HomeHelp CenterMacroeconomic Indicators

Macroeconomic Indicators

Macroeconomic indicators are statistics released by governments, private agencies or organizations which look at the deep underlying data of an industry, country or region. These indicators provide insight into the economic performance of the subject studied and can set or revise existing market expectations. They can therefore have a significant impact on the Forex, Stock and Futures markets. Macroeconomic indicators are published periodically and form part of the economic calendar.

USA

Gross Domestic Product
Explanation:Gross Domestic Product (GDP) is the total market value of all final goods and services produced by a country over a specific time period. The figure includes production by foreign companies working in the country's territory, while excluding production by domestic companies abroad.
Description:The GDP report is one of the most important indicators of the strength of the American economy. It shows the market value of all goods and services produced within the country in a certain time period. The main components of GDP include consumption, investment, net exports and government spending and inventories. Individual consumption generally contributes two-thirds of US GDP.
Significance:A rise in GDP gives the market confidence as it shows that the US economy is growing. This makes it more attractive to investors and tends to strengthen the value of the US dollar.
Market Impact:High
Frequency:GDP forecasts are released quarterly (January, April, July, October) on the last working Thursday of the quarter (or on Wednesday, if it happens to be the last working day of the quarter, etc.). Revisions are released a month later, followed by the real GDP numbers a month after that. All GDP reports are released at 8:30 AM ET.
Source:US Census Bureau
Federal Funds Rate (USA)
Explanation:The Federal Funds Rate (FFR) is the interbank interest rate in the Federal Reserve System.
Description:The FFR is decided on by the Federal Open Market Committee (FOMC). Although the yield of financial instruments is determined by market forces, interest rates can provide insight into the direction of the markets. The correlation between the FFR and bond yields is very high as rate hikes tend to lead to an outflow of capital from the stock market into the bond market1.
Significance:When interest rates are high, loans are less attractive, and there is a corresponding increase in savings. With low rates, there is less incentive to save, and more incentive to spend. A rise in the FFR can lead to an increase in capital flowing into the US and provides a boost for the dollar in the medium term. However, if the increase in rates is not accompanied by rapid economic growth, this may lead to economic stagnation and have a negative impact on the dollar in the long run1.
Market Impact:High
Frequency:Eight times per year, about once every seven weeks, usually on Tuesdays at 14:15 ET
Source:The Federal Reserve
Consumer Confidence Index
Explanation:This is a survey which represents the confidence consumers have in the economy, as expressed by their spending and savings activities.
Description:The Consumer Confidence Index survey has been carried out on a monthly basis since 1967 to evaluate the level of consumer optimism in the economy. The index is benchmarked to a 1985 reading of 100 and is updated monthly, based on a survey of 5,000 US households. Consumer Confidence is considered a leading indicator and is used to forecast the direction of the American economy.
Significance:An increase in the index reflects favorable conditions throughout the economy and tends to strengthen the USD as a result.
Market Impact:Low
Frequency:Around the 20th of each month at 10:00 AM ET
Source:The Conference Board (New York)
Philadelphia Fed Index
Explanation:This index reflects a survey taken of manufacturers from the Philadelphia (USA) area regarding their attitudes towards the current economic climate.
Description:The Philadelphia Fed Index is based on the responses of roughly 100 manufacturers from the Philadelphia-area, and reflects their sentiment towards the current economic situation and where they think the economy is heading in the next six months. A reading below 0 indicates a negative sentiment and may point towards a slowdown in the US economy. The Philadelphia index comes out just before the ISM (Institute for Supply Management) index and is often looked at as a useful predictor of ISM results.
Significance:An increase in this index may lead to a strengthening of the US dollar.
Market Impact:Low
Frequency:The third Thursday of every month at 10:00 AM ET
Source:The Federal Reserve Bank of Philadelphia (USA)
Consumer Price Index
Explanation:The Consumer Price Index (CPI) measures the change in the cost of a fixed basket of consumer goods and services.
Description:The CPI is an indicator of inflation through the comparison of the price of a fixed assortment of good and services from one period to another within the same geographic area. The index tracks the price of items such as food, clothing, educational expenses and utilities in 85 US cities. The index does not take into account discounts or rapidly fluctuating prices.
Significance:In normal economic conditions, an increase in the CPI leads to a growth in interest rates, which in turn boosts the US dollar, as the higher rates make investment more attractive.
Market Impact:High
Frequency:From the 15th-21st of each month (on a Tuesday or Thursday), soon after the release of PPI, at 08:30 AM ET
Source:US Bureau of Labor Statistics
Capacity Utilization
Explanation:Capacity Utilization measures the extent to which the productive capacity of the country is being utilized.
Description:The Capacity Utilization report details the relationship between actual industrial output and potential industrial output in the US. If demand in the market increases then so does utilization. The optimal value for this indicator is 81.5. A lower value signals that the economy is slowing down, whereas a value higher than 85 indicates a risk of inflation through bottlenecks and the limited delivery of goods.
Significance:When CU approaches 85, it is treated as a signal of possible inflation and may lead to a drop in the US dollar.
Market Impact:Low
Frequency:Released in the middle of each month, at 09:15 ET (together with the Industrial Production Index)
Source:The Federal Reserve
Industrial Production Index (IPI)
Explanation:The Industrial Production Index (IPI) measures the output of US factories, mines and utilities.
Description:The IPI is a measure of the strength of American industry. Industrial production is charted, providing an index of the health of US industry as a whole, allowing investors to see which industries are growing and which are contracting.
Significance:Industrial production contributes almost 40% of total economic activity so investors keep a close eye on monthly changes in the IPI. An increase in the IPI can lead to a strengthening of the USD and the stock market while weakening the bond market. However, analyzing the Industrial Production Index is fairly straightforward, so sharp changes in the index are usually priced into markets well in advance.
Market Impact:Medium
Frequency:The middle of each month at 09:15 ET
Source:The Federal Reserve
Leading Indicators Index
Explanation:This index factors in 10 leading indicators that tend to change before the economy as a whole changes.
Description:

The Leading Indicators Index (LII) provides an overview of the American economy, and is comprised of 10 components:

  • The average hours worked per week by production workers in manufacturing industries.
  • The average number of new claims filed for unemployment insurance per week.
  • Manufacturers' new orders for consumer goods.
  • The relative speed at which vendors can deliver orders to industrial companies.
  • New orders received by manufacturers in non-defense capital goods.
  • The number of residential building permits issued.
  • The change in the stock market.
  • The inflation-adjusted M2 money supply.
  • The yield curve (the difference between long term and short term interest rates).
  • The index of consumer expectations.

The LII index has a good track record of predicting dips in the US economy. As a general rule, if the index falls for three months in a row, a recession is likely to follow. From 1952 to 1998, the index accurately predicted seven recessions in the US economy, while erroneously predicting three that did not happen. The Leading Indicators Index can signal a change from economic growth to recession around ten months in advance, but is only able to predict a change from recession to growth 1-2 months in advance.

Significance:An increase in this index tends to boost the US dollar.
Market Impact:Low
Frequency:At the beginning of each month at 10:00 AM ET
Source:The Conference Board (New York)
Personal Income
Explanation:Personal Income is a measure of pre-tax household income from all sources.
Description:This indicator is estimated using payrolls and earnings data from employment records. It also includes income from other sources such as rent, interest, dividends and government subsidy payments. Personal Income is an indicator of future growth in consumer demand. It is reported alongside Personal Spending.
Significance:An increase in Personal Income means that households have more money to spend, potentially providing a boost to the domestic economy and thus strengthening the USD.
Market Impact:Low
Frequency:After the 20th of each month at 08:30 AM ET
Source:US Bureau of Economic Analysis
University of Michigan Consumer Confidence Index
Explanation:This is a measure of consumer confidence undertaken by the University of Michigan.
Description:The University of Michigan Consumer Confidence Index is a monthly telephone survey of 500 or so US households which looks at sentiment (40% of the index) and expectations (60%). Participants are asked about the current economic climate, where they think the economy as a whole is heading and what they think about their personal financial situation.
Significance:An increase in the index is a positive sign for economic growth and may provide a boost to the USD, whereas a decrease indicates a possible slowdown.
Market Impact:Medium
Frequency:Twice a month: a preliminary report is released around the 15th, the final one is released two weeks later at 09:45 AM ET
Source:The University of Michigan (USA)
Initial Claims (Jobless Claims)
Explanation:This is a weekly report detailing new unemployment claims in the prior week.
Description:The Initial Jobless Claims Report provides insight into the US job market. An increase in jobless claims is a sign of a weakening economy, whereas a decrease signals economic expansion and an improving job market. The figure is very volatile, leading to many investors choosing to follow the four-week moving average.
Significance:A decrease in jobless claims indicates growth in the economy, which may boost the USD.
Market Impact:Low
Frequency:Every Thursday at 8:30 AM ET
Source:US Department of Labor
Current Account (Balance of Payments)
Explanation:This indicator measures the flow of goods, services, income and transfer payments into and out of the US.
Description:The balance of Payments is a measure of US foreign trade. It is the sum of the trade balance (exports minus imports), net factor income (dividends, interest) and net transfer payments (which includes items such as foreign aid).
Significance:A current accounts surplus will typically strengthen the USD.
Market Impact:High
Frequency:Quarterly, around the middle of the month at 10:00 AM ET
Source:The Federal Reserve
Non-farm Payrolls
Explanation:The Non-farm Payrolls report gives an overview of the non-agricultural employment sector in the US, excluding agriculture.
Description:The report is derived from a survey of approximately 400,000 businesses and 50,000 homes and is updated on a monthly basis. The data is adjusted to account for seasonal employment or changes in the formula. The Non-Farm Payrolls Report, along with the Unemployment Rate, Average Work Week, and Hourly Earnings report, provides insight into US inflation and provides clues as to the direction of the interest rate.
Significance:Increases in this indicator indicate economic growth.
Market Impact:High
Frequency:Monthly, usually on the first Friday of the month at 08:30 AM ET
Source:US Bureau of Labor Statistics
Trade Balance
Explanation:A Trade Balance is the difference between a country's imports and exports.
Description:The Trade Balance gives a picture of currency flows based whether there is a Trade Surplus (exports are greater than imports) or a trade deficit (imports are greater than exports). The US typically runs a trade deficit. This figure has a big impact on GDP forecasts as imports and exports play role in the calculation of GDP.
Significance:A decrease in the US trade deficit strengthens the US dollar, whilst a corresponding increase in the US trade deficit can weaken the dollar.
Market Impact:High
Frequency:The third week of every month (usually on Tuesday or Thursday) at 08:30 AM ET
Source:US Census Bureau
Productivity
Explanation:The measure shows how efficiently a workforce is producing goods and services in terms of cost.
Description:The Productivity report shows changes in production volume relative to labor costs and can be an early indicator of inflation. The higher the level of production relative to labor costs, the higher the productivity.
Significance:An increase in productivity is generally a positive sign for the US economy, strengthening the US dollar. This index is followed closely by the market but is open to interpretation as both layoffs and strikes can result in apparent increases in productivity due to a fall in costs.
Market Impact:Medium
Frequency:Quarterly, twice for the previous quarter before the 10th of every month (initial and final reading), on the 2nd Tuesday of the 2nd month of each quarter, for the previous quarter at 08:30 AM ET
Source:US Bureau of Labor Statistics
Retail Sales
Explanation:Retail Sales is a measure of total receipts for retail stores and reflects the spending patterns of US consumers.
Description:Retail Sales measure both durable goods (40%) and non-durable goods (60%), which combined account for two-thirds of US GDP. An increase in Retail Sales is generally viewed as a sign of rising demand if the increase appears not to be the result of rising gas and food prices.
Significance:The market can respond strongly to retail sales data as it is traditionally difficult to predict. Low sales may signal an economic slowdown and a corresponding drop in the US dollar.
Market Impact:Medium
Frequency:Monthly around the 13th at 08:30 AM ET
Source:US Census Bureau
Factory Orders
Explanation:The report shows the demand for goods produced by US Factories. It measures the dollar value of new orders, shipments, unfilled orders, and inventories reported by domestic manufacturers. It is expressed both as a raw figure and as a percentage change from the previous month.
Description:This indicator signals industrial demand for durable (understood as goods whose intended lifespan is three years or more) and non-durable goods. A rising order book means a likely increase in production, having a positive effect on the US economy. In the same way, a decrease in orders signals an impending decrease in production.
Significance:An increase in factory orders is seen as a positive sign for the economy and tends to strengthen the US dollar.
Market Impact:Low
Frequency:Monthly at 10:00 AM ET
Source:US Census Bureau
Unemployment Rate
Explanation:The Unemployment Rate shows the percentage of unemployed workers in the US workforce.
Description:The Unemployment Rate is regarded as one of leading economic indicators. Only those actively looking for work are included in the figures. The natural rate of unemployment is considered to be about 4-5%. Wages increase faster during periods of low unemployment, leading to inflation.
Significance:When an interest rate hike is expected, a decrease in unemployment may boost the USD.
Market Impact:Medium
Frequency:The first Friday of every month at 08:30 AM ET
Source:US Bureau of Labor Statistics
Beige Book
Explanation:The Beige Book is produced by the Federal Reserve Bank of the USA and is a collection of reports, interviews and anecdotal information provided by Regional Directors of the Bank. It includes the opinions of business contacts, economists and financial experts. The report is formally known as the Summary of Commentary on Current Economic Conditions.
Description:The report provides commentary on the current state of manufacturing, retail sales, consumption, banking, the labor market, real estate, finance, agriculture, energy and natural resources. The Beige Book report breaks down information by region and by economic sector.
Significance:The report is used to evaluate the economic efficiency of different US regions and to predict future Federal Open Market Committee (FOMC) monetary policy decisions. If, for example, there is a high level of speculation over possible rate changes, then close attention is paid to the section on wages and price levels.
Market Impact:Low
Frequency:Eight times per year on Wednesdays at 2:15 PM ET, two weeks before every FOMC meeting
Source:The Federal Reserve
Durable Goods Orders
Explanation:This index tracks the order books for durable goods, or goods whose intended lifespan is three years or more.
Description:The Durable Goods report is considered a leading indicator of US manufacturing activity. An increase in orders means that manufacturers can produce more goods. The market often moves on this report in spite of its high volatility. The majority (approximately 60%) of all durable goods orders are for cars and trucks, with building materials, furniture, and household items accounting for most of the remaining part.
Significance:The Durable Goods report has been able to detect shifts in the US economy up to six months in advance. A decline in orders can signal an economic slowdown (and a subsequent drop in the US dollar), whereas an increase could signal expansion (and a rise in the US dollar).
Market Impact:Medium
Frequency:Monthly, during the final week of the month
Source:US Census Bureau
Chicago PMI Index
Explanation:The Chicago Purchasing Managers' Index is derived from a survey of purchasing managers in the Chicago area regarding their acquisition of goods and services.
Description:The Chicago PMI looks at manufacturing conditions in the Chicago private sector.
Significance:Chicago PMI index readings above 50 indicate industrial growth and tend to boost the US dollar. Investors use this indicator as the Chicago area tends to be reflective of the American economy as a whole.
Market Impact:Medium
Frequency:On the last business day of every month at 10:00 ET
Source:The Purchasing Managers Association of Chicago (USA)

Switzerland

3-Month LIBOR Range
Explanation:This base rate is also called the reference interest rate and is used by the Swiss central bank to guide the level of interest rates in the Swiss money market.
Description:The 3-month LIBOR is an important aspect of Swiss monetary policy. The Swiss National Bank sets a target range for this rate extending over 1 percentage point and aims to keep the LIBOR within this range. LIBOR rates are fixed daily at 11:00 London time. They are calculated as the average of the last ten quotes offered by sellers.
Significance:The rate can help to determine the level of activity in the economy through making savings and loans more and less attractive. As the interest rate rises, savings become more attractive and spending can fall, while on the reverse side, as the rate falls, holding money becomes less attractive and spending rises.
Market Impact:High
Frequency:Quarterly (March, June, September, December), usually on the third Thursday of the month
Source:The Swiss National Bank

Germany

IFO Business Climate Index
Explanation:Released by the IFO Institute for Economic Research in Munich, this index serves as a leading indicator for economic activity in Germany.
Description:In the region of 7,000 participants from companies involved in manufacturing, wholesaling and retailing assess their current business situation and provide their outlook for the next six months. The index is based on a benchmark of 100.
Significance:An increase may indicate a strengthening of the EUR.
Market Impact:Medium
Frequency:Monthly around the 25th to 27th at 10:30 AM ET
Source:IFO Institute for Economic Research (Munich)
ZEW Indicator of Economic Sentiment
Explanation:The ZEW Indicator of Economic Sentiment is based on a monthly survey conducted by the Center for European Economic Research (ZEW) and measures economic sentiment.
Description:The indicator is a survey of up to 350 financial experts in Germany. The indicator reflects the difference between the share of analysts that are optimistic and the share of analysts that are pessimistic for the expected economic development in Germany in the next six months. The reading is based on the ratio of optimistic to pessimistic responses. If the majority of participants are optimistic, the reading will be above zero. If the response is more pessimistic, the reading will be below zero.
Significance:The ZEW Indicator is used to evaluate the prospects of the German economy. A positive reading indicates a strengthening in the EUR.
Market Impact:Medium
Frequency:The third or fourth Tuesday of the month at 11:00 ET
Source:Center for European Economic Research (Germany)

Japan

Tankan Survey
Explanation:This indicator measures Japanese business sentiment, and is a poll conducted by the Bank of Japan (BOJ).
Description:The Tankan Survey polls between eight to ten thousand Japanese businessmen on current trends and conditions in Japanese business as a whole, as well as in their respective industries. Participants share their expectations for the upcoming quarter and year. A number of major companies are polled including some of Japans largest firms, as well as a number of important medium sized and small businesses.
Significance:It is one of the key measures of confidence in the economy and can have an impact on the value of the JPY and the stock market.
Market Impact:High
Frequency:Quarterly: at the beginning of April, July and October, in mid-December
Source:The Bank of Japan
Overnight Call Rate Target (Japan)
Explanation:The Overnight Call Rate Target is an important aspect of Japan's monetary policy, determining the interest rate banks pay in the Japanese overnight market.
Description:This is the average interest rate the Bank of Japan is looking to see on short-term deposits. The Bank of Japan's board of governors decides what The Overnight Call Rate Target should be, then uses open market operations to meet this target.
Significance:The Overnight Call Rate governs the interest rate on commercial loans. A high interest rate will typically lead to a decrease in lending and cause an increase in consumer savings, meaning that less money is spent in the economy. On the other side, a decrease in the rate will make commercial loans more attractive and so can boost economic activity.
Market Impact:High
Frequency:Released once a month (twice in certain instances)
Source:The Bank of Japan

New Zealand

Official Cash Rate (New Zealand)
Explanation:This is the interest rate paid by New Zealand banks in the overnight money market.
Description:The Reserve Bank of New Zealand uses the official cash rate to manage inflation. The Reserve Bank accepts deposits at a rate 0.25% lower, and lends at a rate 0.25% higher than the Cash Rate. Changes to the Cash Rate are discussed at meetings of the Reserve Bank's Board of Governors.
Significance:The Overnight Call Rate governs the interest rate on commercial loans. A high interest rate will typically lead to a decrease in lending and cause an increase in consumer savings, meaning that less money is spent in the economy. On the other side, a decrease in the rate will make commercial loans more attractive and so can boost economic activity. If the increase in rates is not accompanied by rapid economic growth, this may lead to economic stagnation and have a negative impact on the New Zealand dollar in the long run.
Market Impact:High
Frequency:Released eight times per year.
Source:Reserve Bank of New Zealand

Australia

Official Cash Rate (Australia)
Explanation:This is the interest rate paid by Australian banks in the overnight money market.
Description:The OCR essentially determines the borrowing cost of money in Australia. The Reserve Bank of Australia uses open market operations (the buying and selling of government securities) to hit their OCR target.
Significance:The rate is used to manage the level of economic activity of the country. A lower rate is considered to stimulate existing funds within the economy, while a higher rate is considered to encourage an inflow of capital to the country and so provide a boost to the AUD. If the increase in rates is not accompanied by rapid economic growth, this may lead to economic stagnation and have a negative impact on the currency in the long run.
Market Impact:High
Frequency:Released monthly (except in January) on one of the first days of the month at 04:30 GMT
Source:Reserve Bank of Australia

GREAT BRITAN

Repo Rate (Great Britain)
Explanation:The Repo Rate, also known as the Official Bank Rate or the Bank of England Base Rate, is the rate at which banks borrow from the Bank of England typically on an overnight basis.
Description:The Base Rate is the most important interest rate in Great Britain. The Bank of England has set 2% as the upper limit for inflation in Great Britain. If prices rise more than 2% per year, the Bank of England is likely to intervene by increasing interest rates.
Significance:The rate is used to manage the level of economic activity of the country. A lower rate is considered to stimulate existing funds within the economy, while a higher rate is considered to encourage an inflow of capital to the country and so provide a boost to the GBP. If the increase in rates is not accompanied by rapid economic growth, this may lead to economic stagnation and have a negative impact on the pound in the long run.
Market Impact:High
Frequency:Monthly, usually on the first Thursday of the month at 11:00 GMT (BOE minutes are released 2 weeks after the rates are announced, usually on a Wednesday)
Source:The Bank of England

Euro Zone

Refinancing Rate (Euro Zone)
Explanation:The Refinancing Rate is the rate at which banks pay to borrow money from the European Central Bank (ECB).
Description:The Refinancing Rate is the most important interest rate in Europe. The ECB has set a goal to keep inflation under 2%. Accordingly, if consumer prices are growing more than 2% per year, the ECB will likely intervene and raise interest rates.
Significance:By raising or lowering interest rates, the ECB can influence the interest levels that the banks apply to interbank transactions, business loans, consumer loans, mortgages and savings accounts, amongst other things. Therefore the Refinancing Rate can have a large impact on the economic activity within the EU.
Market Impact:High
Frequency:Monthly, usually on the first Thursday of the month at 11:45 GMT. The ECB's president's press briefing begins at 12:30 GMT.
Source:The European Central Bank

Canada

Overnight Rate Target (Canada)
Explanation:The Overnight Rate Target is an aspect of Canada's monetary policy where the BOC sets the interest rate on short-term deposits in the overnight money market. It is the most important rate in Canada.
Description:The Overnight Rate Target is set in the middle of a 0.5-percentage point band. The BOC uses open market operations to keep the interest rate within this band.
Significance:Changes in the target for the overnight rate influence other interest rates, such as those for consumer loans and mortgages. They can also affect the exchange rate of the Canadian dollar.
Market Impact:High
Frequency:Eight times per year (at dates decided by the Bank of Canada)
Source:The Bank of Canada

Please Note:

  • 1This correlation hasn't held up in recent times.
Try a Demo

Contact Us