Macroeconomic indicators are not much different from other economic indicators. A macroeconomic indicator is like any other economic indicator which provides the statistics and data of important economic financial and economic events and announcements provide by the government and non-profit organizations.
Macroeconomic indicators can be anything the investor or trader chooses, but generally, these are indicators which give economic data of macroeconomic scale that allow predicting the future direction of financial markets and overall health of an economy. Also, macroeconomic indicators vary in impact, frequency, and time, and they have a huge influence on the financial markets as well.
This is why many economists, investors, traders, and market researchers. If you are an investor and beginning investing in the stock market or other financial markets then you should follow these vital macroeconomic indicators. Even if you don’t partake, still it would be helpful to know how the “Experts” analyze and share their opinions from.
List of Important Macroeconomic Indicators
As we said earlier, macroeconomic indicators are no different from other economic indicators. Mostly, it depends upon the investor or trader’s choice and investment type. Even then there are some key economic indicators that are considered as macroeconomic indicators since they have a high impact and influence on a country’s overall health and its financial markets.
Some of the macroeconomic indicators are as follows:
Gross Domestic Product (GDP)
GDP is on top of the list of macroeconomic indicators. It is because, to the investors and economists, it is the macroeconomic indicator that measures a country’s currency economic health. It gives the data of the total value of overall goods and services within a country. It is a high impact data that not only affects a country’s economy but also its financial markets and businesses. Thus, many businesses adjust their expenditures, payrolls, and other investments based on the GDP data.
If the GDP increases, the economy increases too, and vice-versa. But, we would suggest to not taking it granted. After all, it can be misleading like the stock market. Because GDP tells what already happened not what is going to happen. On the basis of data analysis, the economists and research analysts make their assumptions on future movement and tell if the country is entering a recession or not.
Generally, the GDP data announced at the end of each quarter i.e. February, May, August, and November.
Interest Rate Decisions
The interest rates decisions taken by a country’s Federal Reserve are considered to be the most important economic event which directly influences the stock market, forex market, and other financial markets. For instance, if the Federal Reserve (Reserve Bank of India) in India decided to increase the interest rates then the overall value of the country increases too. If that happens, it will automatically attract the foreign investments which ultimately increase the demand of the country’s currency, and vice-versa.
That’s why “Interest rates” is considered the second most important macroeconomic indicator which gives hint on the future direction of the economy and measures the inflation.
That explains why many investors and economists use the economic calendar to keep an eye on the interest rate data. Interest rate data also release every quarter.
Consumer Price Index (CPI)
Consumer price index aka CPI is a macroeconomic data that measures the inflation from consumers’ end. It is one of the key economic indicators which India has recently adopted to measure inflation. Prior to this, India was relying on the Wholesale Price Index (WPI).
CPI measures the price changes in a basket of goods and services on the consumers’ level. Also, it covers both rural and urban part of the country so that special measures in favor of economic development can be taken for both rural and urban benefits. Furthermore, data indicating the prices driven by the consumer demand and supply gives better information on inflation as compared to WPI.
Thus, many government agencies, non-profit organizations, and retail investors use the economic calendar to see through the periodic data of CPI to make well-informed and smart decisions for their investment portfolios.
According to many economists, non-farm payrolls is the foremost and most important macroeconomic indicator which directly impacts the stock market, forex market and other financial markets on a global level.
NFP data usually come on a monthly basis which reveals the data on all non-farm jobs in the United States of America. However, it doesn’t count farm work and private household employees. It is because the farming industry mostly does seasonal hiring.
Industrial production may not treat as a top tier macroeconomic indicator but it is no less than CPI, GDP, and interest rates. At least for investors!
Industrial production is data of raw volumes of goods produced by mines, electric utilities, and industrial factories. This economic indicator measures the inflation on an industrial level and since most investors are invested in big industries and organizations, the industrial production data allows them to foresee the future direction of market and stocks based on industries.
However, there is a drawback of this economic data that it only calculates the physical goods-producing industries and firms, not construction production.
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