Economic data analysis

The most talked-about economic data can be divided into three main categories

1. Economic growth figures

2. Trade balance figures

3. Inflation figures

1. Economic growth data

Gross Domestic Product (GROSS DOMESTIC PRODUCTS)

The total value of goods and services produced by domestic labor and resources. Real GDP is a measure of changes in economic output after adjusting for inflation, and the focus is on the percentage change in this value from quarter to quarter and year to year. The figure itself directly shows the performance of the economy over a specified period, and also reflects the publication of the economy at different stages of the cycle: flash report, preliminary and final revision.

Employment data (EMPLOYMENT REPORT)

When the economy is booming, employment will increase one after another. Conversely, when the economy is weak or in a recession, employment will decrease or even more people will lose their jobs. The unemployment rate is usually calculated as a percentage of the working population, but the calculation method of the total working population varies from country to country. The monthly changes in employment and unemployment can be used as a reference for economic development: in addition, the unemployment rate can also provide a guide to the trend of inflation. When the unemployment rate continues to decline due to the shortage of the working population, there will be upward pressure on wages, and when the cost of production increases, prices will also rise. When analyzing this data, it should be noted that the figures may be affected by unusual weather or some industrial disputes.

Industrial production (INDUSTRIAL PRODUCTION)

This data shows the industrial activity in the country, and the industries included in different countries are different. The industrial production calculation in the United States includes two main categories: market durable and non-durable consumer goods, commercial and non-commercial equipment, construction and commercial supplies, consumer goods and equipment parts, etc.) and industrial (wood and wood products, furniture, metal raw materials, electrical machinery, transportation tools, food, fiber manufacturing, printing, mining, electricity and gas, etc. The overall data reflects the state of the economic cycle. Industries that produce basic goods and consume durable goods are usually hardest hit during economic downturns.

Retail Sales (RETAIL SALES)

The performance of the retail industry directly reflects domestic demand, and the data includes consumer and business transactions. Although retail sales do not fully represent consumer spending, the data is still an important indicator of consumer confidence and demand. Although figures are usually adjusted for seasonal factors, it is still necessary to carefully analyze whether the figures are affected by other special factors: such as unusual weather changes, companies using big price cuts as a sales pitch, or consumers expecting higher sales taxes to lead to early purchases. These factors may temporarily push the figures higher.

Leading economic indicators

This data is based on a wide range of data, including the following eleven economic indices:

1. Average weekly hours worked by manufacturing workers

2. Average weekly initial applications for state unemployment assistance

3. Manufacturers' orders for consumer goods and raw materials are in 1987 dollars

4. Performance of vendors

5. Contracts and orders for the construction of plant and equipment are in 1987 US dollars

6. Private building permits

7. Changes in manufacturers' inventories in 1987 dollars

8. Changes in prices of sensitive commodities

The prices of 500 major stocks

10. M2 money supply (in 1987 dollars)

11. Consumer Expectations Index

Each item has a different weight in the index. The index reflects the economic trend over the next six to twelve months. In addition to the leading indicators, the synchronous indicator COINCIDENT INDCATORS shows the current economic trend, while the lagging indicator (LAGGING INDICATORS) shows the economic trend over the past six months or so.

2. Trade Balance (TRADE BALANCE)

The trade balance is the difference between a country's exports and imports. Trade balance data can show the basic trade situation of a country. A trade surplus is when the total amount of exports exceeds the total amount of imports, while a trade deficit is when the total amount of imports exceeds the total amount of exports. Strong exports also increase the demand for currency, because the importing country needs to buy the currency of the exporting country to pay for the purchase of goods. On the other hand, the value of the currency also affects the attractiveness of the exported goods. When the value of the currency falls and the price of the goods remains unchanged, the exported goods become relatively cheap to other countries. On the contrary, when the value of the currency rises, the goods become expensive. Since the exchange rate has a certain impact on exports, in addition to paying attention to the trade situation, it is also necessary to pay attention to whether the government will use the impact of the exchange rate on exports as its trade policy.

3. Inflation figures

Consumer Price Index (CONSUMER PRICE INDEX)

The Consumer Price Index is an indicator of the prices of a series of goods and services. It measures the changes in consumer prices and is an important data for the market to measure inflation performance. If economic growth is high and consumer market demand rises, consumer prices will rise sharply, causing inflationary pressure. Therefore, the government may raise interest rates to control inflation and cool the economy, so the Consumer Price Index is an indicator of whether the economy is overheating. The consumer price index composed of each country is different, but the main components are similar.

The following are the components of the US Consumer Price Index. The US Consumer Price Index is based on the price level in 1982-84 as a base of 100. The elements that make up the indicator include:

1. Food and beverages 2. Housing 3. Clothing and daily necessities 4. Transportation 5. Medical services 6. Entertainment 7. Other services 8. Energy

Producer Price Index

The Producer Price Index measures the production prices of domestic producers, miners, agriculture, and utilities at different stages of production. The Producer Price Index does not include changes in labor costs. Producer price increases will not represent the full cost of production, but the price sample drawn by the index represents cost-driven inflation in different producers. Therefore, a sharp increase in the Producer Price Index will lead to an increase in overall prices. The US Producer Price Index is based on the producer price level in 1992. The index consists of prices in three stages of production:

1. Finished products: for all commercial organizations, governments, and foreign buyers

2. Intermediate goods and materials

3. Raw materials

Price deflator (PRICE DEFLATOR)

This figure is a measure of the change in prices from GDP to reflect inflation. Because of the broad range of components in the CDP, the deflator can reflect more comprehensive price changes.

National Purchasing Managers Index (NAPM)

The National Purchasing Managers Index is compiled by the Business Survey Committee of the National Purchasing Managers Association, which issues monthly questionnaires to purchasing managers across the country to assess whether the manufacturing industry rose or fell during the month. In addition to the overall PMI, the PMI is divided into nine sub-indices, including: production and new orders, hoarding orders, supplier shipments, inventories, employment, prices, new export orders, and imports. The National Purchasing Managers Index can be regarded as a comprehensive economic indicator, summarizing the overall manufacturing situation, employment and price performance. However, the index is not calculated based on real price or employment changes data. It is only a survey of purchasing managers' opinions. Therefore, the National Purchasing Managers Index can only be regarded as a trend survey, not a real economic change.

Equipment utilization (CAPACITY UTILISATION)

The equipment utilization rate is a measure of the use of industrial equipment by the Federal Reserve. This figure consists of three series of numbers, including the manufacturing series (the ratio of industrial production to equipment space in 16 major manufacturing industries), the material series, and the utilities and minerals series. The importance of the equipment utilization rate is to measure whether the industrial volume is entering the bottle neck. If industrial production continues to rise, but the space for equipment use is limited, and the output continues to increase, it will cause costs to rise and prices to rise.