Fundamental Economic Reports: Major Market Movers !!!

The following Economic Data Reports are the most closely followed Economic Report in the market. These reports will cause volatility after they are announced, meaning there will be some pip movement in currency pairs after these news reports are announced. The amount of pip(point) movement will depend on the volatility rating of each news data reports, news labeled with importance of three exclamation marks cause high volatility, followed by those of 2 exclamation marks & then those of 1 exclamation mark.

Most market participants primarily focus on news releases designated with three and two exclamation marks, as these announcements typically result in market movements ranging from 30 to 100 pips (points) following their release.

The news reports followed by traders are shown below and reports of these news can be found within an Financial Economic Calendar.

Employment Report

Importance: !!!
Source: Bureau of Labor Statistics, U.S. Department of Labor.
News Data Report Announcement Time: First Friday of the month at 8:30 EST, reports data for the prior month

The employment report survey includes data such as Non-Farm Payrolls, Average Work Week hours, and Average Hourly Earnings, which are key indicators for market analysis.

Non-Farm Payrolls are the most critical data point found within the employment report and specifically the establishment survey. As indicated by its name, Non-Farm Payrolls track the number of individuals on payrolls within all non-agricultural sectors. The monthly fluctuations in payroll figures can be quite unpredictable, with changes sometimes exceeding 200K from one month to another. The figures from Non-Farm Payrolls provide a timely and comprehensive overview of the economic landscape, reflecting the status of the American Middle Class and showing the number of individuals with disposable income ready to spend. The American economy is significantly driven by consumer spending, constituting about 75% of GDP, meaning that a higher Non-Farm Payrolls number generally leads to greater consumer activity.

Average work week tracks hours on the job. It's part of the non-farm payroll report. Many overlook this data. Yet it shapes views on factory output and worker pay each month.

Average hourly income The Average Hourly Earnings, the last trading statistic from the institution poll worthy of thorough examination, is crucial for two reasons: Along with total man-hours, average earnings statistics offers us a reliable indicator of personal income growth for the month. Second, the income numbers are closely followed throughout periods of rapid economic expansion to find signs of increasing and expanding wage pressures.

Unemployment Rate

Unemployment rate means the percentage of people who are able and looking for work, out of the total employable population, based on a monthly survey by the Bureau of Labor Statistics.

An unemployment rate of 4% to 6% is healthy. Below that, it pushes inflation through higher wages. Above it, spending drops.

Jobless Claims

Jobless claims count new people filing for unemployment aid each week. This key data, plus its four-week average, shows the job market's health.

Jobless claims track job market strength. Fewer claims mean more people working. This gives investors key insights into the economy.

Nearly each & every job comes with an income that gives a household the spending power. Spending greases the wheels of the economy and keeps the economy growing, so the stronger the job hiring, the healthier the economic environment.

By monitoring the jobless claims figures, traders gain valuable perception into the condition of the employment market. If there is inflationary pressure from rising wages, interest rates are likely to increase, causing bond and stock valuations to decline. In such a scenario, only those traders/investors who paid attention to jobless claims and adapted their portfolios beforehand will be positioned favorably. A lower unemployment claims count signals stronger employment growth, and vice versa.

Gross Domestic Product - (GDP)

Importance: !!!
Source: Bureau of Economic Analysis, U.S. Department of Commerce.
News Data Report Announcement Time: Third or fourth week of the month at 8:30 EST for the prior quarter

Gross Domestic Product - GDP is the most complete way to measure how the economy is doing. The % changes in GDP each quarter, shown as if they happened for a full year, show how much the total economy grew. These numbers can change a lot from one quarter to the next. Changes in stored goods and what is traded with other countries can especially cause big swings in the GDP. The final sales number, which does not include stored goods, can sometimes help show the real growth because stored goods are products that have not been sold, and a big rise in stored goods will make GDP look better but might mean the economy is weak. The main parts of GDP are: what people buy, investments, what is traded with other countries, government spending, and stored goods. What people buy is the biggest part, making up two thirds of the GDP.

Retail Sales report

Importance: !!!
Source: The Census Bureau of the Department of Commerce.
News Announcement Time: 8:30 EST around the 13^th of the month (data for one month prior).

The retail sales report serves as an indicator of the overall receipts from retail stores. Fluctuations in sales figures are closely monitored as they provide timely insights into broader consumer spending trends. Retail sales are often considered excluding autos, as auto sales can fluctuate significantly from month to month. It is equally important to monitor the gas and food components, as changes in these reports often stem from price shifts rather than changes in consumer demand.

Retail sales data can swing a lot. Early reports often face large changes later. It skips spending on services, which is over half of total spending. Full personal consumption data comes out two weeks later in the income and spending report.

Housing Starts and Building Permits

Importance: !!!
Source: The Census Bureau of Department of Commerce
News Announcement Time: 8:30 EST around the 16th of the month (data for 1 month prior).

Housing Starts are a measure of the number of residential units on which construction has started each month. A begin in construction is defined as the beginning of excavation of the foundation for the building and is comprised primarily of residential housing. Building permits are permits taken out so as to allow excavation. An increase in building permits and starts generally occurs a couple of months after a reduction in mortgage rates. Permits lead the starts, but permits are not required in all regions of the country, & the level of permits thenceforth tends to be than the level of the starts over time.

Existing Home Sales

Importance: !!
Source: National Association of Realtors.
News Announcement Time: 10:00 EST around the 2fifth of the month (data for month prior).

The name speaks for and explains itself - this report provides an estimate of the level of sales of existing home sales. The report is considered a decent fundamental indicator of the activity in the housing sector. Housing stats precede this report every month, but stats are a supply rather than demand side trading indicator. Existing home sales precede the other key demand side fundamental indicators of housing - new houses sales - thus boosting the visibility of the report. Sales are highly dependent on mortgage rates, and tends to react with a few months lag to changes in rates. Sales are also determined by the level of pent-up demand for housing - immediately after recession, sales are mostly quite strong because of the demand that accumulated through the recession.

Chicago PMI

Importance: !!!
Source: Chicago Purchasing Managers Association.
News Announcement Time: The last business day of the month at 10:00 EST for the present month.

Surveys from regions like Philadelphia and Chicago receive significant attention due to their timeliness and their ability to represent an accurate cross-section of national manufacturing trends.

Trade Balance

This statement summarizes a nation's transactions involving tangible products (merchandise) and intangible services. It encompasses items such as manufactured goods, raw materials, agricultural commodities, alongside travel and transportation receipts/payments.

It is the difference between the value of the goods and services that a country exports and the value of the goods & services which it imports.

When a nation's exports surpass its imports, this signifies a trade surplus, resulting in a positive balance. Conversely, if imports are greater than exports, the nation experiences a deficit, meaning its trade balance is considered negative.

A positive or negative balance might simply reflect a change in relative cost of the domestic products compared and analyzed with international prices. For industries which rely massively on exports, such as the auto sector, a positive balance may reflect a higher international demand, which can mean more jobs in that sector.

Purchasing Managers Index (PMI)

Purchasing Managers Index PMI - The National Association of Purchasing Managers (NAPM), now called the Institute for Supply Management, releases a monthly composite index of national manufacturing conditions, constructed from info on new trade orders, production, supplier delivery times, backlogs, inventories, prices, employment, export orders, & import orders.

It's divided into manufacturing and non-manufacturing sub-indices.

Producer Price Index (PPI)

Producer Price Index (PPI) - PPI measures the average price for a set group of capital, consumer goods, and items paid for by the companies.

PPI tracks price shifts in manufacturing. It measures average changes in sales prices for domestic producers. This covers output from manufacturing, mining, agriculture, and electric utilities.

Producer Price Inflation Often Translates Downstream, Ultimately Affecting the Consumer Price Index (CPI).

How inflation ties to interest rates helps explain how reports like PPI affect markets and your trades.

Philadelphia Fed Survey

Philadelphia Fed Survey - A mixed index showing how manufacturing is doing and what the conditions are like in the Philadelphia Federal Reserve area.

This survey is widely followed as an indicator of manufacturing sector trends since it is correlated with the ISM survey & the index of industrial production.

The Philly Fed survey provides an in-depth examination of the manufacturing industry, its current activity level, and future trends. Given that manufacturing is a critical component of the economy, this report significantly impacts currency price movements and trends.

Certain ancillary indices from the Philly Fed report also yield directional clues regarding commodity valuations and broader inflationary indicators.

Personal Income

Personal income measures the total earnings received by individuals from all sources. Conversely, personal outlays account for consumer spending on both durable and non-durable goods as well as services.

The data concerning income and outlays serve as valuable indicators to assess the economic momentum and its future trajectory. Income empowers households to either spend or save.

Spending keeps the economy running and expanding. The report's consumption data links straight to economic conditions. Those conditions guide market results.

Consumer spending makes up two-thirds of the economy. Knowing what buyers do helps predict economic direction. This gives investors a clear edge.

New home sales

New home sales track newly built homes sold that month. These sales show trends in housing prices.

This measure shows demand for homes and overall economic strength. Buyers need to feel secure in their finances to purchase a house.

This small data bit packs a big punch in the economy. It spreads to markets and your holdings.

By monitoring economic data, such as figures for new home sales, investors can derive specific trade ideas and also establish broad strategic direction for their asset management.

Each time construction of a new house starts, it translates to additional/more construction jobs, and income that will be pumped back into the economy.

The final sale of a newly constructed home results in revenue generation for both the builder and the real estate agent. Movements observed in the statistics for new home sales provide significant predictive clues for the stock values of construction companies, mortgage providers, and furnishing corporations.

Money supply

Money supply tracks different levels of cash in the economy based on how easy it is to use. Shifts in these amounts show the push of money policy. They also hint at future growth and price rises.

In previous years, monetary aggregates (M1, M2, and M3) were essential indicators, as they reflected the Federal Reserve's approach to controlling credit conditions in the economy - whether tight or loose.

The Fed sets target ranges for money supply growth. In the past, when actual growth moved outside those targets, it usually signaled the Fed was about to change interest rates.

Today, we have a better understanding of monetary policy by looking at the level of the federal funds rate. Money supply became less important in the 1990s because the financial system changed and the Federal Reserve changed how it handles monetary policy.

Fed is working on some new estimates of money supply, & given the way economic indicators ebb and flow in popularity, don't be surprised if the monetary aggregates make a comeback in the future.

International Trade

This tracks the gap between imports and exports of goods and services. The trade balance level, plus shifts in exports and imports, shows foreign trade patterns.

Shifts in the volume of goods imported versus exported, along with the resulting difference (the balance), offer a meaningful measure of economic momentum both domestically and internationally. Moreover, this information can directly influence all sectors of financial trading, most notably the valuation of the dollar.

Imports indicate demand for foreign goods and services here & the USA exports show the demand for USA goods in overseas countries. The dollar can be especially sensitive to changes in deficit run by the United States, since this imbalance creates more demand for foreign currencies.

This writing shows how the USA trades with other big countries and is helpful for traders wanting to spread out their business around the world. For example, if we sell more and more to one country, its economy might be getting better, making it a good place to invest.

Industrial production and capacity utilization

Industrial Production and Capacity Utilization: The Index of Industrial Production is a measurement, weighted by chain volume growth, reflecting the physical output generated by the nation's manufacturing facilities, mining operations, and utility providers.

Capacity utilization shows how resources get used. Investors and traders track it to gauge the economy. That affects how investments do.

Industrial production tracks output from factories, mines, and utilities. Manufacturing makes up a fourth of the economy. This report sways currency prices a lot.

Capacity utilization provides an estimate of factory usage rates. When utilization exceeds 85%, it could result in production bottlenecks and contribute to inflationary pressures in the economy.

The Federal Reserve closely monitors this economic report and bases its interest rate determinations on whether productive capacity constraints pose a risk of sparking inflationary pressures.

Housing starts

Housing starts refer to the count of residential construction projects initiated each month. Home builders typically begin construction only when they are confident in the property's saleability once completed.

Fluctuations in housing statistics provide significant insight into current home demand and the projected health of the construction sector. Moreover, each new housing start stimulates growth in construction employment and injects income back into the general economy.

Construction Spending

Construction spending tracks new work on homes, businesses, and public sites. Data comes in regular dollars and inflation-adjusted ones.

Businesses invest in the construction of new factories or offices only when they are confident that the demand is sufficiently strong to warrant such expansion.

It's similar for people investing in a house, so how much is spent on building is a useful way to know how well the economy is doing right now.

Consumer Confidence Index

Consumer Confidence Index - The Conference Board conducts The Survey of consumer attitudes about the current situation as well as about future economic prospects. Every month, five thousand consumers from all over the nation are polled.

Consumer confidence has a direct impact on consumer spending momentum. With consumer spending accounting for two-thirds of the economy, markets remain highly interested in tracking consumer behavior and its potential trends in the near future.

The more confident consumers are about the economy and their own personal finances, the more likely they are to spend.

With this in mind, it’s easy to see how this index of consumer attitudes gives and provides an insight to the pulse of the economic environment. Changes in consumer confidence and retail sales do not move in tandem month by month.

Consumer Price Index (CPI)

The Consumer Price Index (CPI) measures the average price of a fixed basket of goods and services purchased by consumers. Monthly CPI changes reflect the inflation rate.

CPI tracks US inflation best. Inflation raises costs for goods and services. How it ties to interest rates shows why CPI sways markets.

By watching how inflation changes, whether it's high or low, going up or down, those who trade can guess how different kinds of investments will do.

Durable goods order

The durable goods orders reflect the new orders placed with domestic manufacturers for immediate and future delivery of factory hardwoods. Orders for the durable goods show how busy factories will be in the months to come, as the manufacturers work to fill the orders. The data not only provides insight to demand for things like refrigerators & cars, but also business investment going forward.

If companies commit to spending more on equipment and other capital, they are obviously experiencing sustainable expansion in their business. Increased expenditures on investment goods set the stage for greater productive capacity in the country and minimize the prospects for inflation. It tells traders what to expect from manufacturing industry sector, a major constituent of the economy and therefore a major factor of influence on their investments.

Existing home sales

Existing home sales are the number of previously built homes that actually sold during the month. These resales make up a bigger chunk of the market than new builds and help show where home prices are headed. They also give a good sense of housing demand and the overall economic mood.

Folks need solid financial footing to buy a home. Home sales may not add fresh goods, but they pay realtors well.

Gross Domestic Product (GDP)

This represents the total value of all goods and services generated by entities, regardless of whether they are domestic or foreign corporations. GDP serves as the most comprehensive measure of a nation's economic activity and expansion rate, indicating whether the economy is advancing or contracting. Investors must meticulously follow economic data as it largely dictates the performance trajectory of their investments.

The GDP report holds key data on the economy. It shows the big picture and key trends. Parts like consumer spending, business investments, home investments, and inflation indexes reveal hidden flows. These can lead to smart investment choices and portfolio tips.

Retail Prices Index

Retail Prices Index (RPI) - In the UK, the RPI serves as the primary gauge for consumer price inflation. Its definition involves measuring the average shift in the cost of goods and services acquired for spending purposes by the vast majority of households throughout the United Kingdom.

This data is compiled and released every month and is never subject to revision once published. The RPI index covers expenditures related to foodstuffs and beverages, tobacco, housing, household goods and services, personal items and services, travel fares, vehicle running costs, and apparel, along with leisure goods and activities.

Inflation metrics are essential for economists, businesses, and governments. For instance, the Bank of England's Monetary Policy Committee sets interest rates based on an inflation target established by the Chancellor of the Exchequer.

The RPI is frequently linked to wage agreements, pensions, and changes in benefit levels. Based on the RPI, utility regulators place limitations on price fluctuations.

Study More Topics and Courses:

Trade Forex Trading