Economic indicators - C
List of indicators - C:
- Capacity utilisation
- Capital Flows (TIC)
- CBI Report
- Challenger, Gray and Christmas Layoff Announcements
- Chicago PMI index
- Chicago Purchasing Managers' Survey
- CIPS Report
- Composite Index of Leading Economic Indicators
- Consumer confidence
- Consumer Installment Credit
- Consumer price index (CPI)
- Consumer Sentiment
- Consumer Spending
- Corporate Profits
- Current account (Balance of payments)
Meaning: This is the monthly percentage of estimated efficient possibilities in producing and obtaining goods. For example, if a manufacturer is able to produce 10,000 units per week, but it only produces 8,000 units per week, it works at 80% performance. A rugby stadium, which holds 80,000 people, is at full performance only when all of the places are taken.
Why it is vital: Utilization level usually comes nearer or exceeds eighty-five percent. Such rates increase inflation risks by making production bottlenecks and limiting the delivery of goods.
Capacity utilization shows the amount of usage of different products. It gives you information of how much more can the manufacturing sector do. The informed number is a whole percentage (72%, for example). A rule of thumb is that the more close number is to 80%, the higher the pressure is for price increments at the producing rate. That is not to say price rises are automatic or across the board in all branches. However, once the number hits 80%, economists begin to work about price hikes.
The second danger that may happen when nearing the 80% rate is the slackening in deliver of products as producers struggle to keep up with require. Producers may not want to ramp up goods until they are sure growth will be sustained. The same logic is used to service sector industries, though it is harder to find a precise figure because it takes a different period of time to provide each customer. Sometimes demand may exceed capacity, so the producers have to queues forming. At other times, personnel may not have anything to do. A service business wishing to control costs effectively will gauge demand at different times of the day and then gauge the staffing rates to match.
Many businesses, including service sector are better able to cope with changing demands by employing temporary or part-time workers. Nowadays, there are many temporary and part-time workers in the UK as they can enlarge capacity easily and quickly. If demand then goes down temporary staff can be laid off without reserving payments and part-time workers can have their hours moderated, thus moderating capacity easily and fast. This pliability is good for business as it can help to diminish any expensive reserve capacity. These circumstances, however, may not be as appealing to the workers who have far fewer rights than their full-time colleagues.
How To Enlarge Capacity Utilization
One of the methods is to lower the capacity by either slackening effects of production employed or moving to smaller locations. However, the negative side of moving to a smaller building is that if demand increases in the future, then it will be impossible to enlarge delivery in response to it. This process is called rationalizing. Which production engineering a company chooses, will depend upon the invoke of the low capacity utilization. Is it due to known temporary shortage, such as a seasonal reduction, or due to a financial droop, which may last for 18-24 months? It can be a mistake to moderate capacity in the long run. However, it may be indispensable in order to guarantee short-term survival. It is therefore important to select whether the short fall is short or long term.
Operating At Near Full Performance
Domestically, employees will feel a sense of pride working for such a successful organization.
Internationally, if customers know that a company is working at full capacity it will accept that it is offering the best goods.
High capacity utilisation in industry
The highest capacity utilization measured for the last 10 years in the industry sector is eighty-nine percent. While deficiency of capacity has negative influence to industrial firms, the labor lack is the main encumbrance in the construction sector. The wholesale and retail trade continues reporting strong sales figures. One in three private firms conceives to increase staffing. Bung growth in particular was favorable and much higher than companies had expected. The trust pointer has inverted a few points, while remaining at a high level.
Besides, favorable growth has conducted to a further enlarge in capacity utilization, a rise in employment and stronger cost-efficiency. Companies expect a continued enlarge in order and output growth during the fourth quarter. Meanwhile, refilling difficulties have risen, with two out of three companies stating a labor deficiency as the main hindrance to the company's operations. Companies' weightings are more subordinated this time than in previous quarters. The building industry has adapted downward its weightings for the nearest 12 months.
Nevertheless, employment is expected to increase further in the nearest few months. Nine out of ten companies are fulfilled with sales and cost-efficiency is good. The number of employees has increased and employment growth has been congenial in the wholesale trade in particular. The food trade continues to report decrease price cuts, while the wholesale trade in input products for the building sector reports price increases. The wholesale and retail trade expects continued steady sales growth during the fourth quarter.
Employment is expected to increase further with primarily the wholesale and long-term products trades planning refilling, as beforehand. Employment has increased and different sub-sectors are starting to experience refilling difficulties. Nearly half of architectural and building consulting companies state that a labor deficit is the deficit barrier to their operations. Service companies expect continued favorable demand growth during the fourth quarter. Employment is also anticipated to increase considerably with nearly one in three companies planning to rise staffing.
Capital Flows (TIC)
Every month the US Treasury introduces a report on the net financial flows into the US. It contains inflows into bonds and stocks. It also divides between private inflows and state inflows, working with central banks. All data about financial flows have great importance when the US current account deficit goes wide.
A reduction in inflows brings waning in the US to overseas confidence. If the economic inflows are lower than US current account deficit in the month, then there will be a great concern. It can increase the dollar's dependency on short-term economic inflows.
A weak rate of inflow makes weak the dollar.
Source: US Department of Treasury.
Presence: It takes place in the middle of each month, after 11 business days, at 9:00 a.m. (EST).
Frequency: Each month.
Explanation: The mark of trust within the UK industrial sector is received by the CBI and added in its reports every month or every quarter of a month.
Challenger, Gray and Christmas Layoff Announcements
Meaning: It is the common number of layoff announcements by U.S. companies. Why it is vital: This gives an interesting addition to the unemployment claims record in estimating labor market's health. It shows seasonal structures, but with no seasonal adjustments and, therefore, better compared on a yearly basis.
Chicago Purchasing Managers' Index (PMI)
Explanation: It is information received from surveys of about 200 purchasing managers regarding the producing industry in the Chicago area whose allocation of manufacturing companies mirrors the state spreading.
Significance: According to the Philadelphia Fed Index, it helps to predict the results of the much more closely watched ISM index, which take place every business day. The ISM index is the major pointer of overall financial activity. Readings above 50 show an expanding factory sector, and below 50 - tell about reduction.
Meaning: Browse of purchasing managers in Illinois, Indiana, and Michigan. Why it is vital: This browse shows the same information as the Institute for Supply Management survey about half of the time, while being followed as a second part of corporate purchasing schedule.
It is equal to the ISM reports in the United States. Figures are collected for the manufacturing and services sector and exhausted by the Chartered Institute of Purchasing and Supply.
Composite Index of Leading Economic Indicators
Meaning: This is a structure of ten monetary and non-monetary indicators. Why it is vital: These pointers define business cycle peaks and troughs.
Consumer Confidence Index
Explanation: A browse of 5,000 users asking them what they think about the current financial welfare and their spending patterns. They will also be asked about buying expensive consumer products. The report is divided into what people think now and their expectations to the future life.
Significance: A middle rate is in the region of 100. Figures below 75 are gentle and rates above 125 are steady. A bleak drop in trust can indicate that the financial welfare is weakening, but the correlation between expenditure and confidence figures is not steady.
This browse can help to forecast simultaneous moves in consumption patterns. Moreover, since users expend accounts for two-thirds of the economy, it gives us comprehension about the direction of the economy. However, only index variation of at least five points has great importance.
Steady trust figures are well for the US currency.
Meaning: Outcomes of a statistics of 5,000 households on questions concerning to their recognition of the economy as well as personal recognitions such as scheme to purchase homes or durable products
Why it is vital: Gathered since 1969, the Consumer Confidence Index has a steady bad correlation to unemployment, though its attitude to consumer expenditure is free.
Consumer Installment Credit
Meaning: This is the change in the dollar amount of user's installment credit and non-payment during the month. It includes bond papers to individuals by central banks and economic companies.
Why it is vital: A pointing of user expenditures that has become less useful since non-hypothecary interest lost its tax-deductible rule in 1986.
Consumer Price Index
The Consumer Price Index (CPI) is the average norm of prices of a tight basket of products and services bought by users. Reports every month, which show the changes in CPI, are usually followed as an inflation pointer.
The CPI is a primary inflation pointer because user expenditure accounts for nearly two-thirds of financial activity. Sometimes the CPI is followed, but without considering the price of food and energy because these posts are much more changeable than the rest of the CPI. Additionally, it can shelter the more relevant underlying trend.
Heightening user price inflation is usually linked with the waiting of higher short-term interest levels and may be favorable for a currency in the short period. However, a longer period inflation problem will finally undermine confidence in the currency and there will be delicacy.
Importance: The CPI is important to monitor for its monthly stability except for food and energy prices. This activity helps to understand inflation trends better. It is commonly known as the "core CPI." The higher inflation rate usually strengthens the dollar as far as the interest rates are supposed to grow. In case the inflation grows rapidly along with a number of high values, the situation lowers the trust and is harmful for the dollar.
Source: Bureau of Labor statistics, U.S. Department of Labor.
Availability: The data for previous month is available approximately on the 13th of each month at 8:30 a.m. EST.
What it is: This is a list of 500 consumers concerning the personal finance and economic conditions. It is made throughout the nation each month.Why we care: It is important because this list or poll, being carried out since 1950, indicates the consumers' preferences of spending.
What it is: An indicator of retail establishment realization that is listed taking into consideration seasonal adjustments, trading-day changes, and holidays. It is insecure to use advanced estimates. Therefore, they are reconsidered in a month, while the ultimate results are in one more month. As far as considerable corrections are thought to be suitable, this is not reliable.
Why we care: It is important because two-thirds of the GDP or Gross Domestic Product is occupied by Personal Consumption Expenditures where retail sales take forty percent. Consumer spending and trust can be monitored through retail sales.
What it is: Corporate tax returns give the basis for calculating tax-based profit. Current production income is monitored due to adjusted profits. While the adjusted values have more economical significance, the most press comes from tax-based numbers.
Why we care: Corporate profits gains or declinations may serve a forecast of growing or decreasing capital spending input to general GDP increase.
One of the most significant portions of trade information is the Current Account. It is an overall goods and services sales and purchase, unilateral transfers and interest payments measuring instrument. Moreover, the Current Account includes the Trade Balance and the deficit of Current Account can be a factor of currency weakening.
Importance: In case the deficit grows to the extreme, the trade problems are considered to exist and the US gets more dependent on capital investments. The risk profile of a dollar rises accordingly with the deficit increase. The dollar weakening is generally produced by a severe deficit. The currency causes serious warnings in case a deficit remains above 5% for a long time.
What it is: The US trade indicator including services, merchandise, some financial transactions.
Why we care: Current account balance fluctuations affect the capital streams moving between the US and other countries directly. For instance, capital investments in the US economy rise while the current account deficit increases. It is used extensively and often called a "trade deficit" rate.