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Economic indicators - P

List of indicators - P:

  • Payroll Employment
  • Personal Consumption Expenditures
  • Personal income
  • Philadelphia Fed index
  • Philadelphia Federal Reserve Bank Business Outlook Survey
  • Prices, Wages and Productivity
  • Producer price index (PPI)
  • Productivity
  • Purchasing Managers Index (PMI)

The Payroll employment

The Payroll employment, also known as the “Labor Report," is considered the most important among all economic indicators. It represents extensive look of the economy as it includes all necessary factors of the economy. It is usually released on the first Friday of the month. As valuable source of information about changes in job creation in several industry categories, it can reflect the detailed picture of job market.

Payroll employment is a measure of the number of people being paid as employees by non-farm business establishments and units of government. Monthly changes in payroll employment reflect the net number of new jobs created or lost during the month and changes are widely followed as an important indicator of economic activity.

Large increases in the payroll employment indicate strong economic activity that could eventually cause increasing of interest rates and support the currency at least in the short term. However, during the rising of inflationary pressure, this may weaken the long-term confidence in the currency.

Personal Consumption Expenditures

Personal Consumption Expenditures shows the level of consumer spending for all goods and services, quoted in both real (inflation adjusted) and nominal (current-dollar) terms and divided into three categories: durable goods, nondurable goods, and services. This indicator represents two-thirds of the Gross Domestic Product (GDP).

Personal Income shows households' income from all sources, which are self-employment, employment, investments, and transfer payments. It can also be described as total pretax annual income earned by private trust funds, individuals, and non-profit organizations.

Disposable personal income (DPI) measures personal income discounting tax and non-tax payments, or, in other words, personal saving subtracts personal consumption expenditures plus interest payments and net transfers to foreigners from personal income.

This index can be helpful in forecasting changes in consumer spending patterns. Two-thirds of GDP is personal consumption. Therefore, consumer spending has an effect on economic growth.

Spending is determined mostly by income, and average US consumer spends approximately 95 cents of each new dollar. Larger spending benefits the stock market and stimulates corporate profits.

Philadelphia Fed

This index reflects the conditions of regional manufacturing that covers Pennsylvania, Delaware, and New Jersey. This region is considered to represent a reasonable cross section of different sectors of national manufacturing. Expanding factory sector is represented by readings above 50 percent, while rates below 50 are the symptom of contraction.

This index, along with the Chicago Purchasing Manager's Index, is designed to predict the results of ISM index, which is the leading indicator of economic activity as a whole.

Philadelphia Federal Reserve Bank Business Outlook Survey

This survey is based on a poll of manufacturing firms in eastern Pennsylvania, New Jersey, and Delaware, the bank's district, on recent expectations and developments with response to "general conditions" and specific manufacturing activities. It represents trends in regional economic activity.

GDP-Based Price Indices

The broadest measure of inflation in the economy is GDP-Based Price Indices. It is part of the quarterly Gross Domestic Product (GDP) report representing quarter-to-quarter percent change in weighted price indices for the various components of GDP, for the ratio of nominal (current-dollar) GDP to real (inflation-adjusted) GDP and gross domestic purchases (excludes exports).

The Producer Price Index (PPI) measures the average level of prices of a fixed basket of goods received in primary markets by producers. The monthly reports of this index indicate commodity inflation. The PPI is widely followed because it accounts for price trends throughout the manufacturing sector.

The PPI is popular but leaves out the food and energy components. These items are usually much more changeable than the rest of the PPI and can therefore obscure the more important underlying trend.

Studying the PPI allows consideration of inflationary pressures that may be receding or accumulating, but the index has still to be improved. A rising PPI is normally expected to cause higher consumer price inflation, which potentially increases short-term interest rates. Higher rates will often have a short-term positive effect on a currency. However, outstanding inflationary pressure will often weaken the confidence in the currency.

Productivity and Costs

Productivity is seasonally adjusted review that measures the change in output per hour of work. It provides quarterly statistics on total labor compensation as well.

Productivity considers the possibility of economic growth without a raise in inflation. It has a valuable effect on the outlook for employment, in addition to being an indictor as efficiency of the labor market.

Purchasing Managers Index (PMI)

The Institute for Supply Management (that used to be called the National Association of Purchasing Managers or NAPM) publishes a monthly complex index of national manufacturing conditions. This index contains data on production, new orders, supplier delivery times, inventories, backlogs, prices, export orders and import orders and employment. It consists of two sub-indices: non-manufacturing and manufacturing.