Forex Trading the Top U.S. Economic News Reports
The US dollar is the most traded currency in the world and an understanding of US economic indicators is important in understanding the US dollar and its role in the currency trading system. Some of the most important U.S. economic indicators include the gross domestic product (GDP), producer price index (PPI), consumer price index (CPI), industrial production (IP), durable goods & services, employment cost index (ECI), retail sales index (RSI) and housing starts. These indicators have the potential to generate volume and move market prices around the globe.
Gross Domestic Product (GDP) - The gross domestic product is a measure of all economic activity in the economy. The GDP represents the total market value of all goods and services produced by both domestic and foreign companies within the borders of the US. The GDP should measure between 3% and 5% for advanced industrialized nations such as the U.S., Europe and Japan. A growth of less than 3% indicates a stalling economy and a growth of more than 5% indicates that the economy is on the verge of inflation.
The U.S. Bureau of Economic Analysis (BEA) publishes two measures of the GDP. One measure is based on expenditures while the other measure is based on incomes. The GDP publishes an advance release of the GDP following each quarter of the year, which contains, among other things, estimates for data not previously released, trade balances and inventories. This is considered to be the most important release while other BEA releases are considered less significant.
Producer Price Index (PPI) - The PPI measures price changes in the manufacturing sector as the average change that domestic producers in manufacturing, agriculture, forestry, electric utilities, natural gas, mining and fisheries receive in selling prices. The PPIs used most often in US economic analyses are measures for crude, intermediate and finished goods.
Consumer Price Index (CPI) - The CPI measures the average price paid by urban consumers for a fixed basket of goods and services. Urban consumers are largest base of consumers, totaling about 80% of the U.S. population More than 200 categories of goods and services are included in the calculation of the CPI. The measure of the CPI includes taxes and user fees connected with goods and service, but it excludes the volatile food and energy components of consumer spending.
Industrial Production (IP) - IP is a chain-weighted measure of the change in production for the nation's factories, utilities and mines. An IP is determined for types of industries and types of markets. Since the IP is a measure of industrial capacity and available industrial resources, IP may also be called capacity utilization. Since manufacturing accounts for about one-fourth of the economy, IP rates indicate the capacity of the country's factories.
Durable Goods and Services - Durable goods and services are a measure of new orders placed with domestic manufacturers for immediately delivery and delivery in the future. A durable good or service is a good that lasts or a service that extends for a period of more than three years.
Employment Cost Index (ECI) - The ECI is an estimated measure of the number of full-time and part-time employees in businesses and government. It is based on more than 500 industries in 50 states and 255 metropolitan areas. Data are collected from surveys of employer payrolls and includes wage as well as non-wage costs of employment.
Retail Sales Index (RSI) - The RSI is an estimate of the total monthly sales from retailers. It is a measure of consumer consumption and confidence. Data are collected from a sampling of retail establishments throughout the country. Retail sales include the sale of services, durable goods and non-durable goods. It includes excise taxes and excludes sales taxes.
Housing Starts - Housing starts is an estimate of the number excavations for foundations of residential properties. An analysis of housing starts measures the change in housing start levels from month to month.
The US dollar is the most traded currency in the world and an understanding of US economic indicators is important in understanding the US dollar and its role in the currency trading system. Some of the most important U.S. economic indicators include the gross domestic product (GDP), producer price index (PPI), consumer price index (CPI), industrial production (IP), durable goods & services, employment cost index (ECI), retail sales index (RSI) and housing starts. These indicators have the potential to generate volume and move market prices around the globe.
Gross Domestic Product (GDP) - The gross domestic product is a measure of all economic activity in the economy. The GDP represents the total market value of all goods and services produced by both domestic and foreign companies within the borders of the US. The GDP should measure between 3% and 5% for advanced industrialized nations such as the U.S., Europe and Japan. A growth of less than 3% indicates a stalling economy and a growth of more than 5% indicates that the economy is on the verge of inflation.
The U.S. Bureau of Economic Analysis (BEA) publishes two measures of the GDP. One measure is based on expenditures while the other measure is based on incomes. The GDP publishes an advance release of the GDP following each quarter of the year, which contains, among other things, estimates for data not previously released, trade balances and inventories. This is considered to be the most important release while other BEA releases are considered less significant.
Producer Price Index (PPI) - The PPI measures price changes in the manufacturing sector as the average change that domestic producers in manufacturing, agriculture, forestry, electric utilities, natural gas, mining and fisheries receive in selling prices. The PPIs used most often in US economic analyses are measures for crude, intermediate and finished goods.
Consumer Price Index (CPI) - The CPI measures the average price paid by urban consumers for a fixed basket of goods and services. Urban consumers are largest base of consumers, totaling about 80% of the U.S. population More than 200 categories of goods and services are included in the calculation of the CPI. The measure of the CPI includes taxes and user fees connected with goods and service, but it excludes the volatile food and energy components of consumer spending.
Industrial Production (IP) - IP is a chain-weighted measure of the change in production for the nation's factories, utilities and mines. An IP is determined for types of industries and types of markets. Since the IP is a measure of industrial capacity and available industrial resources, IP may also be called capacity utilization. Since manufacturing accounts for about one-fourth of the economy, IP rates indicate the capacity of the country's factories.
Durable Goods and Services - Durable goods and services are a measure of new orders placed with domestic manufacturers for immediately delivery and delivery in the future. A durable good or service is a good that lasts or a service that extends for a period of more than three years.
Employment Cost Index (ECI) - The ECI is an estimated measure of the number of full-time and part-time employees in businesses and government. It is based on more than 500 industries in 50 states and 255 metropolitan areas. Data are collected from surveys of employer payrolls and includes wage as well as non-wage costs of employment.
Retail Sales Index (RSI) - The RSI is an estimate of the total monthly sales from retailers. It is a measure of consumer consumption and confidence. Data are collected from a sampling of retail establishments throughout the country. Retail sales include the sale of services, durable goods and non-durable goods. It includes excise taxes and excludes sales taxes.
Housing Starts - Housing starts is an estimate of the number excavations for foundations of residential properties. An analysis of housing starts measures the change in housing start levels from month to month.
