Economic indicators - E
List of indicators - E:
- Employment cost index
- Employment Report
- Employment Situation
- Existing home sales
- Export prices
Employment Cost Index (ECI)
The ECI measures the labor cost that includes salaries, wages, and any kind of benefits and looks after this cost changes.
This index usage facilitates wages trends and wage inflation monitoring. Federal Reserve's enemy list has great wage inflation. The pressures of inflation possibilities are constantly strongly monitored by Federal Reserve's officials. The lack of labor caused by a booming economic development can cause wage pressures penetration. While economic declines and the labor demand is low, wage pressures fade out.
The investor can find out if the prices of the business are going to be raised through analyzing labor costs. If there is a possibility of inflation, then it is a reliable forecast of dollar strengthening due to interest rates increase.
The Employment Report
Economics considers unemployment as an existence of people who have a desire to work at an average wage rate having no ability to find such positions. The unemployment rate is calculated by dividing the amount of unemployed people by total number of those who are able to work (civilian labor force). The quantity of unemployed workers can be calculated in a number of different ways. Each of them has its own specific and what makes it difficult to compare the statistics of different countries is using various systems.
There are two different reports containing the employment report, which generally corresponds to the data from two different researches. They are the establishment survey that gives the information about average workweek, non-farm payrolls, average earnings per hour and other similar information and the household survey that gives the data of unemployment rate. The period during which any of these surveys is being held contains the 12th of the month. This information also helps to find out the amount of unemployed people searching for a job and the amount of payment and working hours for those who work as well as the number of the latter. The current conditions and future trends of the economy are forecasted perfectly through these figures. It also gives an opportunity to analyze wages trends including the wage inflation being high on the Federal Reserve's enemies list.
Total payrolls dividing into several sectors, such as manufacturing, construction, mining, services, and government gives a better outlook on the economy. As these components continue to indicate the tendencies within the economy sector, they are followed very closely by the market. Moreover, while the manufacturing often heads the business cycles it is watched more precisely. The analysis of working hours, overtime, and average earnings per hour are contained in this data. It is important to take the hours worked (also used as "workweek") into consideration due to following reasons. The first is that the monthly indicators of industrial production and personal income are formed owing to it.
The second is how labor market conditions can be better understood by using this indicator. For instance, the beginning of the business cycle accompanied by the hours worked increase may show that the employers are going to raise the total wages paid or in case it happens closer to the end of the business cycle this is an indication of the employers' having difficulty with finding suitable labor force. The potential inflation can be found out through average earnings indicator. The labor price responds to an excessively loyal economy policy as well as any other service or goods. The superfluous amount of money spent on few goods or employees can be indicated by the labor prices growing dramatically. Investors can see whether the labor market is too intense by monitoring the jobs data. The possibility of wage inflation indicates possible interest rates increase and currency weakening perfectly.
All paid jobs at all non-farm business structures and governmental agencies are listed in this report. This report gives the information about average weekly and hourly earnings, the average amount of the hours worked as well as an unemployment rate. This is an important indicator of the economy activity. It is carefully followed because of its opportune and accurate data. The indicator of non-farm payrolls is connected directly with the total economic growth and in case the employment increases so does the whole economy.
Economical decline and interest rate reduction are usually considered when an unemployment rate rises. However, if an unemployment rate declines economical growth and possible increase of the interest rates are expected. The dangerous situation is thought to occur when it gets too hard to find the labor force of a too low unemployment-rate. The normal situation with the economy employment is considered to exist when the unemployment rate is at the level from 5.5% to 6.0%.
Dramatically growing earnings may indicate a possibility of inflation. In case the number of hours worked rise the employment increase is possible to come.
Existing Home Sales
Pre-owned houses sales are calculated by this report. It is thought to indicate the housing sphere activity reliably.
This shows the economic momentum as well as the situation at housing market. Only people who are sure in their financial stability can afford to buy a house. The economy and the markets accordingly experience a strong multiplier effect from this data and it gives the same effect to the investments. Investors are able to find some special ideas by monitoring this data (for instance, a house resale) and manage the portfolio with a broaden guidance. Home resale situations actually make no output. However, each deal gives an income for the realtor. The buyer gets a number of consumption chances due to it. There are many items that can be bought by homebuyers like refrigerators, washers, dryers, and furniture. In cases where a hundred thousand households make such buying every month, the economics gets a strong "ripple effect."
What it is: The commodity trade's balance values can be transferred into volume (real) conditions by using this specified indices of international price carried out each month.
Why we care: The general pricing for goods that is produced abroad affecting the entire goods inflation in the US is monitored by the price index changing, except the petroleum component.