Fundamental Economic Reports: Medium Market Movers !!

Durable Goods Orders

Importance: !!
Source: The Census Bureau of Department of Commerce.
News Announcement Time: 8:30 EST around the 26^th of the month (data for prior month).

The durable orders release estimates the dollar volume of orders, shipments, & unfilled orders of durable goods (defined as goods whose lifespan is 3 years or more). Orders are regarded and considered a leading trading indicator of manufacturing activity.

Conference Board Consumer Confidence

Importance: !!
Source: The Conference Board.
News Release/Announcement Time: 10:00 EST on the last Tuesday of the month (data for current month).

The Conference Board conducts/carries out a monthly survey of 5,000 households to figure out the level of consumer confidence. The report can occasionally be helpful in predicting sudden shifts in consumption patterns, though most small changes in the index are just noise. Only index changes of at least five points should be considered significant.

Industrial Production

Importance: !!
Source: Federal Reserve.
News Report Announcement Time: 9:15 ET around the 1fifth of the month (data for month prior).

The index of Industrial Production is a fixed-weight measure of physical output of the factories in a country, mines, & utilities. Manufacturing production, the largest constituent of the total, can be accurately predicted using total manufacturing hours worked from the employment report.

Initial Jobless Claims

Importance: !!
Source: The Employment and Training Administration of Department of Labor.
News Announcement Time: 8:30 EST each Thursday (data for week ended prior Saturday).

Initial jobless claims measure and estimate the number of registrations for state jobless benefits(the number of people out of jobs). This report provides a timely, but often misleading, indicator of the direction and momentum of the economic environment, with increases (decreases) in claims potential signaling/signifying slowing (accelerating) job growth.

There are 2 other statistics in this report - the number of people receiving state benefits and the insured unemployment rate; neither is watched closely by market. Some analysts track the number of individuals receiving state benefits from month to month as a lesson for job growth, though this series has a poor record in predicting the monthly employment report. The insured unemployment rate changes little on a weekly basis and is never a factor for the market.

International Trade

Importance: !!
Source: The Census Bureau and the Bureau of Economic Analysis of Department of Commerce.
News Report Announcement Time: 8:30 EST around the 20th of the month (data for 2 months prior).

The trade report is most widely watched for trends in the overall trade balance. But trends in both exports & imports of goods and services bear watching as well. The export data in particular are crucial to watch for signals that a strengthening and competitive position at home &/or competitive economies overseas are boosting the USA economy Growth. Imports data provides an indication of domestic demand, but given the severe lag of this report relative to other consumption indicators, it isn't particularly very valuable for analysis purpose.

The volatility in the monthly trade balance can play an important role in GDP forecasts. Net exports are a relatively volatile component of GDP, & the trade transaction report provides and gives the only early clue to the net export performance each quarter.

Producer Price Index - PPI

Importance: !!
Source: Bureau of Labor statistics, U.S. Department of Labor.
News Announcement Time: Around the 11th of each month at 8:30 EST for the previous month.

The Producer Price Index gauges prices of goods at wholesale level. There are 3 broad subcategories within PPI: crude, intermediate, & finished. The market keeps track of the finished goods index most closely, as it represents prices for goods which are ready for sale to the end user.

University of Michigan Consumer Sentiment Index

Importance: !!
Source: The University of Michigan.
News Release/Announcement Time: Preliminary: 10:00 ET on the second Friday of the month (data for current month); Final: 10:00 ET on the fourth Friday of the month (data for current month).

The Michigan index is almost identical to the Conference Board Consumer Confidence index, though there are 2 monthly releases, a preliminary & final reading. Like the Conference Board index, it has two sub-indices - expectations and current conditions. The expectations index is a component of the Conference Board Leading Indicators index.

Institute for Supply Management - ISMInstitute for Supply Management (ISM) - Formerly referred to as the NAPM. Change was effective in January 2002. ISM is a composite diffusion index of the national manufacturing conditions.

Readings above 50 % indicate an expanding factory sector. Traders need to keep their fingers on the pulse and performance of the economic situation because it dictates how various types of investments will perform.

By tracking economic date such as and like the ISM, traders will know what the economic back-drop is for the various markets. The ISM generates a detailed look at the manufacturing sector, how busy it is & where things are headed.

Since the manufacturing industry sector is a major source of cyclical variability in the economic environment, this report has a big influence on the markets. More than one of the ISM sub-indexes provides insight on commodity prices and clues regarding the potential for inflation developing.

The Federal Reserve keeps and maintains a close watch on this data report which helps it in determining the direction of the interest rates when the inflation signals are flashing and signaling in these data reports.

Leading Trading IndicatorsLeading Indicators - A composite index of 10 economic reports/indicators that typically lead overall economic activity.

Investors and Traders need to keep their fingers on the pulse and performance of the economic situation because it dictates how various types of investments will perform.

By tracking economic information like the index of leading indicators, investors will know what the economic back-drop is for the various different markets.

The index of Leading Indicators is designed to predict turning points in the economy such as and like recessions & recoveries. Incidentally, stock prices are one of the leading trading indicators in this index.

Import and export pricesImport & export prices - The prices of goods which are brought into the United States but produced abroad and the prices of goods sold abroad but produced locally & domestically.

These prices show inflationary trends in the internationally traded and transacted products. Changes in import and export prices are a valuable gauge and measure of the inflation here(locally and domestically) & abroad. Furthermore, the data can directly impact the financial markets like bonds and the dollar.

Inflation leads to higher interest rates & that's bad news for stocks as well. By monitoring inflation measures such as and like import prices, investors can keep an eye on this menace to their portfolio.

IFO Business Climate in industry and tradeIFO Business Climate in industry & trade - IFO Business Climate Index is a-widely early indicator for economic development in Germany. Every month the IFO Institute surveys more than 7,000 enterprises in west and east Germany on their appraisal of the business situation/environment (good/satisfactory/poor) and their expectations for the next six months (better/same/worse).

The replies are weighted in accordance to the importance of the industry & aggregated. The percentage shares of the positive and negative responses to both questions are balanced & a geometric mean average is formed from the balances divided according to east and west Germany. The series of balances thus derived are linked to a base year (currently 1991) & seasonally adjusted.

APICS SurveyAPICS Survey - Composite diffusion index of the national manufacturing conditions. The APICS survey generates a thorough look at the manufacturing industry sector.

This survey is less well known that the ISM, but also can indicate trends in production. The diffusion index does not move in tandem with the ISM index every month, but sometimes the 2 do move in the same direction.

Since manufacturing is a major sector of the economy, traders can get a feel for the overall economic back-drop for various investments. An index level of 50 means no growth, but every 10 points signals gains of 4 % in manufacturing.

Beige BookBeige Book - District banks have been printing out the summaries of the economic conditions in their districts since 1970. Initially this Red Book was prepared for policymakers only and was not intended for public consumption.

It was made public in 1983. To mark this change, the color of the cover was changed & the publication became referred to as the Beige Book.

Beige Book is released 2 weeks before each FOMC meeting eight times a year. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its district through reports from bank and branch directors and interviews with key businessmen, economists, market experts, & other sources.

The Beige Book summarizes this information by district and sector. An overall and general summary of the 12 district reports is prepared by a designated Federal Reserve Bank on a rotating basis. The report is primarily seen as an indicator of how the Fed may act at its upcoming meeting.

Blue Book ReportBlue Book - A day after the green book, the FOMC members get and receive the blue book. All blue books present the Board staff's view of monetary and financial developments for the few months surrounding the meeting in question. Each book first reviews recent developments in the policy variables, including the Federal Funds rate, reserve estimates, & the monetary aggregates. The blue book also presents two or three alternative policy scenarios for the upcoming inter meeting period. The blue books written for the February and July meetings contains two extra sections to assist and help the Committee in its preparation for the Humphrey-Hawkins testimony. The first of these sections provides longer-term simulations, covering the next five or six years. This section also offers and provides estimates of how different assumptions about various components such as and like fiscal policy, the equilibrium unemployment rate, or speed of adjustment to the changed inflationary expectations would affect the predicted outcome. The second additional section in the February & July blue books sets out alternative annual ranges for growth of the monetary aggregates.

Red Book - Published every Tuesday, this report presents the detail sales of some 30 US stores produce the previous week and compared and analyzed to the previous month. It is always a forecast which counts for the request for the households but a rather volatile measurement taking in to consideration the more or less significant months for the detail business.

Business InventoriesBusiness Inventories - Dollar amount of the inventories held by the manufacturers, wholesalers & retailers. Level of inventories in relation to sales is an important technical indicator of the near-term direction of the production activity.

Investors and Traders need to monitor the economic situation closely because it mostly dictates how various different types of investments will perform. Rising inventories can be an indication signal of business optimism that sales will be growing in the coming months.

By looking at and analyzing the ratio of the inventories to sales, investors can see whether production demands will expand or contract in the near future. The business inventory information provide a valuable forward looking tool for tracking the economic environment.

Chain Stores SalesChain Stores Sales - Monthly sales volumes from department, chain, discount and apparel stores. Sales are reported by the individual retailers. Chain store sales are an indicator of retail sales & consumer spending results.

Consumer spending contributes and accounts for a total two thirds of the economy, hence if you know what the consumers are up to, you'll have a pretty good handle on where the economic situation is headed.

Sales are reported as a change from the same month a year ago. It's important to know how strong the sales actually were a year a go to make sense of this year's sales. Additionally, sales are usually reported for comparable stores in case of company mergers.

Consumer sentimentConsumer sentiment - The Survey of consumer attitudes concerning both the current situation & also their expectations in regards to the economic conditions carried out by the University of Michigan.

5 hundred consumers are surveyed each month. Level of consumer sentiment is directly proportional to the momentum of consumer spending. Consumer spending contributes and accounts for a total two-thirds of the economy, so the markets are always dying to know what consumers are up to & how they may behave in the near future.

The more confident consumers are about the economy and their own personal finances, the more likely they're to spend. With this in mind, it is easy to see how the index of the consumer attitudes gives and provides an insight to the pulse of the economic environment.

Changes in consumer sentiment & retail sales do not move in tandem month by month.

Current accountCurrent trading account - Measure of the country's international trade balance in goods, services and unilateral transfers. Level of the current trading account, & also the trends in exports and imports, are followed as indicators of the trends in the foreign trade.

U.S. Trade with foreign countries hold important clues to economic trends here & abroad. The data can directly impact all the financial trading markets, but especially the forex value of the dollar.

Factory ordersFactory orders - Dollar level of new orders for manufacturing durable goods & nondurable goods. It provides more complete info than durable goods orders which are reported 1 or 2 weeks earlier in the month.

The durable goods orders info show how busy the factories will be in coming months as manufacturers work on filling those orders. This report provides insight to the demand for not only hard goods such as and like refrigerators and cars, but nondurables like cigarettes and apparel.

In addition to new orders, analysts monitor unfilled orders, a trading indicator of the backlog in production. Shipments reveal current sales. Inventories give a handle on the momentum of current & future production.

All in all, this report tells traders what to expect from the manufacturing industry sector, a major component of the economy and hence a major influence on their investments.

Green BookGreen Book - Green book is prepared by the staff members at the Board of Governors 5 days in advance of an FOMC meeting. It presents the staff's interpretations on several economic & financial variables and is divided in to two parts.

The first part of the green book describes & interprets the significant developments in US Economic activity, prices, interest rates, flows of money and credit, & the international sector that have occurred in recent months or quarters.

This section also presents forecasts of a number of variables for next 6 to 8 quarters. The second part of the green book provides additional information on recent developments.

It describes trends in employment, production, and prices & the factors and aspects influencing them. This section also includes sector-by-sector analyzes, commenting on such areas as housing, motor vehicle production, inventories, and spending by federal, state, and local governments.

It reviews a range and variety of developments in the domestic financial trading markets, including credit patterns for banks, other financial intermediaries, non-financial businesses, & consumers.

Finally, international developments are reviewed & analyzed, with commentary on trade statistics, international financial trading transactions, forex markets, & economic activity in a number of foreign countries.

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Fundamental Economic Reports: Medium Market Movers !!