Economic indicators and their meaning, part І

economic indicators
Economic indicators

These are some of the most widely used economic indicators, and a little additional information for them:

Trade Balance

This indicator represents the difference between exports and imports of a particular country. If the sum of the prices of the exported goods is higher than that of the imported goods, then the trade balance is active (positive balance), and if the imports exceed the exports, we have a negative balance. The surplus (or a decrease the negative balance) is a favorable factor for the growth rate of the national currency. The trade balance also affects the country’s GDP, because increased export create opportunities for new jobs and growth in production. This is an extremely important indicator for the market.

Trade balance (seasonally adjusted)

Seasonally adjusted data are introduced, because of the seasonal fluctuations. Such variations include climate change, weekends, holiday periods and seasonal work.

Index of business activity in the economy

All Industries Activity Index – this index reflects the monthly change in production of all sectors of the Japanese economy. It closely follows GDP and the economic growth data. This index has insignificant influence on the market.

Sale of new cars

The sales are measured in the number of new vehicles sold according to the previous month. Growth in the indicator gives a beneficial effect on the currency, because the demand for cars, as durable goods, is a general indicator of consumer spending.

Consumer Price Index

This indicator is determined by the change in the level of retail prices of goods and services in the consumer basket according to the previous month. In its calculation, we consider the prices of imported goods and services. This is a major indicator for the level of inflation in the country. It is used along with the indicator PPI. If the economy develops in normal conditions, the increase in the values of CPI and PPI can lead to higher interest rates in the country. This in turn, leads to an increase in the rate of the national currency, because the attractiveness of foreign investment funds becomes bigger.

Harmonised index of consumer prices

The harmonized index of consumer price is an indicator, designed to align the measurement of price changes in consumer goods and services in all European countries. Inflation calculated in this way, is used to predict the monetary policy of the countries.

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