Auto and Truck Sales Report
This monthly release is also known as the vehicle sales report. It covers unit sales of domestically produced cars and light duty trucks. This report can offer valuable insight into consumer spending and demand. This accounts for approximately 25% of total retail sales.
Beige Book
This report, published eight times per year, is the compilation of anecdotal information from each Federal Reserve Bank regarding current economic conditions in its District. This is determined through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources. Information in the Beige Book is summarized by District and sector.
Building Permits
An economic indicator that tracks the number of building permits issued for the prior month. Building permits are obtained in order to begin the process of excavation, generally for residential housing. This is then tracked and reported in the Housing Starts report, which is released the same day. Because the report offers insight into the demand side of housing construction, it is considered a leading indicator.
Business Inventories
This statistic, released by the Bureau of Census, defines Monthly Retail Trade, Monthly Wholesale Trade, and data for manufacturers production. There is a two-month lag factor for the information. The sales and inventories growth and the inventories to sales ratio are important indicators of current consumption and future manufacturing activity.
Monthly Retail Trade data quantifies in dollar value the retail sales and sales for selected establishments. Some firms also provide data on the value of end-of-month inventories.
Monthly Wholesale Trade is data provided by companies on dollar values of merchant wholesalers sales and end-of-month inventories.
Manufacturers data shows current production levels and future production commitments, including value of shipments, new orders, end-of-month total inventory, materials and supplies, work-in-process and finished goods inventories.
This release is closely watched for long-term trends indicating rising or falling inventory levels and changes in the inventories to sales ratio. The data is relatively current and shows changes in consumer consumption patterns, while providing insight to future manufacturing orders. Because the data is collected through survey, sampling errors are likely and varied interpretation of inventory trends can result in inaccuracies.
Capacity Utilization
A monthly report issued by the Federal Reserve that is widely viewed as a key inflationary indicator and factory-sector gauge. Capacity Utilization is a part of the Industrial Production report. This segment of the report measures industrial capacity, as well as how much of that capacity is being used. By taking the level of industrial production and dividing it by the level of industrial capacity, the capacity utilization rate is obtained.
Chicago PMI
The Chicago PMI is one of several manufacturing surveys released throughout the month. The various reports are ranked according to timeliness and the importance of the region. Specifically, the Chicago PMI is released on the last business day of each month. Like the NAPM, a reading over 50% indicates expansion from the month prior, while a reading under 50% indicates contraction.
Construction Spending
A government report, released monthly by the U.S. Department of Commerce, that breaks down new construction spending into residential, non-residential, and public elements. Though the report is rated near the bottom as far as relative economic importance is concerned, it does deserve consideration, as construction spending represents roughly 20 percent of the country's gross domestic product. Construction spending is also a leading indicator when it comes to foreshadowing recessions.
Consumer Confidence Report
The Consumer Confidence Report is a government sponsored report measuring the force of consumer sentiment toward current economic growth. The monthly survey of 5,000 households is widely viewed as a sort of economic barometer. A strong reading indicates current and anticipated continuation of strength in business conditions and overall economic health. If economic expansion is slowing, this report can often serve as a leading indicator. Often a weakening report is viewed as a pre-cursor to other indications of economic frailty, such as corporate downsizing, real-estate weakness and worst case scenario, a recession. Since consumers make up approximately two thirds of the nations economic activity, economists pay close attention to variances in the monthly report. Generally, unless there is a significant change in the numbers, i.e., two to five points, the report raises little interest or concern. The survey consists of two segments- current consumer assessments of economic conditions and the consumer outlook going forward.
Consumer Credit
A report measuring the dollar value of the consumer installment debt that is outstanding. The debt report covers three categories, which include revolving credit, auto loans and credit card debt. Changes in the Consumer Credit figures can offer insight into the current consumer finance situation as well as help to forecast future consumer spending patterns. The Federal Reserve Board releases the report on a monthly basis. This report generally has little impact on the markets.
Consumer Price Index (CPI)
An inflationary indicator measuring the change in cost of a select group of products and services. This group includes housing, electricity, food and transportation. This information is published by the Bureau of Labor Statistics in the Department of Labor on a monthly basis. This report is also referred to as the cost-of-living index. The CPI is the most widely used measurement to follow the rate of inflation. The financial markets use the CPI as an indicator for inflation risk going forward.
Core CPI
This is the Consumer Price Index (See Consumer Price Index) report minus food and energy components. Because food and energy prices can be so volatile, they can distort the figures and make inflation analysis difficult. The Core CPI focuses on the apparel, tobacco, airline, and automobile sectors.
Core PPI
This is the Producer Price Index (See Producer Price Index) report minus energy and food. Because energy and food can be so volatile, they can obscure the figures and make it more difficult to determine the underlying inflation rate.
Discount Rate
The Discount Rate is the interest rate charged by the Federal Reserve to member banks for loans. The member bank must provide collateral for the loan, which is usually in the form of government securities or eligible paper. This type of borrowing is generally limited, and is done only to meet short-term liquidity requirements. The Federal Open Market Committee is responsible for adjustments to the Discount Rate, which is often raised or lowered in conjunction with the more widely used Federal Funds Rate.
Durable Goods Report
The durable goods report measures orders, shipments, and unfilled orders on a monthly basis. Durable goods are defined as goods whose intended lifespan is three years or more. This report is important as it can indicate the future activity in factory production as manufacturers work to fill the orders they have received. Also, if a company is willing to commit to the future expense by placing the order, one would assume the company to be financially healthy, and anticipating continuing growth. The Durable Goods Report is also used as a sort of barometer for the manufacturing sector.
Economic Indicators
These are the key factors that help to determine the direction that the economy is currently heading in. Examples of economic indicators are the rate of inflation, employment numbers, housing starts, Gross Domestic Product, etc.
Employment Cost Index
A measure of total employee compensation costs, including wages, salaries and benefits. This is the broadest measure of labor costs. Wage inflation is closely watched by the Federal Reserve, as changes in earnings trends can be an early inflationary indication.
Employment Situation Report
A set of labor market indicators measuring both the nation's unemployment levels and non-farm payrolls. The unemployment rate tallies the number of unemployed individuals as a percentage of the total labor force. Two separate surveys are taken to obtain the numbers for the Employment Situation Report. Approximately 60,000 households are surveyed for the unemployment rate, while 375,000 businesses are surveyed for the establishment survey. The establishment survey produces the data for the non-farm payrolls, average workweek and average hourly earnings figures.
The total payroll report is categorized by sector. This can be valuable in identifying economic trends within each sector. Analysts' tend to watch the data pertaining to the manufacturing sector closely, as it can be a leading indicator of changes in the overall business cycle.
The average workweek report can be useful in determining industrial production and personal income. It can also help identify trends in labor market conditions. Average earnings are closely watched for indications of potential inflation as well. In a tightening labor market, the cost of labor will increase. Thus there is too much money chasing too few employees. As a result, companies will then pass on these increases to their products and services, thus perpetuating retail price inflation.
With greater concern of potential inflation comes a more significant impact of this report. The report is issued by the Bureau of Labor Statistics, U.S. Department of Labor, on the first Friday of each month at 8:30 am ET.
Existing Home Sales
A monthly report released by the National Association of Realtors measuring the number of closed sales of previously constructed homes. The existing home sales report is a decent demand-side indicator, whereas the housing starts report offers more insight to the supply-side of housing. Home sales are sensitive to mortgage rates, which is often reflected in the numbers a few months after a rate change.
Export Prices
This report is released by the Bureau of Labor Statistics and measures changes in the price of products that are produced in the United States and shipped to other countries. This report offers insight into economic conditions around the world, as it tracks global demand for U.S. goods. Weakness in economic conditions abroad will often result in lower export prices, while economic strength will create higher demand and therefore, higher export prices.
Factory Orders
A report issued by the Census Bureau of the Department of Commerce consisting of the non-durable goods orders combined with the previously announced durable goods figures. Because the only new data in the report is the rather predictable non-durables, such as food and tobacco, it is often considered to be "old news" and generally has little impact on the markets. The manufacturing inventory numbers from this report are used as part of the calculation for aggregate business inventories in the quarterly GDP report.
Fed Beige Book
A compilation of economic data released eight times per year. The report is compiled of anecdotal and qualitative information gathered by each Federal Reserve Bank on current economic conditions in their District. The information is obtained through reports from Bank and Branch Directors, economists, interviews with key business contacts, market experts and various other sources. The Beige Book report summarizes all of the information by district and sector. The data in the Beige Book report is used at the FOMC meeting in making decisions regarding interest rate policy. The report is released at 2 p.m. on the Wednesday roughly two weeks before the FOMC meeting is held.
Fed Funds Rate
When a bank does not have the necessary funds to meet overnight reserve requirements, they will borrow funds from another bank with excess reserves. The interest rate applied to the loan is known as the Federal Funds Rate. This rate is the most sensitive indicator of the direction of interest rates, as it is set on a daily basis by the market.
Federal Open Market Committee
The Federal Open Market Committee is the most important gear in the Federal Reserve Systems monetary policy-making machine. Made up of seven members of the Board of Governors and five Reserve Bank Presidents, the FOMC is responsible for regulating money supply and credit policies in the U.S. The Committee is responsible for making decisions to increase or decrease interest rates, indicating whether the Federal Reserve is seeking to tighten the money supply to reduce inflation or loosen it to stimulate the economy. The Committee does this through open market operations or purchases and sales of U.S. Government and Federal Agency Securities. Actions taken by the FOMC can have a significant impact on not only U.S. interest rates, but also of those abroad. Meetings are held eight times per year.
Federal Reserve Bank
One of 12 regional banks that, with their branches, make up the Federal Reserve System. These banks are established to maintain reserves, lend money to member banks and to issue bank notes.
Federal Reserve Board
This is the seven member governing board of the Federal Reserve System that is responsible for establishing policy for the Federal Reserve Banks. They are responsible for implementing monetary policy and monitoring the overall economic health of the United States.
The members are elected by the President of the United States and confirmed by the Senate. Members of the Federal Reserve Board serve 14 year terms.
Federal Reserve System
The Federal Reserve System is the central banking system for the United States, and was established in 1913 by the Federal Reserve Act. Governed by the Federal Reserve Board, the 12 Federal Reserve Banks, their 24 branches and all national and state member banks make up the Federal Reserve System. The Federal Reserve System was created to regulate the national money supply and flow, set reserve requirements, regulate credit and monitor member banks in the United States. Members of the Federal Reserve Board are appointed by the President of the United States and are confirmed by the Senate. Still, the Federal Reserve System is considered to be an independent entity, with a responsibility to make decisions free of political influence.
FOMC Meeting
Eight times per year, the Federal Open Market Committee meets to discuss the longer-term economic outlook for the United States. Twice a year, during the first and fourth meetings, which are two days in length, current conduct of open market operations is addressed. Generally, the meetings are held on Tuesdays. See also Federal Open Market Committee.
FOMC Minutes
A few days following each assembly of the Federal Open Market Meeting, the minutes detailing the meeting are made available and are thereafter published in the Federal Reserve Bulletin and in the Board's Annual Report.
Gross Domestic Product (GDP)
This is the market value of final goods and services produced by labor in the United States. The GDP consists of both consumer and government purchases, net exports of goods and services produced in the United States and private domestic investments. The Commerce Department releases a report detailing the GDP figures on a quarterly basis. Economic growth is measured by the change in the inflation adjusted GDP.
Gross National Product (GNP)
The Gross National Product is simply a measure of the GDP plus any income accruing to domestic residents as a result of investments abroad, less any income earned in domestic markets accruing to foreigners abroad. The financial markets focus more on the GDP as an indicator of economic growth.
Help Wanted Index (United States)
Help-wanted advertising is an indicator of trends in the job market. If the employment situation is expected to stay strong, the jobless rate will likely decline and wage growth will accelerate. Higher wages could spark inflationary pressures.
The Conference Board surveys help-wanted advertising in 51 major newspapers across the nation. The data is released at the end of the month for the prior month. Since inception, the index has sampled the same 51 newspapers. The Conference Board then constructs an index based on the volume of advertising. Separate indices are created for the nation, the nine census divisions and the 51 metro areas in which the newspapers are published. The year 1987 is the base year, with a value of 100. The index is seasonally adjusted.
If the moving average of the index for several months shows a change in trend, a change in employment growth is likely to occur. It also gives limited indication of differing economic conditions across regions and metro areas, with the volume of help-wanted advertising relative to conditions in 1987.
Housing Starts
The measurement of the number of residential properties on which construction has started within the month. A start of construction is defined by foundation excavation beginning on a property that will be primarily used for residential housing. The data is calculated by the Census Bureau of the Department of Commerce. The report is issued on a monthly basis.
Humphrey Hawkins Report
The Humphrey-Hawkins Report is a semiannual report delivered to the United States Congress every February and July by the Federal Open Market Committee (FOMC). In the report, the FOMC comments on recent and projected U.S. economy and addresses monetary policy. The FOMC Chairman is required to review the economy's strengths and weaknesses. The Chairman will also offer an estimate of current inflation, GDP growth, unemployment and other key factors that play a role in overall U.S. economic health. Because of the information offered, this report can have a substantial impact on the markets, depending upon what is said. The report is the result of the Full Employment and Balanced Growth Act of 1978 and is named such after Senator Hubert Humphrey and Representative Augustus Hawkins, both of whom were the legislation's initial sponsors.
Import Prices
This report is released by the Bureau of Labor Statistics and measures the changes in the price of products purchased from other countries by the U.S. Imports account for roughly 15 percent of goods purchased in the United States, therefore, changes in these figures can certainly have an impact on inflation within the U.S. Import Prices can also have a significant impact in the U.S., as many firms within the U.S. will adjust their own prices to remain competitive with companies outside of the country. The report is released on a monthly basis.
Industrial Production
A monthly statistic released by the Federal Reserve Board on the total output of all U.S. factories and mines. These numbers are a key economic indicator.
Initial Jobless Claims
An index tracking the number of individuals filing for state unemployment benefits for the first time. The data is compiled weekly, and on a week to week basis, can be somewhat unreliable. However, the four week moving average of the index, which is what most analysts use, can be a valuable indicator. Many economists use the data to gauge the current job market. Increases in the Initial Jobless Claims can be indicative of slowing job growth, while decreases can signal acceleration. The data is released at 8:30 am ET every Thursday.
Inverted Yield Curve
An Inverted Yield Curve is a graph plotting bond yields, where short-term interest rates are higher than long-term interest rates. The dividend yield is plotted along the vertical line and bond durations are plotted moving outward on the horizontal. This type of curve results from a surge in demand for short-term credit, which drives short-term rates higher. It can indicate an unhealthy economy with high levels of inflation. It can also signal a possible recession on the horizon. The Inverted Yield Curve is an unusual occurrence, as long-term interest rates tend to be higher than short-term.
Lagging Indicator
An economic indicator that is behind the overall pace of the current economic activity. Some examples of lagging indicators include employment figures, bank interest rates and inventory book value.
Leading Indicator
Leading Indicators are economic components used to forecast the ups and downs of the business cycle. The Conference Board releases a monthly report of 11 leading indicators. A few of these components include building permits, stock prices, money supply, and production workweek. The index of leading indicators is adjusted for inflation. As the majority of the data included in the report has already been released, the market tends to show little interest in the numbers.
Michigan Sentiment Report
The Michigan Sentiment report is released by the University of Michigan twice a month. The Conference Board conducts a monthly survey, which polls 5,000 households to try and ascertain the level of consumer confidence. Economists generally view any change of five points or more as significant.
NAPM Index
A national manufacturing index based on a survey of the National Association of Purchasing Managers. The group is made up of approximately 300 industrial companies' executives. The survey covers indicators such as new orders, production, employment, inventories and export orders. The report is released on the first business day of every month. A reading over 50% indicates expansion from the month prior, while a reading under 50% indicates contraction. Being that it is one of the first comprehensive economic reports of the month, it can often indicate the "mood" of subsequent releases. This report can have a significant impact, particularly on the bond market, during periods of inflationary concern.
New Home Sales
A report issued by The Census Bureau of the Department of Commerce, detailing the number of newly constructed homes committed for sale. This report rarely elicits much of a reaction from the markets, as New Home Sales tend to offer a lagged reaction to changes in mortgage rates.
Nonfarm Payrolls
A monthly survey given to 375,000 businesses produces the nonfarm payroll figures and employment rates. Nonfarm payrolls are broken down into industries such as manufacturing, mining, construction, and retail. The manufacturing sector is the most scrutinized by the financial markets, as it often leads the business cycle.
Personal Consumption Expenditure
The Personal Consumption Expenditure report is actually a part of the Personal Income Report. This section includes data pertaining to durables, non-durables, and services. This is a fairly predictable report and, by itself, has little impact on the markets.
Personal Income Report
A government report measuring income received by individuals from all sources. This is another important economic indicator, as the amount of income obviously impacts how consumers spend and save their money. The largest category of personal income is wages and salaries Many economists believe the Personal Income Report is one good way to gauge the strength and momentum behind economic growth. Higher incomes create higher aggregate demand and help to expand the economy.
Philadelphia Fed Index
A monthly report issued by the Federal Reserve Bank of Philadelphia (Third Federal Reserve District), covering changes in business and employment trends. The survey is a good indicator of near-term conditions and expectations for manufacturers and producers. The survey also provides insight to movements in prices paid given the current state of inflation. Like the NAPM, a reading over 50% indicates expansion from the month prior, while a reading under 50% indicates contraction.
Producer Price Index
The Producer Price Index is a monthly report issued by the U.S. Bureau of Labor Statistics, which measures and tracks changes in wholesale prices for the output of domestic goods-producing sectors. Groups include mining, scrap, manufacturing, forestry and agriculture. The PPI consists of three categories: crude, intermediate and finished goods. The financial markets have the highest interest in the finished goods, as they are the products that are ready for sale to consumers. The PPI also monitors price changes in the service sectors, such as utilities, transportation, finance, health, legal, business services and professional services. The report is used as an indicator of overall price movements at the producer level, and can often act as a precursor to changes in the Consumer Price Index. The PPI report is closely watched for early signs of inflation.
Productivity Report
Productivity, tracked on a quarterly basis by the U.S. Labor Department, is a measure of worker output per hour. These numbers, along with labor costs, which measure what companies spend on workers, is another report often looked at in concert with the productivity report. Many of the gains in worker productivity, especially in the last year, have resulted from breakthroughs in technology. Improvements in efficiency can boost company profits, preventing corporations from having to pass costs on to the customer, triggering inflation.
Reserve Requirements
The amount of cash reserves and liquid assets the Federal Reserve member banks must maintain as a percentage of demand and time deposits. The requirements are set by the Federal Reserve's Board of Governors.
Retail Sales Index Report
A report issued by the Census Bureau of the Department of Commerce, tallying receipts from stores selling durable and non- durable goods. This report can provide valuable insight into consumer spending, and is closely watched for any changes in trend. Generally, the report is analyzed ex-autos, as auto sales can fluctuate a great deal from month to month. The data is used by the Bureau of Economic Analysis for help in estimating Gross Domestic Product. The Federal Reserve Board relies on the data to anticipate changes in the U.S. economic situation. The report also provides the first monthly estimates of broad-based retail trading activity. The data is released on a monthly basis, usually around the 12th.
Trade Balance
Also referred to as balance of trade, the trade balance is the net difference over a period of time between the value of a country's imports and exports of merchandise. Movable goods such as automobiles, foodstuffs, and apparel are included in the trade balance; payments abroad for services and tourism are not. When exports exceed imports, a favorable trade balance results; when imports are greater, the balance is said to be unfavorable. The trade balance is represented in the context of the country's entire international economic position and can be offset by other influences. For example, a country that has a consistently favorable trade balance could import considerable services, which may effect a mediocre or poor international economic position.
Treasury Budget
The United States Treasury Budget is a monthly account of the U.S. government's surplus or deficit. The budget is normally released on the 15th workday of the month that follows the reporting period; it is provided by the Department of Treasury.
As monthly changes in the federal fiscal situation are difficult to interpret, the markets are more affected by longer-term trends in the federal budget. The items of highest concern include the fiscal year-to-date federal budget deficit or surplus and the year-over-year growth in fiscal year-to-date revenues and outlays.
The major data sources are monthly accounting reports by Federal entities and disbursing officers and daily reports from Federal Reserve banks. These reports detail accounting transactions affecting receipts and outlays of the Federal Government and off-budget Federal entities, and their related effect on the assets and liabilities of the U.S. Government.
Although the Treasury Budget is highly volatile on a month-to-month basis and is often difficult to interpret, it does provide a thorough and timely account of the federal fiscal situation.
Unemployment Rate
A survey of nearly 60,000 households produces the monthly unemployment rate. The unemployment rate and nonfarm payrolls reports are considered the most timely and broad indicator of economic activity released each month. The financial markets primarily focus on the more comprehensive nonfarm payroll report for employment data.
Wholesale Inventories
A report issued by the Census Bureau of the Department of Commerce detailing sales and inventory statistics from the second stage of the manufacturing process. Because this report offers little in the way of personal consumption data, it has little to no impact on the markets.
