As the worlds largest economy, movements in US markets often sets the tone for the rest of the world. The US economic situation is viewed as the most important in the world since it is often the main driver of the global economy. As such, any news that provides information on what's happening in the US economic situation, has a large effect, not just on the US markets but across all markets currency, commodity, and of course US and global equity indices. There is a wide variety of information that is periodically released to the market. The most important of these are explained below. This is just a snapshot however and investors should also note that the markets do not necessarily react the way theory expects.
- Michigan consumer sentiment
- Conference Board Consumer Confidence Index
- PPI (Producer Prices Index)
- CPI (Consumer Price Index)
- Durable goods
- ISM Manufacturing Index
- Trade balance
- GDP
- Philadelphia Fed Index (Philly Fed)
- PCE Deflator
- Employment report (Non-farm payrolls & Employment rate)
- Advanced retail sales
- FOMC minutes
- Beige book
- Leading indicators
- Chicago PMI
- Oil inventories The Petroleum status report
Name: University of Michigan Consumer Sentiment Index www.umich.edu
Briefly: The Reuters/University of Michigan Surveys of Consumers are monthly surveys of consumer attitudes and expectations about the U.S. economy. They provide a gauge of consumer anticipation of changes in the economic environment. One part of the surveys -- the Index of Consumer Expectations -- is an official component of the U.S. Index of Leading Economic Indicators.
Source: Reuters/University of Michigan
Frequency: Monthly
Released: Preliminary estimate released on the second Friday of the reporting month, usually 3pm Irish time. A revision to the estimate is released the last Friday of the month.
Market impact: High. Often moves markets depending on what mood the market is in. Considered the best indicator of the confidence of the US consumer.
Notes: Be careful not to confuse this with the Consumer Confidence Index (below)
Name: Conference Board Consumer Confidence Index www.umich.edu
Briefly: Consumer confidence index (1985 = 100) constructed from a random survey of 5,000 households in which consumers rate business conditions, labor market conditions and prospects for job and income growth.
Source: The Conference Board
Frequency: Monthly
Released: Last Tuesday of the month at 10 a.m. Eastern. Data for current month.
Market impact: Little. Sometimes moves markets. Used in conjunction with other confidence measures to gauge consumer moods.
Name: ISM Index: Manufacturing www.ism.ws
Briefly: A national manufacturing index based on a survey of purchasing executives at roughly 300 industrial companies. Signals expansion when the PMI is above 50 and contraction when below.
Source: Institute for Supply Management
Frequency: Monthly
Released: First business day of the month at 3pm Irish time. Data for prior month.
Market impact: High. Often moves markets. Considered the single best snapshot of the condition of the factory sector. Is widely watched since its timing is regarded as one of the best indicators of future economic trends.
Notes: The ISM Index calculates nine different sub-indices, elements of which are used to help predict Industrial Production, the Producer Price Index, Factory Orders and Leading Indicators.
Name: US Trade Balance www.bea.gov
Briefly: The difference between exports of goods and services out of the US and imports into the US. It is one of the biggest components of the Balance of Payments. A positive number or surplus indicates that exports are greater than imports. The opposite implies a deficit.
Source: Bureau of Economic Analysis, Department of Commerce (U.S.)
Frequency: Monthly
Released: Usually on Friday, 1:30pm Irish time.
Market impact: High. Usually impacts currency markets as changes in the figure provide information on the flows of US dollars in and out of the country. In recent years the growth of the deficit has put huge pressure on the US currency.
Name: US GDP www.bea.gov
Briefly: Measures the overall growth of the economy, reported in % terms.
Source: Bureau of Economic Analysis, Department of Commerce (U.S.)
Frequency: Monthly
Released: Usually on Friday, 1:30pm Irish time.
Market impact: Moderate. Much of the data has already been released by the time GDP actually comes out and so estimates are usually quite accurate. However, unexpected changes do occur regularly and can have an impact on both currency and equity markets. Higher than expected figures can signal a stronger economy and thus may indicate a need for higher interest rates, thus inducing strength in the dollar and may send equity markets downward in the short term. However growth is usually a good sign for an economy and will, in the longer term, have a positive effect on equity markets.
Notes: GDP actually has three releases, as an Advanced, Preliminary, and Final figure. The Advanced figure is released four weeks following the quarter's end. One month later, the Preliminary GDP is released, followed by the Final GDP measure at the end of the quarter following the reporting quarter. As the most timely measure, the Advanced GDP tends to move markets the most.
Name: Philadelphia Fed Survey www.phil.frb.org
Briefly: Survey of manufacturers in the district. A high number indicates growth/expansion in the region. The report is well established and is widely watched for indications of whats to come in the ISM Manufacturing report.
Source: Federal Reserve Bank of Philadelphia
Frequency: Monthly
Released: Usually third Thursday of the month, 5pm Irish time.
Market impact: Moderate/high.
Name: US Durable Goods Orders www.census.gov
Briefly: Durable goods are those which are relatively long lasting (more than 3 years), including cars, electrical appliances, aeroplanes. This is an important figure since it measures the consumers outlook on the state of the economy and the state of their personal finances when they are willing to make large expenditures on capital goods. If economic conditions are poor, consumers will hold off spending on durables, preferring to spend money only on more necessity products. The number is split into the headline figure and Durable goods ex-autos and transportation. This latter figure is regarded as more stable since it strips out large cap spending items such as vehicles and aeroplanes which can be volatile anyway.
Source: US Census Bureau
Frequency: Monthly
Released: Usually on Thursday, 1:30pm Irish time.
Market impact: High. Can provide a good indication of where things are going economically since it measures sentiment directly from the consumers pocket.
Name: PCE Deflator (Personal Consumption Expenditure Deflator) www.bea.gov
Briefly: The PCE Deflator measures inflation based on changes in personal consumption. This is different from the CPI (Consumer Price Index) which measures inflation based on changes in the prices of specific basket of goods. The PCE finds the average increase in prices for all domestically consumed goods. The Federal Reserve has repeatedly stated that the PCE is its preferred method for measuring inflation and studies have shown that it is a more accurate measure than CPI.
Source: Bureau of Economic Analysis
Frequency: Monthly
Released: 1:30pm Irish time.
Market impact: High. However, despite the Feds favoritism toward the measure, CPI usually has the greater impact on the market. Rises in inflation above the normal target zone of 2% might indicate that the Fed will have to raise interest rates. This can add strength to the US Dollar and weigh heavily on equity markets.
Notes:
Name: US CPI (Consumer Price Index) www.bls.gov
Briefly: The CPI is the most commonly used method of measuring price inflation that is the change in the cost of living. Inflation means that the purchasing power of the dollar is falling. In a stable economy, this is offset by individuals receiving interest payments on their savings. Thus the relationship between inflation and interest rates is an important one. CPI tracks the changes in the prices of a basket of goods that represents the typical US household expenses such as food, energy, housing, clothing, transportation, medical care, entertainment and education. The CPI ex-food and energy is also released at the same time and this often provides a cleaner indication of inflation since it removes some categories which may be effected by external shocks such as high oil prices.
Source: Bureau of Labour Statistics, US Dept of Labour
Frequency: Monthly
Released: 1:30pm Irish time.
Market impact: High. However, despite the Feds favoritism toward the PCE as a measure of inflation, CPI usually has the greater impact on the market. Rises in inflation above the normal target zone of 2% might indicate that the Fed will have to raise interest rates. This can add strength to the US Dollar and weigh heavily on equity markets.
Name: US PPI (Producer Price Index) www.bls.gov
Briefly: The PPI is supposed to provide an early indication of what to expect from the CPI. It measures changes in the prices that producers are charging for goods and services and thus is one stage earlier in the production cycle. Higher raw material prices and higher machinery costs for example might mean that PPI will increase as the producers goods will have to pass some of the cost increases on to manufacturers and they in turn pass it on to consumers, thus increasing prices and pushing inflation higher.
Source: Bureau of Labour Statistics, US Dept of Labour
Frequency: Monthly
Released: Two weeks after the reporting month, 1:30pm Irish time.
Market impact: Moderate. Can provide an early indication of inflationary pressures mounting.
Name: Non-farm Payrolls & Employment rate www.bea.gov
Briefly: The employment situation report is one of the most watched and anticipated US economic releases. The report provides an overview of job creation and losses, wages and working hours. The data is based on household and employment surveys conducted monthly.The headline figure is the Change in Non-farm payrolls the monthly change in employment, excluding the farming sector. The figure is given in the number of new jobs created or lost, e.g. +100K jobs. It is the most widely commentated part of the report and is watched for any significant moves which may indicate a buoyant or struggling economy. Changes in the figure can move the markets severely as traders react to the figures. Also included in the report is the Employment rate which is the percentage of people employed in the US. This figure provides a little more perspective since it is based in % terms and while it doesnt move the market as much as the NFP, it is the most accurate snapshot of the employment situation in the US.
Source: Bureau of Labour Statistics, US Dept of Labour
Frequency: Monthly
Released: First Friday of every month, 1:30pm Irish time.
Market impact: High. Moves currency and equity markets. Often the reliance on this figure is overstated and thus the reaction can often be the same. Expect volatility when this number is released.
Name: Advanced Retail Sales www.census.gov
Briefly: An often volatile figure, this measures the sales of goods to consumers at retail outlets. It is an important figure however since it provides a realtime update of how much consumers are spending on small ticket items and often discretionary sales. The consumer is the key to the US economy and keeping tabs on the health of the consumer is important to investors. There is also an ex-Auto figure released which displays lower volatility.
Source: Bureau of Labour Statistics, US Dept of Labour
Frequency: Monthly
Released: Midmonth, 1:30pm Irish time.
Market impact: Moderate/high. Often effects equity markets, especially specific sectors. Provides information on the health and outlook of the general economy and thus is closely watched by the US Federal Reserve, potentially effecting interest rate decisions.
Name: FOMC Minutes www.federalreserve.gov
Briefly: A practice which only began a cuple of years ago, publishing the minutes of the interest rate policy meetings has added an element of transparency to Fed decision making. The minutes are released approximately 3 weeks after the meeting takes place. The data can provide clues as to the thinking of the Fed committee and indicate the direction of future interest rate changes.
Source: Board of Governors of the Federal Reserve
Released: 3 weeks after meeting, 7:00pm Irish time.
Market impact: Moderate/high. Depending on how much uncertainty remains after the Feds statement, the minutes can provide a large impact on the market. The Feds assessment of the current economic conditions is vitally important to determining where future interest rate decisions might go.
Name: Beige Book www.federalreserve.gov
Briefly: The Beige book is one of a number of coloured books which are released from the Federal Reserve. It is the most observed since it provides a report on the economic conditions in each of the 12 Federal Reserve districts in the US. It is used by the Fed as input in to Fed policy meetings and as such is an important indicator of whats happening in the economy.
Source: Board of Governors of the Federal Reserve
Frequency: 8 times a year
Released: 2 weeks before FOMC meeting, 7:00pm Irish time.
Market impact: Low.
Name: Leading Indicators www.globalindicators.org
Briefly: A index with a number of different input variables, designed to provide a forecast of trends in the overall economy. There are ten input indicators in all including money supply, consumer expectations and manufacturing orders.
Source: Conference Board
Frequency: Monthly
Released: 3:00pm Irish time.
Market impact: Low.
Name: Leading Indicators www.globalindicators.org
Briefly: A index with a number of different input variables, designed to provide a forecast of trends in the overall economy. There are ten input indicators in all including money supply, consumer expectations and manufacturing orders.
Source: Conference Board
Frequency: Monthly
Released: 3:00pm Irish time.
Market impact: Low.
Name: Chicago Purchasing Managers Index (PMI) www.kingbiz.com/about_barometer.asp
Briefly: Measures the business conditions of the Chicago area which has a high degree of manufacturing facilities in Chicago area and surrounding states. The index is based on a survey of purchasing managers in the area and a report greater than 50 signals expansion.
Source: Chicago arm of the National Association of Purchasing Managers
Frequency: Monthly
Released: Last business day of the month at 3p.m. Irish time.
Market impact: Moderate. Often moves markets since it is used as a good predictor for the ISM which is usually released a few days later.
Name: Existing Home Sales
Briefly: Measures the sales of houses that have been previously owned.
Source: National Association of Realtors
Frequency: Monthly
Released: Mid month
Market impact: Low to Moderate. Depending on the markets concerns over the housing market situation.
Name: Oil inventories/EIA petroleum status report
Briefly: Measures the amount of oil and gas supplies the US has in storage for future use. The figures which are based on a report which surveys companies operating in the sector. Levels are highly volatile and seasonal.
Source: US Energy Information Administration
Frequency: Weekly
Released: Wednesdays 3:30p.m. Irish time.
Market impact: High impact on the commodities markets, in particular crude oil. Significant changes can also impact equity markets if the price of crude rallies or falls sharply on the news.