Main Economic Indicators of the World (Part 2)

National Association of Purchasing Managers (NAPM CHICAGO)

Definition: The Chicago PMI (officially known as the Business Barometer) is a monthly composite index based on opinion surveys of more than 200 Chicago purchasing managers regarding the manufacturing industry. The survey responses are limited to three options: slower, faster and same. As such, the index will not capture if a component is growing but at a much slower rate or vice versa. The index is a composite of seven similarly constructed indexes including: new orders, production, supplier delivery times, backlogs, inventories, prices paid, and employment. New orders and orders backlog indices indicate future production activity. It signals factory-sector expansion when it is above 50 and contraction when below it. The index is seasonally adjusted for the effects of variations within the year, differences due to holidays and institutional changes. Because it is an opinion survey, it is often influenced by respondents’ perception of current events, as opposed to actual hard data. Also, it does not capture technological and production changes, which make it possible for production to expand, while employment contracts. Because the Chicago PMI is released the day before the ISM, it is watched in order to predict the more important ISM report, which is in itself a good leading indicator of overall economic activity. It frequently moves markets

New Home Sales

Definition: The New Home Sales report shows the number of newly constructed homes with a committed sale during the month. The level of new home sales indicates housing market trends, and economic momentum signaling consumer purchases of furniture and appliances. Simply, the volume of sales indicates housing demand. Also, the monthly supply of homes serves as an input into the level of housing pressure. However, when analyzing sales trends, one must remember to take into account unusual weather and seasonal effects

NY Empire State Index

Definition: The New York Fed conducts this monthly survey of manufacturers in New York State. Participants from across the state represent a variety of industries. On the first of each month, the same pool of roughly 175 manufacturing executives (usually the CEO or the president) is sent a questionnaire to report the change in an assortment of indicators from the previous month. Respondents also give their views about the likely direction of these same indicators six months ahead. This index is seasonally adjusted using the Philadelphia Fed's seasonal factors because its own history is not long enough with data only going back a couple of years.

Personal Income

Definition: Personal income is simply the income received by individuals, nonprofit institutions, and private trust funds. This indicator is vital for the sales sector. Without an adequate personal income and a propensity to purchase, consumer purchases of durable and nondurable goods are limited.

Philadelphia Fed Survey

Definition: A composite diffusion index of manufacturing conditions within the Philadelphia Federal Reserve district. This survey is widely followed as an indicator of manufacturing sector trends since it is correlated with the NAPM survey and the index of industrial production.

Producer Price Index

Definition: The PPI gauges the average changes in prices received by domestic producers for their output at all stages of processing. The PPI data is compiled from most sectors of the economy, such as manufacturing, mining and agriculture.

Productivity

Definition: The economic measure of efficiency summarizing the value of outputs relative to the value of inputs.

Purchasing Managers’ Index (PMI)

Definition: The Index is widely used by industrialized economies to assess business confidence. Germany, Japan and the UK use PMI surveys for both manufacturing and services industries. The numbers are arrived at through a series of questions regarding Business activity, New Business, Employment, Input Prices, Prices Charged and Business Expectations. In addition to the headline figures, the prices paid components is highly scrutinized by the markets for evaluating pricing power and inflationary risks.

Retail Sales

Definition The retail sales report is a measure of the total receipts of retail stores from samples representing all sizes and kinds of business in retail trade throughout the nation. It is the most timely indicator of broad consumer spending patterns and is adjusted for normal seasonal variation, holidays, and trading-day differences. Retail sales include durable and nondurable merchandise sold, and services and excise taxes incidental to the sale of merchandise. Excluded are sales taxes collected directly from the customer. It also excludes spending for services, a large component of consumer expenditures. Retail sales is a the first picture of consumer spending for a given month. Retail sales are often viewed ex-autos, as auto sales can move sharply from month-to-month. Also, gas and food component changes are often a result of price changes rather than shifting consumer demand. Retail sales can be quite volatile and the advance reports are subject to large revisions.

Tankan Survey

Definition: An economic survey of Japanese business issued by the central Bank of Japan, the survey is conducted to provide an accurate picture of business trends of enterprises in Japan, thereby contributing to the appropriate implementation of monetary policy . The report is released four times a year in April, July, October and mid-December.

Tertiary Industry Index (Japan)

Definition: The tertiary index measures activity in six industries: utilities, transport and telecommunications, wholesale and retail, finance and insurance, real estate and services.

Treasury International Capital (TIC)

Definition: These Treasury data track the flows of financial instruments into and out of the United States. Instruments tracked include Treasury securities, agency securities, corporate bonds, and corporate equities.

Unemployment Rate

Definition: The percentage of the people classified as unemployed as compared to the total labor force.

Wholesale Trade

Definition: Wholesale Trade is the dollar value of sales made and of inventories held by merchant wholesalers. It is one of the components of business inventories. Statistics include sales, inventories, and stock/sale ratios, collected via mail-out/mailback survey of about 7,100 selected wholesale firms.

ZEW

Definition: The ZEW works in the field of user-related empirical economic research. In this context it particularly distinguished itself nationally and internationally by analysing internationally comparative issues in the European context and by compiling scientifically important data bases. The ZEW's duty is to carry out economic research, economic counseling and knowledge transfer. The institute focuses on decision-makers in politics, economics, and administration, scientists in the national and international arena as well as the interested public. Regular interviews on the situation on the financial markets and business-related service providers as well as large-scale annual studies on technological competitiveness of and innovation activities in the economy are representative of the different types of topical information provided by the ZEW. The ZEW is subdivided into the following five research fields: