, construction, wholesale and retail. The report asks businesses throughout the country about their view of the current business climate, (good, satisfactory, poor) and their projections for the business climate for the coming 6 months (more favorable, unchanged, less favorable).
The import and export price indices are published monthly by the US Department of Labor’s, Bureau of Labor Statistics. The Import Price Index measures price changes in manufactured products, as well as price changes in agricultural and mineral goods bought by the US, while the Export Price Index measures price changes in those goods sold abroad. These indices are a good indicator of currency value and market strength, as they track the rise and fall of internationally traded goods, which occur as a result of movements in the value of the dollar and in the global market of various products. Institute for Supply.
The Institute for Supply Management, a non-profit organization for the Supply Management and Purchasing sector, publishes monthly reports projecting economic movements both in manufacturing and non-manufacturing industries.
The Jobless Claims Report measures how many new applicants have filed for unemployment benefits. The report signals the health of the job market and the economy as a whole, as greater unemployment means less purchasing power to fuel the economy.
The money supply is the amount of cash and other liquid assets flowing through the economy. More money in circulation indicates higher levels of employment, inflation and manufacturing.
New Home Sales refer to the sales volume of newly constructed houses each month. These sales are a good indicator of the country’s economic growth and have an impact on the construction sector and other related industries.
Personal income relates to income received from any source, that is received by private individuals, private trust funds, non-profits serving individuals and private uninsured welfare funds. The income is defined as labor income, wages and salary disbursements, proprietors’ income, personal interest, rental income, personal dividends and transfer payments to individuals, not including personal Social Security payments.
The Philadelphia Fed Survey takes a monthly look at enterprises in the manufacturing sector within the 3rd Federal Reserve District (Philadelphia, Delaware Eastern Pennsylvania, and Southern New Jersey). The survey offers an early indication, for business conditions, the direction of pricing and employment levels for the manufacturing industry, in advance of larger scope manufacturing reports like the ISM Index.
The PMI indicates the economic strength of the manufacturing industry, looking at employment statistics, inventory levels, deliveries and production. An index level of 50, signals that there has been no growth in manufacturing. Any rise over the 50 mark reflects growth, and anything below means a manufacturing slow-down. It is part of the ISM publication.
The PPI looks at the current prices of a constant set of goods and services sold by wholesale producers and manufacturers, including raw materials, intermediate goods and finished goods. The Producer Price Index is like the Consumer Price Index, in that it is a strong indicator of the direction of US inflation, except it relates to the sellers of wholesale products, as opposed to the buyers of consumer goods.
Measured both monthly and annually, the RPI looks at the retail price of goods and services including everything from gas and housing prices to the cost of food, travel and household items. It serves as a strong indicator of changes in the inflation rate and is used to evaluate the necessary adjustments required for wages, pensions and tax allowances, which are inflation-indexed.
The unemployment rate refers to the percentage of the workforce that is unemployed and is a primary market indicator for signaling the strength of the economy. The higher levels of unemployment rise, the worse the state of the economy, with greater unemployment often leading to cuts in interest rates and rising inflation.