Home > Fundamental analysis > Economic indicators > Economic indicators - I

Economic indicators - I

List of indicators - I:

  • IFO Index
  • Import prices
  • Industrial production
  • Industrial Production and Capacity Utilization
  • Initial Claims
  • International Trade
  • ISM Manufacturing Index
  • ISM Nonmanufacturing Survey
  • ISM Services Index

IFO index

The IFO index is close to PMI report and it shows the stability of German economy.

A rising index shows the possibility of production increase during the following months that caused euro strengthening as well as import prices. What it is: A number of international indices of prices that adapt the figures of merchandise trade balance of each month to turn into volume (or real) conditions.

Why we care: Import price fluctuations except the petroleum ones show perfectly the possibility of foreign-formed prices to affect the U.S. inflation for goods.

Industrial Production

It's a set of rates with a fixed weight showing both nation's factories, mines and utilities production readjustment and the possible industrial capacity, production and the available resources usage among factories, utilities and mines, which is also known as capacity utilization. This factor affects much on the economy as far as the manufacturing occupies one-fourth part of the developed countries' economy.

It is possible to forecast the manufacturing production through the employment report and total manufacturing workweek in particular. The utility production seems to be the most instable factor as far as it can differ much because of the weather conditions. Strong hot or cold periods may raise the utility production as far as heating or cooling requirements increase sharply. This report estimates capacity utilization either. The capacity is taken as a straight line because of difficulties in its measurement. That is why it is possible to predict capacity utilization rate decently relying on the estimated production increase. A key barrier that gives the starting point for generating inflationary pressures is 85% historically. Utilization rate values over 85% may cause production bottlenecks of inflation. For instance, it is common for the Federal Reserve to form its interest rate policy and affect the Forex market accordingly basing on this report estimating the possible inflationary pressures from production tensions.

Initial Claims

This is a government index that represents the amount of people applying for state unemployment insurance.

Investors for forecasting changes in the labor market use this indicator's four-week moving average. A move of 30,000 or more in claims depicts a considerable change in job growth. The amount of claims is associated with job market strength - low number of claims means strong job market.

International Trade

This report is used to reflect the balance between exports and imports of U.S. services and goods.

Import and export, representing approximately 14 and 12 percent of GDP respectively, are necessary parts of the entire economic activity. Generally, the stronger exports are favorable for the stock market and corporate earnings. This report is also vital for investors who are interested in diversifying globally, because trends in trade balance with particular countries can affect foreign exchange and policy with that trading partner.

Surveys of 300 purchasing managers nationwide representing 20 industries regarding manufacturing activity, is the base for the ISM Manufacturing Index. It includes such components as production, new orders, inventories, delivery times, employment, export and import orders and prices.

ISM Manufacturing Index is most important among all manufacturing indices. Expanding manufacturing sector and a healthy economy represent rates of 50% or above, while slowdown marks are below 50%. Rates traditionally associated with strong growth are above 65% while a figure below 40% means recession in the entire economy.

Besides, useful information about manufacturing activity is represented by various sub-components of this index. New orders are associated with long-term goods orders, the production component with industrial production, and prices with producer prices along with employment to factory payrolls, export orders to merchandise trade exports, and import orders to merchandise imports.

The index is influenced by different factors, such as variations within the year, differences due to holidays and institutional changes, so it has to be adjusted seasonally.

ISM Non-manufacturing Survey

ISM Non-manufacturing survey contains interviews with 370 supply and purchasing management professionals from more than 26 sectors of the economy. This survey, despite of its short history (it dates back only to 1997), is supposed to become helpful guide to certain parts of the economy.

ISM Services Index

ISM Services Index, sometimes referred to as Non-Manufacturing ISM, is an index, which represents a survey of about 370 purchasing executives in industries associated with the service sector: communications, insurance, real estate, utilities and finance.

The expansion for the non-manufacturing parts of the economy is portrayed by readings above 50% while readings below 50% are declarative of decrease. The is a new index created in 1997, so it's not followed as closely as the ISM Manufacturing Index, which dates back to the 1940s.