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Per traders alle prime armi
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I profitti sono tuoi, le perdite annullate
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Keep up to date with the most important events and economic indicators that drive the Forex Market.
Use the Date Range button below in order to go back to previous weeks.
Events may also be brought into focus by filtering their origin and level of importance.
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Today: 2 September 2010
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Results for the week of:29/08/2010 - 04/09/2010
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| 30/08/2010 | | | | Market Holiday | | | | | |
| Country: UK |
| 30/08/2010 | 04:30 | | | Building Permits | 2.3% | -0.7% | -3.3% | Jul |  |
Country: Australia
Source: The Census Bureau of the Department of Commerce.
Raw Data Available At: http://www.census.gov/const/www/newresconstindex.html
Release Time: 8:30 ET around the 16th of the month (data for one month prior).
Housing Starts are a measure of the number of residential units on which construction is begun each month. A start in construction is defined as the beginning of excavation of the foundation for the building and is comprised primarily of residential housing. Building permits are permits taken out in order to allow excavation. An increase in building permits and starts usually occurs a few months after a reduction in mortgage rates. Permits lead starts, but permits are not required in all regions of the country, and the level of permits therefore tends to be less than the level of starts over time.
The monthly national report is broken down by region: Northeast, Midwest, South, and West. Briefing recommends analyzing the regional data because they are subject to a high degree of volatility. The high volatility can be attributed to weather changes and/or natural disasters. For example, an unexpectedly high level of rain in South could delay housing starts for the region.
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| 30/08/2010 | 09:00 | | | Consumer Confidence | -11.0 | -12.0 | -14.0 | Aug | |
Country: EMU
Source: The Conference Board.
Raw Data Available At: http://www.tcb-indicators.org/
Release Time: 10:00 ET on the last Tuesday of the month (data for current month).
This survey measures the level of confidence individual households have in the performance of the economy now and in the future. It is a leading indicator of future spending and the business cycle. 5000 consumers in the nine census divisions across the country are surveyed each month. The level of consumer confidence is directly correlated to the strength of consumer spending, which accounts for two-thirds of the economy. It also correlates closely with joblessness, inflation, and real incomes. 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. The index consists of two subindexes - consumers' appraisal of current conditions and their expectations for the future. Expectations make up 60% of the total index, with current conditions accounting for the other 40%. The expectations index is typically seen as having better leading indicator qualities than the current conditions index. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. Note, changes in consumer confidence and retail sales do not move in tandem month by month. If the economy experiences a long-term expansion, buying intentions may decline even while the jobless rate declines because of the satisfaction of pent-up demand. Conversely, if inflation begins to accelerate, spending plans may increase for the short-term as consumers buy now to avoid having to pay higher prices later. Regional differences in consumer confidence are an indication of differing business cycles across the nation. This has implications for spending on durable goods and, more importantly, for residential real estate markets. Financial markets interpret rising consumer confidence as a precursor to higher consumer spending. Higher consumer spending could in turn spark inflation. Look for a change in the direction of the six month moving average of the index. Consumers do not usually have the necessary information to accurately assess income and job growth six months in the future. The report provides information on planned spending, which does not necessarily turn into actual spending, although it is unlikely that increasing consumer confidence would be followed by a decline in spending. The Consumer Confidence survey is not useful for any type of forecasting.
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| 30/08/2010 | 09:00 | | | Industrial Sentiment | -4.0 | -4.0 | -4.0 | Aug | |
| Country: EMU |
| 30/08/2010 | 09:00 | | | Service Sentiment | 7.0 | 6.0 | 6.0 | Aug | |
| Country: EMU |
| 30/08/2010 | 12:30 | | | Personal Consumption | 0.2% | 0.3% | 0.0% | Jul | |
| Country: US |
| 30/08/2010 | 12:30 | | | Core PCE mm | 0.1% | 0.1% | 0.0% | Jul | |
Country: US
Source: The Bureau of Economic Analysis of the Department of Commerce.
Raw Data Available At: http://www.bea.doc.gov/bea/rels.htm
Release Time: 8:30 ET around the first business day of the month (data for two months prior).
Personal income measures income from all sources. The largest component of total income is wages and salaries, a figure which can be estimated using payrolls and earnings data from the employment report. Beyond that, there are many other categories of income, including rental income, government subsidy payments, interest income, and dividend income. Personal income is a decent indicator of future consumer demand, but it is not perfect. Recessions usually occur when consumers stop spending, which then drives down income growth. Looking solely at income growth, one may therefore miss the turning point when consumers stop spending.
The income report also includes a section covering personal consumption expenditures, also known as PCE. PCE is comprised of three categories: durables, nondurables, and services. The retail sales report will provide a good read on durable and nondurable consumption, while service purchases tend to grow at a fairly steady pace, making this a relatively predictable report, and ranking it well below retail sales in terms of market importance.
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| 30/08/2010 | 12:30 | | | Core PCE yy | 1.4% | | 1.4% | Jul | |
Country: US
Source: The Bureau of Economic Analysis of the Department of Commerce.
Raw Data Available At: http://www.bea.doc.gov/bea/rels.htm
Release Time: 8:30 ET around the first business day of the month (data for two months prior).
Personal income measures income from all sources. The largest component of total income is wages and salaries, a figure which can be estimated using payrolls and earnings data from the employment report. Beyond that, there are many other categories of income, including rental income, government subsidy payments, interest income, and dividend income. Personal income is a decent indicator of future consumer demand, but it is not perfect. Recessions usually occur when consumers stop spending, which then drives down income growth. Looking solely at income growth, one may therefore miss the turning point when consumers stop spending.
The income report also includes a section covering personal consumption expenditures, also known as PCE. PCE is comprised of three categories: durables, nondurables, and services. The retail sales report will provide a good read on durable and nondurable consumption, while service purchases tend to grow at a fairly steady pace, making this a relatively predictable report, and ranking it well below retail sales in terms of market importance.
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| 30/08/2010 | 12:30 | | | Personal Consumption Exp. mm | 0.2% | | -0.1% | Jul | |
Country: US
Source: The Bureau of Economic Analysis of the Department of Commerce.
Raw Data Available At: http://www.bea.doc.gov/bea/rels.htm
Release Time: 8:30 ET around the first business day of the month (data for two months prior).
Personal income measures income from all sources. The largest component of total income is wages and salaries, a figure which can be estimated using payrolls and earnings data from the employment report. Beyond that, there are many other categories of income, including rental income, government subsidy payments, interest income, and dividend income. Personal income is a decent indicator of future consumer demand, but it is not perfect. Recessions usually occur when consumers stop spending, which then drives down income growth. Looking solely at income growth, one may therefore miss the turning point when consumers stop spending.
The income report also includes a section covering personal consumption expenditures, also known as PCE. PCE is comprised of three categories: durables, nondurables, and services. The retail sales report will provide a good read on durable and nondurable consumption, while service purchases tend to grow at a fairly steady pace, making this a relatively predictable report, and ranking it well below retail sales in terms of market importance.
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| 30/08/2010 | 12:30 | | | Personal Consumption Exp. yy | 1.5% | | 1.4% | Jul | |
Country: US
Source: The Bureau of Economic Analysis of the Department of Commerce.
Raw Data Available At: http://www.bea.doc.gov/bea/rels.htm
Release Time: 8:30 ET around the first business day of the month (data for two months prior).
Personal income measures income from all sources. The largest component of total income is wages and salaries, a figure which can be estimated using payrolls and earnings data from the employment report. Beyond that, there are many other categories of income, including rental income, government subsidy payments, interest income, and dividend income. Personal income is a decent indicator of future consumer demand, but it is not perfect. Recessions usually occur when consumers stop spending, which then drives down income growth. Looking solely at income growth, one may therefore miss the turning point when consumers stop spending.
The income report also includes a section covering personal consumption expenditures, also known as PCE. PCE is comprised of three categories: durables, nondurables, and services. The retail sales report will provide a good read on durable and nondurable consumption, while service purchases tend to grow at a fairly steady pace, making this a relatively predictable report, and ranking it well below retail sales in terms of market importance.
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| 30/08/2010 | 12:30 | | | Current Account | -11.02b | -10.70b | -7.82b | Q2 | |
Country: Canada
The most important part of international trade data. It is the broadest measure of sales and purchases of goods, services, interest payments and unilateral transfers. The entire merchandise trade balance is contained in the current account.
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| 30/08/2010 | 12:30 | | | Core PPI mm | 0.1% | | -0.9% | Jul | |
Country: Canada
Source: Bureau of Labor statistics, U.S. Department of Labor.
Raw Data Available At: http://stats.bls.gov/news.release/ppi.toc.htm
Release Time: Around the 11th of each month at 8:30 ET for the prior month.
The Producer Price Index measures prices of goods at the wholesale level. There are three broad subcategories within PPI: crude, intermediate, and finished. The market tracks the finished goods index most closely, as it represents prices for goods that are ready for sale to the end user. Goods prices at the crude and intermediate stages of production often provide an indication of coming (dis)inflationary pressures, but the closer you get to crude goods, the more that these prices track commodity prices which are already available in traded indexes such as the CRB (Commodity Research Bureau).
At all stages of production, the market places more emphasis on the index excluding food and energy, referred to as the core rate. Food and energy prices tend to be quite volatile and obscure trends in the underlying inflation rate. Though the market reaction is determined by the month/month changes, year/year changes are also noted by analysts. The index is not revised on a monthly basis, but annual revisions to seasonal adjustment factors can produce small adjustments to past releases.
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| 30/08/2010 | 12:30 | | | Core PPI yy | 1.0% | | 0.2% | Jul | |
Country: Canada
Source: Bureau of Labor statistics, U.S. Department of Labor.
Raw Data Available At: http://stats.bls.gov/news.release/ppi.toc.htm
Release Time: Around the 11th of each month at 8:30 ET for the prior month.
The Producer Price Index measures prices of goods at the wholesale level. There are three broad subcategories within PPI: crude, intermediate, and finished. The market tracks the finished goods index most closely, as it represents prices for goods that are ready for sale to the end user. Goods prices at the crude and intermediate stages of production often provide an indication of coming (dis)inflationary pressures, but the closer you get to crude goods, the more that these prices track commodity prices which are already available in traded indexes such as the CRB (Commodity Research Bureau).
At all stages of production, the market places more emphasis on the index excluding food and energy, referred to as the core rate. Food and energy prices tend to be quite volatile and obscure trends in the underlying inflation rate. Though the market reaction is determined by the month/month changes, year/year changes are also noted by analysts. The index is not revised on a monthly basis, but annual revisions to seasonal adjustment factors can produce small adjustments to past releases.
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| 30/08/2010 | 23:00 | | | GFK Consumer Sentiment | -18 | -24 | -22 | Jul | |
| Country: UK |
| 30/08/2010 | 23:15 | | | Manufacturing PMI | 50.1 | | 52.8 | Aug | |
Country: Japan
Source: Institute for Supply Management.
Raw Data Available At: http://www.ism.ws/ISMReport/index.cfm
Release Time: 10:00 ET on the first business day of the month for the prior month.
ISM: Institute for Supply Management
formerly NAPM: National Association of Purchasing Managers
In Brief
The ISM report is a national survey of purchasing managers which covers such indicators as new orders, production, employment, inventories, delivery times, prices, export orders, and import orders. Diffusion indexes are produced for each of these categories, with a reading over 50% indicating expansion relative to the prior month, and a sub-50% reading indicating contraction.
The total index is calculated based on a weighted average of the following five sub-indexes, with weights in parentheses: new orders (30%), production (25%), employment (20%), deliveries (15%), and inventories (10%).
The ISM is one of the first comprehensive economic releases of the month, typically preceding the employment report. Though it covers only the manufacturing sector, it can often provide accurate hints regarding the tone of subsequent releases. During periods of inflation concerns, the prices paid and vendor deliveries indexes often determine the bond market's reaction to the report.
In Depth
The Institute for Supply Management's monthly Report on Business is probably the most widely watched economic indicator produced by the private sector. There are two key reasons for the ISM's prominence. First, its longevity - the report was first produced in 1931, and after a break during World War II, it has produced continuously since 1948. Second , its leading quality - the ISM has been one of the better predictors of the business cycle over the years.
Who and What It Surveys
The ISM index is the result of a monthly survey of over 400 companies in 20 industries throughout the 50 states. The survey queries respondents on a number of monthly indicators, including orders, production, employment, inventories, delivery times, prices paid, export orders, and import orders. Respondents are asked to characterize each indicator as higher, lower, or unchanged for the month (or faster/slower in the case of delivery times). They are not asked for specific numbers - only a thumbs up or down.
Presenting the Numbers
Based on these responses, the ISM calculates diffusion indexes for each of the components. These diffusion indexes are calculated by adding half of the percentage of respondents answering "unchanged" to the percentage answering "higher" (or "slower" for deliveries). These diffusion indexes do not yield estimates of specific magnitudes of strength or weakness, but the more respondents who are indicating trends in the same direction - the better the chance that the magnitude of that move is larger.
A diffusion index of 50% is the theoretical breakeven mark - with readings above indicating strength and below indicating weakness. The ISM only provides the raw data - the Department of Commerce produces the seasonal factors which are used to provide more meaningful, seasonally adjusted indexes.
The total index is not the result of a separate question regarding general business conditions (as is the case with the Philadelphia Fed index). Instead, the index is calculated using the weighted sum of five of the subindexes. Orders account for 30% of the total; production - 25%; employment - 20%; deliveries - 15%; inventories - 10%. Prices, export orders, and import orders are not part of the total index.
Breakevens in Theory and Practice
Though 50% is the breakeven mark in theory, different readings have proved to be breakeven in practice. For new orders, 50.3% is the level consistent with breakeven readings in factory orders. For production, 49.4% has been the breakeven mark in theory and practice. For employment, 47.5% has been consistent with a steady level of manufacturing employment. For inventories, 41.3% has been consistent with steady business inventory readings. And finally, the 42.7% mark on the total index marks the point below which the overall economy is believed to be in recession. Between 42.7-50%, the manufacturing sector may be in decline, but the total economy is only seeing slower growth.
No Services
This observation highlights the important element which is missing from the ISM index - the service sector. With the manufacturing sector making up an ever-shrinking percentage of the total economy - the ISM might seem to be an indicator in decline. Not so, however - the manufacturing sector, while shrinking in relative terms, still tends to lead the total economy into and out of recessions. The ISM therefore remains a closely watched indicator despite its manufacturing focus.
A Proven Performer
The ISM's leading quality has been proven over time. Its bottom during a recession has preceded the turning point for the business cycle by an average of four months, and its worst performance in leading the turning point was on two occasions when the ISM trough occurred in the same month as the business cycle trough. The ISM index is released on the first business day of each at 10:00 ET, with data for the prior calendar month.
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| 30/08/2010 | 23:50 | | | Retail Sales yy | 3.9% | 3.5% | 3.2% | Jul | |
Country: Japan
Source: The Census Bureau of the Department of Commerce.
Raw Data Available At: http://www.census.gov/svsd/www/advtable.html
Release Time: 8:30 ET around the 13th of the month (data for one month prior).
The retail sales report is a measure of the total receipts of retail stores. The changes in retail sales are widely followed as the most timely indicator of broad consumer spending patterns. Retail sales are often viewed ex-autos, as auto sales can move sharply from month-to-month. It is also important to keep an eye on the gas and food components, where changes in sales 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 rather large revisions. Retail sales do not include spending on services, which makes up over half of total consumption. Total personal consumption is not available until the personal income and consumption reports are released, typically two weeks after retail sales.
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| 31/08/2010 | 01:30 | | | Retail Sales mm | 0.7% | 0.4% | 0.2% | Jul | |
Country: Australia
Source: The Census Bureau of the Department of Commerce.
Raw Data Available At: http://www.census.gov/svsd/www/advtable.html
Release Time: 8:30 ET around the 13th of the month (data for one month prior).
The retail sales report is a measure of the total receipts of retail stores. The changes in retail sales are widely followed as the most timely indicator of broad consumer spending patterns. Retail sales are often viewed ex-autos, as auto sales can move sharply from month-to-month. It is also important to keep an eye on the gas and food components, where changes in sales 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 rather large revisions. Retail sales do not include spending on services, which makes up over half of total consumption. Total personal consumption is not available until the personal income and consumption reports are released, typically two weeks after retail sales.
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| 31/08/2010 | 05:00 | | | Housing Starts yy | 4.3% | 2.9% | 0.6% | Jul | |
Country: Japan
Source: The Census Bureau of the Department of Commerce.
Raw Data Available At: http://www.census.gov/const/www/newresconstindex.html
Release Time: 8:30 ET around the 16th of the month (data for one month prior).
Housing Starts are a measure of the number of residential units on which construction is begun each month. A start in construction is defined as the beginning of excavation of the foundation for the building and is comprised primarily of residential housing. Building permits are permits taken out in order to allow excavation. An increase in building permits and starts usually occurs a few months after a reduction in mortgage rates. Permits lead starts, but permits are not required in all regions of the country, and the level of permits therefore tends to be less than the level of starts over time.
The monthly national report is broken down by region: Northeast, Midwest, South, and West. Briefing recommends analyzing the regional data because they are subject to a high degree of volatility. The high volatility can be attributed to weather changes and/or natural disasters. For example, an unexpectedly high level of rain in South could delay housing starts for the region.
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| 31/08/2010 | 08:00 | | | Unemployment Rate | 7.6% | 7.6% | 7.6% | Aug | |
Country: Germany
Source: Bureau of Labor Statistics, U.S. Department of Labor.
Raw Data Available At: http://stats.bls.gov/news.release/empsit.toc.htm
Release Time: First Friday of the month at 8:30 ET for the prior month.
In Brief
The employment report is actually two separate reports which are the results of two separate surveys. The household survey is a survey of roughly 60,000 households. This survey produces the unemployment rate. The establishment survey is a survey of 375,000 businesses. This survey produces the nonfarm payrolls, average workweek, and average hourly earnings figures, to name a few. Both surveys cover the payroll period which includes the 12th of each month.
The reports both measure employment levels, just from different angles. Due to the vastly different size of the survey samples (the establishment survey not only surveys more businesses, but each business employs many individuals), the measures of employment may differ markedly from month to month. The household survey is used only for the unemployment measure - the market focusses primarily on the more comprehensive establishment survey. Together, these two surveys make up the employment report, the most timely and broad indicator of economic activity released each month.
Total payrolls are broken down into sectors such as manufacturing, mining, construction, services, and government. The markets follows these components closely as indicators of the trends in sectors of the economy; the manufacturing sector is watched the most closely as it often leads the business cycle. The data also include breakdowns of hours worked, overtime, and average hourly earnings.
The average workweek (also known as hours worked) is important for two reasons. First, it is a critical determinant of such monthly indicators as industrial production and personal income. Second, it is considered a useful indicator of labor market conditions: a rising workweek early in the business cycle may be the first indication that employers are preparing to boost their payrolls, while late in the cycle a rising workweek may indicate that employers are having difficulty finding qualified applicants for open positions. Average earnings are closely followed as an indicator of potential inflation. Like the price of any good or service, the price of labor reacts to an overly accommodative monetary policy. If the price of labor is rising sharply, it may be an indication that too much money is chasing too few goods, or in this case employees.
In Depth
The employment report is really two reports - the household survey and the establishment survey. These two surveys contain a wealth of timely information which justify this report's status as the most important economic release of the month. This same wealth of information can nevertheless turn into a dearth of knowledge if it is not placed in the proper context.
Household and Establishment Surveys
The household and establishment surveys differ due to the source of the data, as the names suggest. The household survey is a survey of households and the establishment survey is a surveys of businesses. The establishment survey, which is sometimes referred to as the payrolls survey, is favored by the market for a simple reason - it is far more comprehensive. Both surveys attempt to measure employment conditions at the roughly the same point in time - the household survey covers the calendar week which includes the 12th of the month while the establishment survey covers the pay period (be it a week, two weeks, or longer) which includes the 12th. But the establishment survey covers 390,000 businesses which employ 47 million people, while the household survey covers just 50,000 individuals. With a sample size which is 940 times larger than the household survey, it is hardly surprising that the market is more interested in the establishment survey.
Aside from the sample size, the surveys differ in other significant ways. The household survey counts farm workers, the self-employed, unpaid family workers, and private household workers as employed; the establishment survey does not. The household survey can only count one individual as employed once, even if that person holds two jobs. The establishment survey will double count an individual who appears on the payrolls of two companies. There are other, less significant differences, but let's turn now to the statistics produced by the two surveys.
The Household Survey
The Unemployment Rate
As we noted earlier, the household survey is not nearly as reliable as the establishment survey due to the small size of the survey sample. This survey nevertheless receives attention, primarily because it is responsible for the one figure which is guaranteed to lead the nightly news - the unemployment rate. The unemployment rate demands little explanation, though it is worth noting that the rate can occasionally sees significant monthly changes which are due to flukes in the data. The rate is simply the result of dividing the number of people unemployed (labor force less employed) by the number of people in the labor force.
The problem is that the employment and labor force measures in the household survey are far more volatile than even nonfarm payrolls. The reason, of course, is the small survey sample size. It is therefore useful to look at the labor force and employment figures themselves to determine if changes in the unemployment rate are due to aberrant swings in one or both of these series.
Beyond the basics of tallying up the labor force and employment, the household survey breaks down these totals in every way imaginable - by gender, race, age, type of job, duration of unemployment, and on and on. These breakdowns seldom are of interest to the financial markets. Perhaps the only two exceptions are the discouraged worker and part-time worker measures.
Discouraged Workers
Discouraged workers are people who have dropped out of the labor force because they have become discouraged about their job prospects. During hard times, this statistic is often watched alongside the unemployment rate. If the job situation gets exceptionally bleak, it is possible to see the unemployment rate remaining stable not because people are finding jobs, but because they have given up looking and dropped out of the labor force.
Part-Time Workers
The issue of part time employment has arisen in recent years as many analysts have argued that strong payroll growth reflected the increase in the number of workers holding multiple part-time jobs. Since the payroll data do not differentiate between full and part-time workers, it is possible that a sudden surge in part-time employment which reflected poor full-time job prospects would actually boost payroll growth. In reality, it does not appear that this has happened, as part-time employment has been relatively steady in recent years. This figure nevertheless receives attention from time to time.
The Big Picture
Given the wealth of data contained in the employment report, it is important to take all of these indicators into account when passing judgment on the report. Looking at payrolls along is often misleading, as the workweek, earnings, and household employment measures may be telling a different story. Taken together, however, and taken with the caveats concerning monthly volatility and revisions, the employment report offers the best monthly glimpse of the economy.
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| 31/08/2010 | 08:30 | | | Consumer Credit mm | 0.173b | 0.0b | -0.10b | Jul | |
Country: UK
Source: Federal Reserve.
Raw Data Available At: http://www.census.gov/const/www/c30index.html
Release Time: 15:00 ET on the fifth business day of the month (data for two months prior).
This monthly measure of consumer debt is volatile and subject to massive revisions. It is also released well after every other consumer spending indicator, including weekly chain store sales, auto sales, consumer confidence, retail sales, and personal consumption. For these reasons, the market almost never reacts to the consumer credit report.
Consumer credit is broken down into three categories: auto, revolving (ie, credit card), and other. Since we already have indications on total consumer spending well before this release, there is little to be gained from learning what portion of spending was financed through acquisition of debt. Periods of strong spending can be accompanied by relatively weak credit growth and vice versa, so this measure fails even as a coincident or lagging indicator.
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| 31/08/2010 | 09:00 | | | Unemployment Rate | 10.0% | 10.0% | 10.0% | Jul | |
Country: EMU
Source: Bureau of Labor Statistics, U.S. Department of Labor.
Raw Data Available At: http://stats.bls.gov/news.release/empsit.toc.htm
Release Time: First Friday of the month at 8:30 ET for the prior month.
In Brief
The employment report is actually two separate reports which are the results of two separate surveys. The household survey is a survey of roughly 60,000 households. This survey produces the unemployment rate. The establishment survey is a survey of 375,000 businesses. This survey produces the nonfarm payrolls, average workweek, and average hourly earnings figures, to name a few. Both surveys cover the payroll period which includes the 12th of each month.
The reports both measure employment levels, just from different angles. Due to the vastly different size of the survey samples (the establishment survey not only surveys more businesses, but each business employs many individuals), the measures of employment may differ markedly from month to month. The household survey is used only for the unemployment measure - the market focusses primarily on the more comprehensive establishment survey. Together, these two surveys make up the employment report, the most timely and broad indicator of economic activity released each month.
Total payrolls are broken down into sectors such as manufacturing, mining, construction, services, and government. The markets follows these components closely as indicators of the trends in sectors of the economy; the manufacturing sector is watched the most closely as it often leads the business cycle. The data also include breakdowns of hours worked, overtime, and average hourly earnings.
The average workweek (also known as hours worked) is important for two reasons. First, it is a critical determinant of such monthly indicators as industrial production and personal income. Second, it is considered a useful indicator of labor market conditions: a rising workweek early in the business cycle may be the first indication that employers are preparing to boost their payrolls, while late in the cycle a rising workweek may indicate that employers are having difficulty finding qualified applicants for open positions. Average earnings are closely followed as an indicator of potential inflation. Like the price of any good or service, the price of labor reacts to an overly accommodative monetary policy. If the price of labor is rising sharply, it may be an indication that too much money is chasing too few goods, or in this case employees.
In Depth
The employment report is really two reports - the household survey and the establishment survey. These two surveys contain a wealth of timely information which justify this report's status as the most important economic release of the month. This same wealth of information can nevertheless turn into a dearth of knowledge if it is not placed in the proper context.
Household and Establishment Surveys
The household and establishment surveys differ due to the source of the data, as the names suggest. The household survey is a survey of households and the establishment survey is a surveys of businesses. The establishment survey, which is sometimes referred to as the payrolls survey, is favored by the market for a simple reason - it is far more comprehensive. Both surveys attempt to measure employment conditions at the roughly the same point in time - the household survey covers the calendar week which includes the 12th of the month while the establishment survey covers the pay period (be it a week, two weeks, or longer) which includes the 12th. But the establishment survey covers 390,000 businesses which employ 47 million people, while the household survey covers just 50,000 individuals. With a sample size which is 940 times larger than the household survey, it is hardly surprising that the market is more interested in the establishment survey.
Aside from the sample size, the surveys differ in other significant ways. The household survey counts farm workers, the self-employed, unpaid family workers, and private household workers as employed; the establishment survey does not. The household survey can only count one individual as employed once, even if that person holds two jobs. The establishment survey will double count an individual who appears on the payrolls of two companies. There are other, less significant differences, but let's turn now to the statistics produced by the two surveys.
The Household Survey
The Unemployment Rate
As we noted earlier, the household survey is not nearly as reliable as the establishment survey due to the small size of the survey sample. This survey nevertheless receives attention, primarily because it is responsible for the one figure which is guaranteed to lead the nightly news - the unemployment rate. The unemployment rate demands little explanation, though it is worth noting that the rate can occasionally sees significant monthly changes which are due to flukes in the data. The rate is simply the result of dividing the number of people unemployed (labor force less employed) by the number of people in the labor force.
The problem is that the employment and labor force measures in the household survey are far more volatile than even nonfarm payrolls. The reason, of course, is the small survey sample size. It is therefore useful to look at the labor force and employment figures themselves to determine if changes in the unemployment rate are due to aberrant swings in one or both of these series.
Beyond the basics of tallying up the labor force and employment, the household survey breaks down these totals in every way imaginable - by gender, race, age, type of job, duration of unemployment, and on and on. These breakdowns seldom are of interest to the financial markets. Perhaps the only two exceptions are the discouraged worker and part-time worker measures.
Discouraged Workers
Discouraged workers are people who have dropped out of the labor force because they have become discouraged about their job prospects. During hard times, this statistic is often watched alongside the unemployment rate. If the job situation gets exceptionally bleak, it is possible to see the unemployment rate remaining stable not because people are finding jobs, but because they have given up looking and dropped out of the labor force.
Part-Time Workers
The issue of part time employment has arisen in recent years as many analysts have argued that strong payroll growth reflected the increase in the number of workers holding multiple part-time jobs. Since the payroll data do not differentiate between full and part-time workers, it is possible that a sudden surge in part-time employment which reflected poor full-time job prospects would actually boost payroll growth. In reality, it does not appear that this has happened, as part-time employment has been relatively steady in recent years. This figure nevertheless receives attention from time to time.
The Big Picture
Given the wealth of data contained in the employment report, it is important to take all of these indicators into account when passing judgment on the report. Looking at payrolls along is often misleading, as the workweek, earnings, and household employment measures may be telling a different story. Taken together, however, and taken with the caveats concerning monthly volatility and revisions, the employment report offers the best monthly glimpse of the economy.
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| 31/08/2010 | 12:30 | | | Gross Domestic Product (GDP) mm | 0.2% | 0.2% | 0.1% | Jun | |
Country: Canada
Source: Bureau of Economic Analysis, U.S. Department of Commerce.
Raw Data Available At: http://www.bea.doc.gov/bea/dn1.htm
Release Time: Third or fourth week of the month at 8:30 ET for the prior quarter, with subsequent revisions released in the second and third months of the quarter.
Gross Domestic Product (GDP) is the broadest measure of economic activity. Annualized quarterly percent changes in GDP reflect the growth rate of total economic output. The figures can be quite volatile from quarter to quarter. Inventory and net export swings in particular can produce significant volatility in GDP. The final sales figure, which excludes inventories, can sometimes be helpful in identifying underlying growth trends as inventories represent unsold goods, and a large inventory increase will boost GDP but might be indicative of weakness rather than strength. The broad components of GDP are: consumption, investment, net exports, government purchases, and inventories. Consumption is by far the largest component, totalling roughly 2/3rds of GDP.
In addition to the GDP figures, there are GDP deflators, which measure the change in prices in total GDP and for each component. Though the consumer price index is a more closely watched inflation indicator, the GDP deflator is another key inflation measure. Unlike CPI, it has the advantage of not being a fixed basket of goods and services, so that changes in consumption patterns or the introduction of new goods and services will be reflected in the deflator.
With both GDP and the deflator, the market tends to focus on the quarter/quarter change. Year/year changes are also cited frequently, though they do not provide the most timely indications of economic activity or inflation. The bond market often reacts to GDP, though the price moves are typically small, as much of the GDP data is easily predicted using monthly economic releases such as personal consumption, durable goods shipments, construction spending, international trade, and inventories.
Quarterly GDP reports are broken down into three announcements: advance, preliminary, and final. After the final revision, GDP is not revised again until the annual benchmark revisions each July. These revisions can be quite large and usually affect the past five years of data.
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| 31/08/2010 | 12:30 | | | Gross Domestic Product (GDP) qq | 0.5% | | 1.5% | Q2 | |
Country: Canada
Source: Bureau of Economic Analysis, U.S. Department of Commerce.
Raw Data Available At: http://www.bea.doc.gov/bea/dn1.htm
Release Time: Third or fourth week of the month at 8:30 ET for the prior quarter, with subsequent revisions released in the second and third months of the quarter.
Gross Domestic Product (GDP) is the broadest measure of economic activity. Annualized quarterly percent changes in GDP reflect the growth rate of total economic output. The figures can be quite volatile from quarter to quarter. Inventory and net export swings in particular can produce significant volatility in GDP. The final sales figure, which excludes inventories, can sometimes be helpful in identifying underlying growth trends as inventories represent unsold goods, and a large inventory increase will boost GDP but might be indicative of weakness rather than strength. The broad components of GDP are: consumption, investment, net exports, government purchases, and inventories. Consumption is by far the largest component, totalling roughly 2/3rds of GDP.
In addition to the GDP figures, there are GDP deflators, which measure the change in prices in total GDP and for each component. Though the consumer price index is a more closely watched inflation indicator, the GDP deflator is another key inflation measure. Unlike CPI, it has the advantage of not being a fixed basket of goods and services, so that changes in consumption patterns or the introduction of new goods and services will be reflected in the deflator.
With both GDP and the deflator, the market tends to focus on the quarter/quarter change. Year/year changes are also cited frequently, though they do not provide the most timely indications of economic activity or inflation. The bond market often reacts to GDP, though the price moves are typically small, as much of the GDP data is easily predicted using monthly economic releases such as personal consumption, durable goods shipments, construction spending, international trade, and inventories.
Quarterly GDP reports are broken down into three announcements: advance, preliminary, and final. After the final revision, GDP is not revised again until the annual benchmark revisions each July. These revisions can be quite large and usually affect the past five years of data.
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| 31/08/2010 | 13:00 | | | House Prices | 4.2% | 3.9% | 4.6% | Jun | |
| Country: US |
| 31/08/2010 | 13:45 | | | Chicago PMI | 56.7 | 57.0 | 62.3 | Aug | |
Country: US
Source: Chicago Purchasing Managers Association.
Raw Data Available At: http://www.phil.frb.org/
Release Time: Last business day of the month at 10 ET for the current month.
In Brief
There are many regional manufacturing surveys, and they tend to be ranked in order of timeliness and the importance of the region. The Philadelphia Fed's survey is first each month, actually coming out during the third week of the month for which it is reporting. Several smaller surveys are then released before the Chicago purchasing managers' report on the last day of each month. A few, such as the Atlanta and Richmond Fed surveys, are released after the NAPM and are of little value. The purchasing managers' reports are measured like the national NAPM - 50% marks the breakeven line between an expanding and contracting manufacturing sector. For the Philadelphia and Atlanta Fed indexes, 0 is the breakeven mark.
These surveys can be of some help in forecasting the national NAPM - particularly the Philadelphia and Chicago surveys which are more closely watched due to their timeliness and the fact that these regions represent a reasonable cross section of national manufacturing activities.
In Depth
The market has been bombarded with a bevy of surveys purporting to measure manufacturing activity in every nook and cranny of the country. First it was Philadelphia, then Chicago, and Detroit, Milwaukee, New York, Cincinnati, Richmond, Atlanta, Boston, and there might as well have been a Nome survey. This hodge-podge of releases is begging for someone - namely us - to come along and cut this group down to a more manageable size.
Nuts and Bolts
Let's start with the issue of what these manufacturing surveys are trying to measure and how they go about doing it. The leader of this pack of regional surveys is the ISM index which comes from the Institute for Supply Management (formerly the National Association of Purchasing Managers). It has been around since 1931 (1948 on an uninterrupted basis), it is national, and it is one of the most timely measures of manufacturing activity available. In other words, it sets the standards by which its progeny are measured.
The ISM index is actually a composite of five sub-indexes - new orders, production, supplier deliveries, inventories, and employment. In surveying over 300 companies each month, the ISM asks for positive, negative, or unchanged readings on each of these indicators. The positive responses are added to one half of the unchanged responses to produce the diffusion index. For example, if 50% of respondents reported stronger orders, 40% reported weaker, and 10% unchanged, the diffusion index for orders would be 55%, the 50% positive plus half of the 10% unchanged. To calculate the total index, the ISM uses weights for the five indicators, which are as follows: 30% new orders, 25% production, 20% employment, 15% supplier deliveries, and 10% inventories.
The Selection Criteria
Since this methodology has made the ISM index one of the better leading indicators of economic activity over the years, we will measure the usefulness of the regional indexes based on their ability to help in forecasting the national index. In our effort to arrive at the most important regional indices, these criteria make eliminating most of the candidates easy for one simple reason - they are released after the national index. While regional economic developments are of interest to those who live in the region, they are not particularly important to the markets. If a region cannot help in forecasting national trends, then its data are not particularly useful. So say adios to Atlanta, Richmond, Kansas City, and who knows how many others which have cropped up in recent years.
And the Winner Is...
Let's focus on the regional surveys which precede the release of the national index on the first business day of each month (with data for the prior month). The contestants are Philadelphia, Chicago, Milwaukee, Detroit, New York, and the most recent addition to the bunch - the APICS survey. We looked at the correlation of all of these indexes to the national NAPM and found substantial differences in their forecasting ability. The winners are...drum roll please...Chicago and Philadelphia, in that order.
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 (the Chicago PMI has an impressive 91% correlation with the ISM national NAPM), which is in itself a good leading indicator of overall economic activity. It frequently moves markets.
The Philadelphia Fed index, which is released on the third Thursday of the month (with data for the same month), was a distant second at 76%. Philly Fed's performance improved slightly to 78% when Briefing measured its results using the NAPM methodology. The Philly index as released is not a composite of its subindexes, as the NAPM is. Instead, the Philly Fed survey asks many questions, but the total index is based on the general question "are business conditions better or worse than last month." It is often the case that a weighted measure of the individual questions on specifics such as new orders and production moves in a different direction than the index based on the general question.
The rest of the regional indexes fared poorly, ranging from correlations as poor as 55% (APICS) to 73% (Milwaukee). Chicago was the clear winner, but the Philly Fed index definitely deserves recognition, particularly since it is released so much earlier than the rest. In the future, then, we would recommend setting aside most of the regional manufacturing surveys and focussing on just Philly and Chicago, which offer the best hope of predicting the national index. And when you look at the Philly index, improve your chances by looking at the Philly numbers calculated on an NAPM basis, which Briefing will be happy to provide.
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| 31/08/2010 | 14:00 | | | Consumer Confidence | 53.5 | 50.5 | 50.4 | Aug | |
Country: US
Source: The Conference Board.
Raw Data Available At: http://www.tcb-indicators.org/
Release Time: 10:00 ET on the last Tuesday of the month (data for current month).
This survey measures the level of confidence individual households have in the performance of the economy now and in the future. It is a leading indicator of future spending and the business cycle. 5000 consumers in the nine census divisions across the country are surveyed each month. The level of consumer confidence is directly correlated to the strength of consumer spending, which accounts for two-thirds of the economy. It also correlates closely with joblessness, inflation, and real incomes. 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. The index consists of two subindexes - consumers' appraisal of current conditions and their expectations for the future. Expectations make up 60% of the total index, with current conditions accounting for the other 40%. The expectations index is typically seen as having better leading indicator qualities than the current conditions index. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. Note, changes in consumer confidence and retail sales do not move in tandem month by month. If the economy experiences a long-term expansion, buying intentions may decline even while the jobless rate declines because of the satisfaction of pent-up demand. Conversely, if inflation begins to accelerate, spending plans may increase for the short-term as consumers buy now to avoid having to pay higher prices later. Regional differences in consumer confidence are an indication of differing business cycles across the nation. This has implications for spending on durable goods and, more importantly, for residential real estate markets. Financial markets interpret rising consumer confidence as a precursor to higher consumer spending. Higher consumer spending could in turn spark inflation. Look for a change in the direction of the six month moving average of the index. Consumers do not usually have the necessary information to accurately assess income and job growth six months in the future. The report provides information on planned spending, which does not necessarily turn into actual spending, although it is unlikely that increasing consumer confidence would be followed by a decline in spending. The Consumer Confidence survey is not useful for any type of forecasting.
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| 31/08/2010 | 18:00 | | | Protocol of last interest rate meeting | | | | | |
| Country: US |
| 01/09/2010 | 01:30 | | | Gross Domestic Product (GDP) qq | 0.6% | 1.0% | 0.5% | Q2 | |
Country: Australia
Source: Bureau of Economic Analysis, U.S. Department of Commerce.
Raw Data Available At: http://www.bea.doc.gov/bea/dn1.htm
Release Time: Third or fourth week of the month at 8:30 ET for the prior quarter, with subsequent revisions released in the second and third months of the quarter.
Gross Domestic Product (GDP) is the broadest measure of economic activity. Annualized quarterly percent changes in GDP reflect the growth rate of total economic output. The figures can be quite volatile from quarter to quarter. Inventory and net export swings in particular can produce significant volatility in GDP. The final sales figure, which excludes inventories, can sometimes be helpful in identifying underlying growth trends as inventories represent unsold goods, and a large inventory increase will boost GDP but might be indicative of weakness rather than strength. The broad components of GDP are: consumption, investment, net exports, government purchases, and inventories. Consumption is by far the largest component, totalling roughly 2/3rds of GDP.
In addition to the GDP figures, there are GDP deflators, which measure the change in prices in total GDP and for each component. Though the consumer price index is a more closely watched inflation indicator, the GDP deflator is another key inflation measure. Unlike CPI, it has the advantage of not being a fixed basket of goods and services, so that changes in consumption patterns or the introduction of new goods and services will be reflected in the deflator.
With both GDP and the deflator, the market tends to focus on the quarter/quarter change. Year/year changes are also cited frequently, though they do not provide the most timely indications of economic activity or inflation. The bond market often reacts to GDP, though the price moves are typically small, as much of the GDP data is easily predicted using monthly economic releases such as personal consumption, durable goods shipments, construction spending, international trade, and inventories.
Quarterly GDP reports are broken down into three announcements: advance, preliminary, and final. After the final revision, GDP is not revised again until the annual benchmark revisions each July. These revisions can be quite large and usually affect the past five years of data.
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| 01/09/2010 | 01:30 | | | Gross Domestic Product (GDP) yy | 3.1% | 3.4%% | 2.7% | Q2 | |
Country: Australia
Source: Bureau of Economic Analysis, U.S. Department of Commerce.
Raw Data Available At: http://www.bea.doc.gov/bea/dn1.htm
Release Time: Third or fourth week of the month at 8:30 ET for the prior quarter, with subsequent revisions released in the second and third months of the quarter.
Gross Domestic Product (GDP) is the broadest measure of economic activity. Annualized quarterly percent changes in GDP reflect the growth rate of total economic output. The figures can be quite volatile from quarter to quarter. Inventory and net export swings in particular can produce significant volatility in GDP. The final sales figure, which excludes inventories, can sometimes be helpful in identifying underlying growth trends as inventories represent unsold goods, and a large inventory increase will boost GDP but might be indicative of weakness rather than strength. The broad components of GDP are: consumption, investment, net exports, government purchases, and inventories. Consumption is by far the largest component, totalling roughly 2/3rds of GDP.
In addition to the GDP figures, there are GDP deflators, which measure the change in prices in total GDP and for each component. Though the consumer price index is a more closely watched inflation indicator, the GDP deflator is another key inflation measure. Unlike CPI, it has the advantage of not being a fixed basket of goods and services, so that changes in consumption patterns or the introduction of new goods and services will be reflected in the deflator.
With both GDP and the deflator, the market tends to focus on the quarter/quarter change. Year/year changes are also cited frequently, though they do not provide the most timely indications of economic activity or inflation. The bond market often reacts to GDP, though the price moves are typically small, as much of the GDP data is easily predicted using monthly economic releases such as personal consumption, durable goods shipments, construction spending, international trade, and inventories.
Quarterly GDP reports are broken down into three announcements: advance, preliminary, and final. After the final revision, GDP is not revised again until the annual benchmark revisions each July. These revisions can be quite large and usually affect the past five years of data.
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| 01/09/2010 | 07:30 | | | Services PMI | 61.4 | 66.0 | 66.9 | Aug | |
Country: Switzerland
Source: Institute for Supply Management.
Raw Data Available At: http://www.ism.ws/ISMReport/index.cfm
Release Time: 10:00 ET on the first business day of the month for the prior month.
ISM: Institute for Supply Management
formerly NAPM: National Association of Purchasing Managers
In Brief
The ISM report is a national survey of purchasing managers which covers such indicators as new orders, production, employment, inventories, delivery times, prices, export orders, and import orders. Diffusion indexes are produced for each of these categories, with a reading over 50% indicating expansion relative to the prior month, and a sub-50% reading indicating contraction.
The total index is calculated based on a weighted average of the following five sub-indexes, with weights in parentheses: new orders (30%), production (25%), employment (20%), deliveries (15%), and inventories (10%).
The ISM is one of the first comprehensive economic releases of the month, typically preceding the employment report. Though it covers only the manufacturing sector, it can often provide accurate hints regarding the tone of subsequent releases. During periods of inflation concerns, the prices paid and vendor deliveries indexes often determine the bond market's reaction to the report.
In Depth
The Institute for Supply Management's monthly Report on Business is probably the most widely watched economic indicator produced by the private sector. There are two key reasons for the ISM's prominence. First, its longevity - the report was first produced in 1931, and after a break during World War II, it has produced continuously since 1948. Second , its leading quality - the ISM has been one of the better predictors of the business cycle over the years.
More than 370 purchasing and supply management professionals in the non-manufacturing sector participate in the survey by completing a monthly questionnaire covering Business Activity, New Orders, Backlog of Orders, New Export Orders, Inventory Change, Inventory Sentiment, Imports, Prices, Employment, and Supplier Deliveries. The respondents are from more than 60 different sectors representing nine divisions from the Standard Industrial Code classification system including Agriculture, Forestry, & Fisheries; Mining; Construction; Transportation, Communications, Electric, Gas, and Sanitary Services; Wholesale Trade; Retail Trade; Finance, Insurance & Real Estate; Services; and Public Administration. Geographic location is also a consideration
The results of the responses are compiled in the Non-Manufacturing NAPM Report on Business®by Ralph G. Kauffman, Ph.D., C.P.M, chair of the Non-Manufacturing Business Survey Committee. Following the initial release, this new report will be issued on the third business day of each month at 10:00 a.m. eastern Time via Business Wire and Xpedite Broadcast Fax.
The National Association of Purchasing Management is a not-for-profit association that provides national and international leadership in purchasing and supply management research and education. NAPM provides its more than 44,000 members in its 180 affiliated associations with opportunities to expand their professional skills and knowledge.
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| 01/09/2010 | 07:50 | | | Manufacturing PMI | 58.2 | 58.2 | 58.2 | Aug | |
Country: Germany
Source: Institute for Supply Management.
Raw Data Available At: http://www.ism.ws/ISMReport/index.cfm
Release Time: 10:00 ET on the first business day of the month for the prior month.
ISM: Institute for Supply Management
formerly NAPM: National Association of Purchasing Managers
In Brief
The ISM report is a national survey of purchasing managers which covers such indicators as new orders, production, employment, inventories, delivery times, prices, export orders, and import orders. Diffusion indexes are produced for each of these categories, with a reading over 50% indicating expansion relative to the prior month, and a sub-50% reading indicating contraction.
The total index is calculated based on a weighted average of the following five sub-indexes, with weights in parentheses: new orders (30%), production (25%), employment (20%), deliveries (15%), and inventories (10%).
The ISM is one of the first comprehensive economic releases of the month, typically preceding the employment report. Though it covers only the manufacturing sector, it can often provide accurate hints regarding the tone of subsequent releases. During periods of inflation concerns, the prices paid and vendor deliveries indexes often determine the bond market's reaction to the report.
In Depth
The Institute for Supply Management's monthly Report on Business is probably the most widely watched economic indicator produced by the private sector. There are two key reasons for the ISM's prominence. First, its longevity - the report was first produced in 1931, and after a break during World War II, it has produced continuously since 1948. Second , its leading quality - the ISM has been one of the better predictors of the business cycle over the years.
Who and What It Surveys
The ISM index is the result of a monthly survey of over 400 companies in 20 industries throughout the 50 states. The survey queries respondents on a number of monthly indicators, including orders, production, employment, inventories, delivery times, prices paid, export orders, and import orders. Respondents are asked to characterize each indicator as higher, lower, or unchanged for the month (or faster/slower in the case of delivery times). They are not asked for specific numbers - only a thumbs up or down.
Presenting the Numbers
Based on these responses, the ISM calculates diffusion indexes for each of the components. These diffusion indexes are calculated by adding half of the percentage of respondents answering "unchanged" to the percentage answering "higher" (or "slower" for deliveries). These diffusion indexes do not yield estimates of specific magnitudes of strength or weakness, but the more respondents who are indicating trends in the same direction - the better the chance that the magnitude of that move is larger.
A diffusion index of 50% is the theoretical breakeven mark - with readings above indicating strength and below indicating weakness. The ISM only provides the raw data - the Department of Commerce produces the seasonal factors which are used to provide more meaningful, seasonally adjusted indexes.
The total index is not the result of a separate question regarding general business conditions (as is the case with the Philadelphia Fed index). Instead, the index is calculated using the weighted sum of five of the subindexes. Orders account for 30% of the total; production - 25%; employment - 20%; deliveries - 15%; inventories - 10%. Prices, export orders, and import orders are not part of the total index.
Breakevens in Theory and Practice
Though 50% is the breakeven mark in theory, different readings have proved to be breakeven in practice. For new orders, 50.3% is the level consistent with breakeven readings in factory orders. For production, 49.4% has been the breakeven mark in theory and practice. For employment, 47.5% has been consistent with a steady level of manufacturing employment. For inventories, 41.3% has been consistent with steady business inventory readings. And finally, the 42.7% mark on the total index marks the point below which the overall economy is believed to be in recession. Between 42.7-50%, the manufacturing sector may be in decline, but the total economy is only seeing slower growth.
No Services
This observation highlights the important element which is missing from the ISM index - the service sector. With the manufacturing sector making up an ever-shrinking percentage of the total economy - the ISM might seem to be an indicator in decline. Not so, however - the manufacturing sector, while shrinking in relative terms, still tends to lead the total economy into and out of recessions. The ISM therefore remains a closely watched indicator despite its manufacturing focus.
A Proven Performer
The ISM's leading quality has been proven over time. Its bottom during a recession has preceded the turning point for the business cycle by an average of four months, and its worst performance in leading the turning point was on two occasions when the ISM trough occurred in the same month as the business cycle trough. The ISM index is released on the first business day of each at 10:00 ET, with data for the prior calendar month.
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| 01/09/2010 | 07:55 | | | Manufacturing PMI | 55.1 | 55.0 | 55.0 | Aug | |
Country: EMU
Source: Institute for Supply Management.
Raw Data Available At: http://www.ism.ws/ISMReport/index.cfm
Release Time: 10:00 ET on the first business day of the month for the prior month.
ISM: Institute for Supply Management
formerly NAPM: National Association of Purchasing Managers
In Brief
The ISM report is a national survey of purchasing managers which covers such indicators as new orders, production, employment, inventories, delivery times, prices, export orders, and import orders. Diffusion indexes are produced for each of these categories, with a reading over 50% indicating expansion relative to the prior month, and a sub-50% reading indicating contraction.
The total index is calculated based on a weighted average of the following five sub-indexes, with weights in parentheses: new orders (30%), production (25%), employment (20%), deliveries (15%), and inventories (10%).
The ISM is one of the first comprehensive economic releases of the month, typically preceding the employment report. Though it covers only the manufacturing sector, it can often provide accurate hints regarding the tone of subsequent releases. During periods of inflation concerns, the prices paid and vendor deliveries indexes often determine the bond market's reaction to the report.
In Depth
The Institute for Supply Management's monthly Report on Business is probably the most widely watched economic indicator produced by the private sector. There are two key reasons for the ISM's prominence. First, its longevity - the report was first produced in 1931, and after a break during World War II, it has produced continuously since 1948. Second , its leading quality - the ISM has been one of the better predictors of the business cycle over the years.
Who and What It Surveys
The ISM index is the result of a monthly survey of over 400 companies in 20 industries throughout the 50 states. The survey queries respondents on a number of monthly indicators, including orders, production, employment, inventories, delivery times, prices paid, export orders, and import orders. Respondents are asked to characterize each indicator as higher, lower, or unchanged for the month (or faster/slower in the case of delivery times). They are not asked for specific numbers - only a thumbs up or down.
Presenting the Numbers
Based on these responses, the ISM calculates diffusion indexes for each of the components. These diffusion indexes are calculated by adding half of the percentage of respondents answering "unchanged" to the percentage answering "higher" (or "slower" for deliveries). These diffusion indexes do not yield estimates of specific magnitudes of strength or weakness, but the more respondents who are indicating trends in the same direction - the better the chance that the magnitude of that move is larger.
A diffusion index of 50% is the theoretical breakeven mark - with readings above indicating strength and below indicating weakness. The ISM only provides the raw data - the Department of Commerce produces the seasonal factors which are used to provide more meaningful, seasonally adjusted indexes.
The total index is not the result of a separate question regarding general business conditions (as is the case with the Philadelphia Fed index). Instead, the index is calculated using the weighted sum of five of the subindexes. Orders account for 30% of the total; production - 25%; employment - 20%; deliveries - 15%; inventories - 10%. Prices, export orders, and import orders are not part of the total index.
Breakevens in Theory and Practice
Though 50% is the breakeven mark in theory, different readings have proved to be breakeven in practice. For new orders, 50.3% is the level consistent with breakeven readings in factory orders. For production, 49.4% has been the breakeven mark in theory and practice. For employment, 47.5% has been consistent with a steady level of manufacturing employment. For inventories, 41.3% has been consistent with steady business inventory readings. And finally, the 42.7% mark on the total index marks the point below which the overall economy is believed to be in recession. Between 42.7-50%, the manufacturing sector may be in decline, but the total economy is only seeing slower growth.
No Services
This observation highlights the important element which is missing from the ISM index - the service sector. With the manufacturing sector making up an ever-shrinking percentage of the total economy - the ISM might seem to be an indicator in decline. Not so, however - the manufacturing sector, while shrinking in relative terms, still tends to lead the total economy into and out of recessions. The ISM therefore remains a closely watched indicator despite its manufacturing focus.
A Proven Performer
The ISM's leading quality has been proven over time. Its bottom during a recession has preceded the turning point for the business cycle by an average of four months, and its worst performance in leading the turning point was on two occasions when the ISM trough occurred in the same month as the business cycle trough. The ISM index is released on the first business day of each at 10:00 ET, with data for the prior calendar month.
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| 01/09/2010 | 12:15 | | | ADP employment | -10k | 19.0K | 42.0K | Aug | |
| Country: US |
| 01/09/2010 | 14:00 | | | Manufacturing PMI | 56.3 | 53.0 | 55.5 | Aug | |
Country: US
Source: Institute for Supply Management.
Raw Data Available At: http://www.ism.ws/ISMReport/index.cfm
Release Time: 10:00 ET on the first business day of the month for the prior month.
ISM: Institute for Supply Management
formerly NAPM: National Association of Purchasing Managers
In Brief
The ISM report is a national survey of purchasing managers which covers such indicators as new orders, production, employment, inventories, delivery times, prices, export orders, and import orders. Diffusion indexes are produced for each of these categories, with a reading over 50% indicating expansion relative to the prior month, and a sub-50% reading indicating contraction.
The total index is calculated based on a weighted average of the following five sub-indexes, with weights in parentheses: new orders (30%), production (25%), employment (20%), deliveries (15%), and inventories (10%).
The ISM is one of the first comprehensive economic releases of the month, typically preceding the employment report. Though it covers only the manufacturing sector, it can often provide accurate hints regarding the tone of subsequent releases. During periods of inflation concerns, the prices paid and vendor deliveries indexes often determine the bond market's reaction to the report.
In Depth
The Institute for Supply Management's monthly Report on Business is probably the most widely watched economic indicator produced by the private sector. There are two key reasons for the ISM's prominence. First, its longevity - the report was first produced in 1931, and after a break during World War II, it has produced continuously since 1948. Second , its leading quality - the ISM has been one of the better predictors of the business cycle over the years.
Who and What It Surveys
The ISM index is the result of a monthly survey of over 400 companies in 20 industries throughout the 50 states. The survey queries respondents on a number of monthly indicators, including orders, production, employment, inventories, delivery times, prices paid, export orders, and import orders. Respondents are asked to characterize each indicator as higher, lower, or unchanged for the month (or faster/slower in the case of delivery times). They are not asked for specific numbers - only a thumbs up or down.
Presenting the Numbers
Based on these responses, the ISM calculates diffusion indexes for each of the components. These diffusion indexes are calculated by adding half of the percentage of respondents answering "unchanged" to the percentage answering "higher" (or "slower" for deliveries). These diffusion indexes do not yield estimates of specific magnitudes of strength or weakness, but the more respondents who are indicating trends in the same direction - the better the chance that the magnitude of that move is larger.
A diffusion index of 50% is the theoretical breakeven mark - with readings above indicating strength and below indicating weakness. The ISM only provides the raw data - the Department of Commerce produces the seasonal factors which are used to provide more meaningful, seasonally adjusted indexes.
The total index is not the result of a separate question regarding general business conditions (as is the case with the Philadelphia Fed index). Instead, the index is calculated using the weighted sum of five of the subindexes. Orders account for 30% of the total; production - 25%; employment - 20%; deliveries - 15%; inventories - 10%. Prices, export orders, and import orders are not part of the total index.
Breakevens in Theory and Practice
Though 50% is the breakeven mark in theory, different readings have proved to be breakeven in practice. For new orders, 50.3% is the level consistent with breakeven readings in factory orders. For production, 49.4% has been the breakeven mark in theory and practice. For employment, 47.5% has been consistent with a steady level of manufacturing employment. For inventories, 41.3% has been consistent with steady business inventory readings. And finally, the 42.7% mark on the total index marks the point below which the overall economy is believed to be in recession. Between 42.7-50%, the manufacturing sector may be in decline, but the total economy is only seeing slower growth.
No Services
This observation highlights the important element which is missing from the ISM index - the service sector. With the manufacturing sector making up an ever-shrinking percentage of the total economy - the ISM might seem to be an indicator in decline. Not so, however - the manufacturing sector, while shrinking in relative terms, still tends to lead the total economy into and out of recessions. The ISM therefore remains a closely watched indicator despite its manufacturing focus.
A Proven Performer
The ISM's leading quality has been proven over time. Its bottom during a recession has preceded the turning point for the business cycle by an average of four months, and its worst performance in leading the turning point was on two occasions when the ISM trough occurred in the same month as the business cycle trough. The ISM index is released on the first business day of each at 10:00 ET, with data for the prior calendar month.
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| 02/09/2010 | 04:30 | | | International Trade Balance mm | +1888m | 3100m | 3539m | Jul | |
Country: Australia
Source: The Census Bureau and the Bureau of Economic Analysis of the Department of Commerce.
Raw Data Available At: http://www.census.gov/foreign-trade/www/press.html
Release Time: 8:30 ET around the 20th of the month (data for two months prior).
The trade report is most widely watched for trends in the overall trade balance. But trends in both exports and imports of goods and services bear watching as well. The export data in particular are important to watch for indications that a strengthening competitive position at home and/or strengthening economies overseas are boosting U.S. growth. Imports provide an indication of domestic demand, but given the severe lag of this report relative to other consumption indicators, it is not particularly valuable for this 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, and the trade report provides the only early clues to the net export performance each quarter.
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| 02/09/2010 | 05:45 | | | Gross Domestic Product (GDP) qq | 0.9% | 0.8% | 1% | Q2 | |
Country: Switzerland
Source: Bureau of Economic Analysis, U.S. Department of Commerce.
Raw Data Available At: http://www.bea.doc.gov/bea/dn1.htm
Release Time: Third or fourth week of the month at 8:30 ET for the prior quarter, with subsequent revisions released in the second and third months of the quarter.
Gross Domestic Product (GDP) is the broadest measure of economic activity. Annualized quarterly percent changes in GDP reflect the growth rate of total economic output. The figures can be quite volatile from quarter to quarter. Inventory and net export swings in particular can produce significant volatility in GDP. The final sales figure, which excludes inventories, can sometimes be helpful in identifying underlying growth trends as inventories represent unsold goods, and a large inventory increase will boost GDP but might be indicative of weakness rather than strength. The broad components of GDP are: consumption, investment, net exports, government purchases, and inventories. Consumption is by far the largest component, totalling roughly 2/3rds of GDP.
In addition to the GDP figures, there are GDP deflators, which measure the change in prices in total GDP and for each component. Though the consumer price index is a more closely watched inflation indicator, the GDP deflator is another key inflation measure. Unlike CPI, it has the advantage of not being a fixed basket of goods and services, so that changes in consumption patterns or the introduction of new goods and services will be reflected in the deflator.
With both GDP and the deflator, the market tends to focus on the quarter/quarter change. Year/year changes are also cited frequently, though they do not provide the most timely indications of economic activity or inflation. The bond market often reacts to GDP, though the price moves are typically small, as much of the GDP data is easily predicted using monthly economic releases such as personal consumption, durable goods shipments, construction spending, international trade, and inventories.
Quarterly GDP reports are broken down into three announcements: advance, preliminary, and final. After the final revision, GDP is not revised again until the annual benchmark revisions each July. These revisions can be quite large and usually affect the past five years of data.
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| 02/09/2010 | 05:45 | | | Gross Domestic Product (GDP) yy | 3.4% | 2.7% | 2.3% | Q2 | |
Country: Switzerland
Source: Bureau of Economic Analysis, U.S. Department of Commerce.
Raw Data Available At: http://www.bea.doc.gov/bea/dn1.htm
Release Time: Third or fourth week of the month at 8:30 ET for the prior quarter, with subsequent revisions released in the second and third months of the quarter.
Gross Domestic Product (GDP) is the broadest measure of economic activity. Annualized quarterly percent changes in GDP reflect the growth rate of total economic output. The figures can be quite volatile from quarter to quarter. Inventory and net export swings in particular can produce significant volatility in GDP. The final sales figure, which excludes inventories, can sometimes be helpful in identifying underlying growth trends as inventories represent unsold goods, and a large inventory increase will boost GDP but might be indicative of weakness rather than strength. The broad components of GDP are: consumption, investment, net exports, government purchases, and inventories. Consumption is by far the largest component, totalling roughly 2/3rds of GDP.
In addition to the GDP figures, there are GDP deflators, which measure the change in prices in total GDP and for each component. Though the consumer price index is a more closely watched inflation indicator, the GDP deflator is another key inflation measure. Unlike CPI, it has the advantage of not being a fixed basket of goods and services, so that changes in consumption patterns or the introduction of new goods and services will be reflected in the deflator.
With both GDP and the deflator, the market tends to focus on the quarter/quarter change. Year/year changes are also cited frequently, though they do not provide the most timely indications of economic activity or inflation. The bond market often reacts to GDP, though the price moves are typically small, as much of the GDP data is easily predicted using monthly economic releases such as personal consumption, durable goods shipments, construction spending, international trade, and inventories.
Quarterly GDP reports are broken down into three announcements: advance, preliminary, and final. After the final revision, GDP is not revised again until the annual benchmark revisions each July. These revisions can be quite large and usually affect the past five years of data.
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| 02/09/2010 | 06:00 | | | House Prices | -0.9% | -0.2% | -0.5% | Aug | |
| Country: UK |
| 02/09/2010 | 07:15 | | | Retail Sales mm | +4.80% | | 0.9% | Jul | |
Country: Switzerland
Source: The Census Bureau of the Department of Commerce.
Raw Data Available At: http://www.census.gov/svsd/www/advtable.html
Release Time: 8:30 ET around the 13th of the month (data for one month prior).
The retail sales report is a measure of the total receipts of retail stores. The changes in retail sales are widely followed as the most timely indicator of broad consumer spending patterns. Retail sales are often viewed ex-autos, as auto sales can move sharply from month-to-month. It is also important to keep an eye on the gas and food components, where changes in sales 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 rather large revisions. Retail sales do not include spending on services, which makes up over half of total consumption. Total personal consumption is not available until the personal income and consumption reports are released, typically two weeks after retail sales.
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| 02/09/2010 | 08:30 | | | Manufacturing PMI | 52.1 | 53.2 | 54.1 | Aug | |
Country: UK
Source: Institute for Supply Management.
Raw Data Available At: http://www.ism.ws/ISMReport/index.cfm
Release Time: 10:00 ET on the first business day of the month for the prior month.
ISM: Institute for Supply Management
formerly NAPM: National Association of Purchasing Managers
In Brief
The ISM report is a national survey of purchasing managers which covers such indicators as new orders, production, employment, inventories, delivery times, prices, export orders, and import orders. Diffusion indexes are produced for each of these categories, with a reading over 50% indicating expansion relative to the prior month, and a sub-50% reading indicating contraction.
The total index is calculated based on a weighted average of the following five sub-indexes, with weights in parentheses: new orders (30%), production (25%), employment (20%), deliveries (15%), and inventories (10%).
The ISM is one of the first comprehensive economic releases of the month, typically preceding the employment report. Though it covers only the manufacturing sector, it can often provide accurate hints regarding the tone of subsequent releases. During periods of inflation concerns, the prices paid and vendor deliveries indexes often determine the bond market's reaction to the report.
In Depth
The Institute for Supply Management's monthly Report on Business is probably the most widely watched economic indicator produced by the private sector. There are two key reasons for the ISM's prominence. First, its longevity - the report was first produced in 1931, and after a break during World War II, it has produced continuously since 1948. Second , its leading quality - the ISM has been one of the better predictors of the business cycle over the years.
Who and What It Surveys
The ISM index is the result of a monthly survey of over 400 companies in 20 industries throughout the 50 states. The survey queries respondents on a number of monthly indicators, including orders, production, employment, inventories, delivery times, prices paid, export orders, and import orders. Respondents are asked to characterize each indicator as higher, lower, or unchanged for the month (or faster/slower in the case of delivery times). They are not asked for specific numbers - only a thumbs up or down.
Presenting the Numbers
Based on these responses, the ISM calculates diffusion indexes for each of the components. These diffusion indexes are calculated by adding half of the percentage of respondents answering "unchanged" to the percentage answering "higher" (or "slower" for deliveries). These diffusion indexes do not yield estimates of specific magnitudes of strength or weakness, but the more respondents who are indicating trends in the same direction - the better the chance that the magnitude of that move is larger.
A diffusion index of 50% is the theoretical breakeven mark - with readings above indicating strength and below indicating weakness. The ISM only provides the raw data - the Department of Commerce produces the seasonal factors which are used to provide more meaningful, seasonally adjusted indexes.
The total index is not the result of a separate question regarding general business conditions (as is the case with the Philadelphia Fed index). Instead, the index is calculated using the weighted sum of five of the subindexes. Orders account for 30% of the total; production - 25%; employment - 20%; deliveries - 15%; inventories - 10%. Prices, export orders, and import orders are not part of the total index.
Breakevens in Theory and Practice
Though 50% is the breakeven mark in theory, different readings have proved to be breakeven in practice. For new orders, 50.3% is the level consistent with breakeven readings in factory orders. For production, 49.4% has been the breakeven mark in theory and practice. For employment, 47.5% has been consistent with a steady level of manufacturing employment. For inventories, 41.3% has been consistent with steady business inventory readings. And finally, the 42.7% mark on the total index marks the point below which the overall economy is believed to be in recession. Between 42.7-50%, the manufacturing sector may be in decline, but the total economy is only seeing slower growth.
No Services
This observation highlights the important element which is missing from the ISM index - the service sector. With the manufacturing sector making up an ever-shrinking percentage of the total economy - the ISM might seem to be an indicator in decline. Not so, however - the manufacturing sector, while shrinking in relative terms, still tends to lead the total economy into and out of recessions. The ISM therefore remains a closely watched indicator despite its manufacturing focus.
A Proven Performer
The ISM's leading quality has been proven over time. Its bottom during a recession has preceded the turning point for the business cycle by an average of four months, and its worst performance in leading the turning point was on two occasions when the ISM trough occurred in the same month as the business cycle trough. The ISM index is released on the first business day of each at 10:00 ET, with data for the prior calendar month.
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| 02/09/2010 | 09:00 | | | Gross Domestic Product (GDP) qq | 1.0% | 1.0% | 1.0% | Q2 | |
Country: EMU
Source: Bureau of Economic Analysis, U.S. Department of Commerce.
Raw Data Available At: http://www.bea.doc.gov/bea/dn1.htm
Release Time: Third or fourth week of the month at 8:30 ET for the prior quarter, with subsequent revisions released in the second and third months of the quarter.
Gross Domestic Product (GDP) is the broadest measure of economic activity. Annualized quarterly percent changes in GDP reflect the growth rate of total economic output. The figures can be quite volatile from quarter to quarter. Inventory and net export swings in particular can produce significant volatility in GDP. The final sales figure, which excludes inventories, can sometimes be helpful in identifying underlying growth trends as inventories represent unsold goods, and a large inventory increase will boost GDP but might be indicative of weakness rather than strength. The broad components of GDP are: consumption, investment, net exports, government purchases, and inventories. Consumption is by far the largest component, totalling roughly 2/3rds of GDP.
In addition to the GDP figures, there are GDP deflators, which measure the change in prices in total GDP and for each component. Though the consumer price index is a more closely watched inflation indicator, the GDP deflator is another key inflation measure. Unlike CPI, it has the advantage of not being a fixed basket of goods and services, so that changes in consumption patterns or the introduction of new goods and services will be reflected in the deflator.
With both GDP and the deflator, the market tends to focus on the quarter/quarter change. Year/year changes are also cited frequently, though they do not provide the most timely indications of economic activity or inflation. The bond market often reacts to GDP, though the price moves are typically small, as much of the GDP data is easily predicted using monthly economic releases such as personal consumption, durable goods shipments, construction spending, international trade, and inventories.
Quarterly GDP reports are broken down into three announcements: advance, preliminary, and final. After the final revision, GDP is not revised again until the annual benchmark revisions each July. These revisions can be quite large and usually affect the past five years of data.
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| 02/09/2010 | 09:00 | | | Gross Domestic Product (GDP) yy | 1.9% | 1.7% | 1.7% | Q2 | |
Country: EMU
Source: Bureau of Economic Analysis, U.S. Department of Commerce.
Raw Data Available At: http://www.bea.doc.gov/bea/dn1.htm
Release Time: Third or fourth week of the month at 8:30 ET for the prior quarter, with subsequent revisions released in the second and third months of the quarter.
Gross Domestic Product (GDP) is the broadest measure of economic activity. Annualized quarterly percent changes in GDP reflect the growth rate of total economic output. The figures can be quite volatile from quarter to quarter. Inventory and net export swings in particular can produce significant volatility in GDP. The final sales figure, which excludes inventories, can sometimes be helpful in identifying underlying growth trends as inventories represent unsold goods, and a large inventory increase will boost GDP but might be indicative of weakness rather than strength. The broad components of GDP are: consumption, investment, net exports, government purchases, and inventories. Consumption is by far the largest component, totalling roughly 2/3rds of GDP.
In addition to the GDP figures, there are GDP deflators, which measure the change in prices in total GDP and for each component. Though the consumer price index is a more closely watched inflation indicator, the GDP deflator is another key inflation measure. Unlike CPI, it has the advantage of not being a fixed basket of goods and services, so that changes in consumption patterns or the introduction of new goods and services will be reflected in the deflator.
With both GDP and the deflator, the market tends to focus on the quarter/quarter change. Year/year changes are also cited frequently, though they do not provide the most timely indications of economic activity or inflation. The bond market often reacts to GDP, though the price moves are typically small, as much of the GDP data is easily predicted using monthly economic releases such as personal consumption, durable goods shipments, construction spending, international trade, and inventories.
Quarterly GDP reports are broken down into three announcements: advance, preliminary, and final. After the final revision, GDP is not revised again until the annual benchmark revisions each July. These revisions can be quite large and usually affect the past five years of data.
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| 02/09/2010 | 09:00 | | | Core PPI mm | 0.2% | 0.3% | 0.3% | Jul | |
Country: EMU
Source: Bureau of Labor statistics, U.S. Department of Labor.
Raw Data Available At: http://stats.bls.gov/news.release/ppi.toc.htm
Release Time: Around the 11th of each month at 8:30 ET for the prior month.
The Producer Price Index measures prices of goods at the wholesale level. There are three broad subcategories within PPI: crude, intermediate, and finished. The market tracks the finished goods index most closely, as it represents prices for goods that are ready for sale to the end user. Goods prices at the crude and intermediate stages of production often provide an indication of coming (dis)inflationary pressures, but the closer you get to crude goods, the more that these prices track commodity prices which are already available in traded indexes such as the CRB (Commodity Research Bureau).
At all stages of production, the market places more emphasis on the index excluding food and energy, referred to as the core rate. Food and energy prices tend to be quite volatile and obscure trends in the underlying inflation rate. Though the market reaction is determined by the month/month changes, year/year changes are also noted by analysts. The index is not revised on a monthly basis, but annual revisions to seasonal adjustment factors can produce small adjustments to past releases.
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| 02/09/2010 | 09:00 | | | Core PPI yy | 4.0% | 4.0% | 3.0% | Jul | |
Country: EMU
Source: Bureau of Labor statistics, U.S. Department of Labor.
Raw Data Available At: http://stats.bls.gov/news.release/ppi.toc.htm
Release Time: Around the 11th of each month at 8:30 ET for the prior month.
The Producer Price Index measures prices of goods at the wholesale level. There are three broad subcategories within PPI: crude, intermediate, and finished. The market tracks the finished goods index most closely, as it represents prices for goods that are ready for sale to the end user. Goods prices at the crude and intermediate stages of production often provide an indication of coming (dis)inflationary pressures, but the closer you get to crude goods, the more that these prices track commodity prices which are already available in traded indexes such as the CRB (Commodity Research Bureau).
At all stages of production, the market places more emphasis on the index excluding food and energy, referred to as the core rate. Food and energy prices tend to be quite volatile and obscure trends in the underlying inflation rate. Though the market reaction is determined by the month/month changes, year/year changes are also noted by analysts. The index is not revised on a monthly basis, but annual revisions to seasonal adjustment factors can produce small adjustments to past releases.
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| 02/09/2010 | 11:45 | | | Interest Rate Decision | 1.0% | 1.0% | 1.0% | Sep | |
Country: EMU
Source (U.S.): The Federal Reserve Open Market Committee - FOMC.
Source (World): The Central Bank Monetary Policy Committee - MPC.
The Federal Open Market Committee is a twelve-member committee made up of the seven members of the Board of Governors and five Federal Reserve Bank presidents. It meets eight times per year to determine the near-term direction of monetary policy, such as setting guidelines for the purchase and sale of government securities and setting policy relating to System operations in the foreign exchange markets. These changes in monetary policy are now announced immediately after FOMC meetings. Most importantly, the Fed determines interest rate policy at FOMC meetings. Market participants speculate about the possibility of an interest rate change at these meetings, and if the outcome is different from expectations, the impact on the markets can be dramatic and far-reaching. The interest rate set by the Fed the federal funds rate serves as a benchmark for all other rates. A change in the fed funds rate, the lending rate banks charge each other for the use of overnight funds, translates directly through to all other interest rates from Treasury bonds to mortgage loans. It also changes the dynamics of competition for investor dollars: when bonds yield 10 percent, they will attract more money away from stocks then when they only yield 5 percent. The level of interest rates affects the economy higher rates tend to slow activity; lower rates stimulate activity, a ripple effect that expands into all sectors of the economy.
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| 02/09/2010 | 12:30 | | | Initial Jobless Claims | 472.0K | 475.0k | 473.0k | L/W | |
Country: US
Source: The Employment and Training Administration of the Department of Labor.
Raw Data Available At: http://www.dol.gov/opa/media/press/eta/main.htm
Release Time: 8:30 ET each Thursday (data for week ended prior Saturday).
This survey measures the attitudes and expectations concerning both present and future economic conditions of 500 consumers. The Michigan index is almost identical to the Conference Board Consumer Confidence index, though there are two monthly releases, a preliminary and final reading. Like the Conference Board index, it has two subindexes - expectations and current conditions. The expectations index is a component of the Conference Board's Leading Indicators index. |
| 02/09/2010 | 14:00 | | | Durable Goods Orders | 0.4% | | 0.3% | Jul | |
Country: US
Source: The Census Bureau of the Department of Commerce.
Raw Data Available At: http://www.census.gov/ftp/pub/indicator/www/m3/index.htm
Release Time: 8:30 ET around the 26th of the month (data for month prior).
The durable orders release measures the dollar volume of orders, shipments, and unfilled orders of durable goods (defined as goods whose intended lifespan is three years or more). Orders are considered a leading indicator of manufacturing activity, and the market often moves on this report despite the volatility and large revisions that make it a less than perfect indicator. These problems can be minimized by looking at the breakdown of orders. The total number is often skewed by huge increases in aircraft and defense orders. An increase based solely on strength in one sector tends to be discounted, while the market is more impressed with broadbased increases in orders.
Also notable in this report is the narrow category of nondefense capital goods. These goods mirror the GDP category producers' durable equipment (PDE) -- the largest component of business investment. Shipments of nondefense capital goods are a good proxy for PDE in the current quarter, while nondefense capital goods orders provide an indication of PDE growth in the quarters ahead. |
| 02/09/2010 | 14:00 | | | Factory Orders yy | 0.1% | 0.3% | -1.2% | Jul | |
Country: US
Source: The Census Bureau of the Department of Commerce.
Raw Data Available At: http://www.census.gov/ftp/pub/indicator/www/m3/index.htm
Release Time: 10:00 ET around the first business day of the month (data for two months prior).
Factory orders consist of the earlier announced durable goods report plus non-durable goods orders. The report is very predictable with nondurables the only new component. Nondurables consist of such items as food and tobacco products which grow at a fairly consistent monthly rate, so that market forecasts for this report are far more accurate than for the durable orders report. In addition to seeing nondurables for the first time, the market also watches for revisions to the durable orders data, which can be significant. At present, durable goods orders sum to about 54% of total orders.
The final piece of new information in this report is factory inventories -- the first glimpse at the inventory picture each month (wholesales inventories are typically released a week later, with retail inventories released a few days after wholesale inventories). Though the inventory figure is not a market-mover, economists use this number to help forecast inventories in the quarterly GDP report.
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| 02/09/2010 | 14:00 | | | Pending Homes Sales | +5.2% | -1.0% | -2.6% | Jul | |
| Country: US |
| 03/09/2010 | 07:15 | | | Consumer Price Index (CPI) mm | | 0.1% | -0.7% | Aug | |
Country: Switzerland
Source: Bureau of Labor statistics, U.S. Department of Labor.
Raw Data Available At: http://stats.bls.gov/news.release/cpi.toc.htm
Release Time: 8:30 ET, about the 13th of each month for the prior month.
The Consumer Price Index is a measure of the price level of a fixed market basket of goods and services purchased by consumers. CPI is the most widely cited inflation indicator, and it is used to calculate cost of living adjustments for government programs and it is the basis of COLAs for many private labor agreements as well. It has been criticized for overstating inflation, because it does not adjust for substitution effects and because the fixed basket does not reflect price changes in new technology goods which are often declining in price. Despite these criticisms, it remains the benchmark inflation index.
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| 03/09/2010 | 07:15 | | | Consumer Price Index (CPI) yy | | 0.4% | 0.4% | Aug | |
Country: Switzerland
Source: Bureau of Labor statistics, U.S. Department of Labor.
Raw Data Available At: http://stats.bls.gov/news.release/cpi.toc.htm
Release Time: 8:30 ET, about the 13th of each month for the prior month.
The Consumer Price Index is a measure of the price level of a fixed market basket of goods and services purchased by consumers. CPI is the most widely cited inflation indicator, and it is used to calculate cost of living adjustments for government programs and it is the basis of COLAs for many private labor agreements as well. It has been criticized for overstating inflation, because it does not adjust for substitution effects and because the fixed basket does not reflect price changes in new technology goods which are often declining in price. Despite these criticisms, it remains the benchmark inflation index.
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| 03/09/2010 | 07:50 | | | Services PMI | | 58.5 | 58.5 | Aug | |
Country: Germany
Source: Institute for Supply Management.
Raw Data Available At: http://www.ism.ws/ISMReport/index.cfm
Release Time: 10:00 ET on the first business day of the month for the prior month.
ISM: Institute for Supply Management
formerly NAPM: National Association of Purchasing Managers
In Brief
The ISM report is a national survey of purchasing managers which covers such indicators as new orders, production, employment, inventories, delivery times, prices, export orders, and import orders. Diffusion indexes are produced for each of these categories, with a reading over 50% indicating expansion relative to the prior month, and a sub-50% reading indicating contraction.
The total index is calculated based on a weighted average of the following five sub-indexes, with weights in parentheses: new orders (30%), production (25%), employment (20%), deliveries (15%), and inventories (10%).
The ISM is one of the first comprehensive economic releases of the month, typically preceding the employment report. Though it covers only the manufacturing sector, it can often provide accurate hints regarding the tone of subsequent releases. During periods of inflation concerns, the prices paid and vendor deliveries indexes often determine the bond market's reaction to the report.
In Depth
The Institute for Supply Management's monthly Report on Business is probably the most widely watched economic indicator produced by the private sector. There are two key reasons for the ISM's prominence. First, its longevity - the report was first produced in 1931, and after a break during World War II, it has produced continuously since 1948. Second , its leading quality - the ISM has been one of the better predictors of the business cycle over the years.
More than 370 purchasing and supply management professionals in the non-manufacturing sector participate in the survey by completing a monthly questionnaire covering Business Activity, New Orders, Backlog of Orders, New Export Orders, Inventory Change, Inventory Sentiment, Imports, Prices, Employment, and Supplier Deliveries. The respondents are from more than 60 different sectors representing nine divisions from the Standard Industrial Code classification system including Agriculture, Forestry, & Fisheries; Mining; Construction; Transportation, Communications, Electric, Gas, and Sanitary Services; Wholesale Trade; Retail Trade; Finance, Insurance & Real Estate; Services; and Public Administration. Geographic location is also a consideration
The results of the responses are compiled in the Non-Manufacturing NAPM Report on Business®by Ralph G. Kauffman, Ph.D., C.P.M, chair of the Non-Manufacturing Business Survey Committee. Following the initial release, this new report will be issued on the third business day of each month at 10:00 a.m. eastern Time via Business Wire and Xpedite Broadcast Fax.
The National Association of Purchasing Management is a not-for-profit association that provides national and international leadership in purchasing and supply management research and education. NAPM provides its more than 44,000 members in its 180 affiliated associations with opportunities to expand their professional skills and knowledge.
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| 03/09/2010 | 07:50 | | | Services PMI | | 55.6 | 55.6 | Aug | |
Country: EMU
Source: Institute for Supply Management.
Raw Data Available At: http://www.ism.ws/ISMReport/index.cfm
Release Time: 10:00 ET on the first business day of the month for the prior month.
ISM: Institute for Supply Management
formerly NAPM: National Association of Purchasing Managers
In Brief
The ISM report is a national survey of purchasing managers which covers such indicators as new orders, production, employment, inventories, delivery times, prices, export orders, and import orders. Diffusion indexes are produced for each of these categories, with a reading over 50% indicating expansion relative to the prior month, and a sub-50% reading indicating contraction.
The total index is calculated based on a weighted average of the following five sub-indexes, with weights in parentheses: new orders (30%), production (25%), employment (20%), deliveries (15%), and inventories (10%).
The ISM is one of the first comprehensive economic releases of the month, typically preceding the employment report. Though it covers only the manufacturing sector, it can often provide accurate hints regarding the tone of subsequent releases. During periods of inflation concerns, the prices paid and vendor deliveries indexes often determine the bond market's reaction to the report.
In Depth
The Institute for Supply Management's monthly Report on Business is probably the most widely watched economic indicator produced by the private sector. There are two key reasons for the ISM's prominence. First, its longevity - the report was first produced in 1931, and after a break during World War II, it has produced continuously since 1948. Second , its leading quality - the ISM has been one of the better predictors of the business cycle over the years.
More than 370 purchasing and supply management professionals in the non-manufacturing sector participate in the survey by completing a monthly questionnaire covering Business Activity, New Orders, Backlog of Orders, New Export Orders, Inventory Change, Inventory Sentiment, Imports, Prices, Employment, and Supplier Deliveries. The respondents are from more than 60 different sectors representing nine divisions from the Standard Industrial Code classification system including Agriculture, Forestry, & Fisheries; Mining; Construction; Transportation, Communications, Electric, Gas, and Sanitary Services; Wholesale Trade; Retail Trade; Finance, Insurance & Real Estate; Services; and Public Administration. Geographic location is also a consideration
The results of the responses are compiled in the Non-Manufacturing NAPM Report on Business®by Ralph G. Kauffman, Ph.D., C.P.M, chair of the Non-Manufacturing Business Survey Committee. Following the initial release, this new report will be issued on the third business day of each month at 10:00 a.m. eastern Time via Business Wire and Xpedite Broadcast Fax.
The National Association of Purchasing Management is a not-for-profit association that provides national and international leadership in purchasing and supply management research and education. NAPM provides its more than 44,000 members in its 180 affiliated associations with opportunities to expand their professional skills and knowledge.
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| 03/09/2010 | 07:50 | | | Services PMI | | 52.9 | 53.1 | Aug | |
Country: UK
Source: Institute for Supply Management.
Raw Data Available At: http://www.ism.ws/ISMReport/index.cfm
Release Time: 10:00 ET on the first business day of the month for the prior month.
ISM: Institute for Supply Management
formerly NAPM: National Association of Purchasing Managers
In Brief
The ISM report is a national survey of purchasing managers which covers such indicators as new orders, production, employment, inventories, delivery times, prices, export orders, and import orders. Diffusion indexes are produced for each of these categories, with a reading over 50% indicating expansion relative to the prior month, and a sub-50% reading indicating contraction.
The total index is calculated based on a weighted average of the following five sub-indexes, with weights in parentheses: new orders (30%), production (25%), employment (20%), deliveries (15%), and inventories (10%).
The ISM is one of the first comprehensive economic releases of the month, typically preceding the employment report. Though it covers only the manufacturing sector, it can often provide accurate hints regarding the tone of subsequent releases. During periods of inflation concerns, the prices paid and vendor deliveries indexes often determine the bond market's reaction to the report.
In Depth
The Institute for Supply Management's monthly Report on Business is probably the most widely watched economic indicator produced by the private sector. There are two key reasons for the ISM's prominence. First, its longevity - the report was first produced in 1931, and after a break during World War II, it has produced continuously since 1948. Second , its leading quality - the ISM has been one of the better predictors of the business cycle over the years.
More than 370 purchasing and supply management professionals in the non-manufacturing sector participate in the survey by completing a monthly questionnaire covering Business Activity, New Orders, Backlog of Orders, New Export Orders, Inventory Change, Inventory Sentiment, Imports, Prices, Employment, and Supplier Deliveries. The respondents are from more than 60 different sectors representing nine divisions from the Standard Industrial Code classification system including Agriculture, Forestry, & Fisheries; Mining; Construction; Transportation, Communications, Electric, Gas, and Sanitary Services; Wholesale Trade; Retail Trade; Finance, Insurance & Real Estate; Services; and Public Administration. Geographic location is also a consideration
The results of the responses are compiled in the Non-Manufacturing NAPM Report on Business®by Ralph G. Kauffman, Ph.D., C.P.M, chair of the Non-Manufacturing Business Survey Committee. Following the initial release, this new report will be issued on the third business day of each month at 10:00 a.m. eastern Time via Business Wire and Xpedite Broadcast Fax.
The National Association of Purchasing Management is a not-for-profit association that provides national and international leadership in purchasing and supply management research and education. NAPM provides its more than 44,000 members in its 180 affiliated associations with opportunities to expand their professional skills and knowledge.
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| 03/09/2010 | 09:00 | | | Retail Sales mm | | 0.2% | 0.0% | Jul | |
Country: EMU
Source: The Census Bureau of the Department of Commerce.
Raw Data Available At: http://www.census.gov/svsd/www/advtable.html
Release Time: 8:30 ET around the 13th of the month (data for one month prior).
The retail sales report is a measure of the total receipts of retail stores. The changes in retail sales are widely followed as the most timely indicator of broad consumer spending patterns. Retail sales are often viewed ex-autos, as auto sales can move sharply from month-to-month. It is also important to keep an eye on the gas and food components, where changes in sales 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 rather large revisions. Retail sales do not include spending on services, which makes up over half of total consumption. Total personal consumption is not available until the personal income and consumption reports are released, typically two weeks after retail sales.
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| 03/09/2010 | 09:00 | | | Retail Sales yy | | 0.5% | 0.4% | Jul | |
Country: EMU
Source: The Census Bureau of the Department of Commerce.
Raw Data Available At: http://www.census.gov/svsd/www/advtable.html
Release Time: 8:30 ET around the 13th of the month (data for one month prior).
The retail sales report is a measure of the total receipts of retail stores. The changes in retail sales are widely followed as the most timely indicator of broad consumer spending patterns. Retail sales are often viewed ex-autos, as auto sales can move sharply from month-to-month. It is also important to keep an eye on the gas and food components, where changes in sales 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 rather large revisions. Retail sales do not include spending on services, which makes up over half of total consumption. Total personal consumption is not available until the personal income and consumption reports are released, typically two weeks after retail sales.
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| 03/09/2010 | 12:30 | | | Unemployment Rate | | 9.6% | 9.5% | Aug | |
Country: US
Source: Bureau of Labor Statistics, U.S. Department of Labor.
Raw Data Available At: http://stats.bls.gov/news.release/empsit.toc.htm
Release Time: First Friday of the month at 8:30 ET for the prior month.
In Brief
The employment report is actually two separate reports which are the results of two separate surveys. The household survey is a survey of roughly 60,000 households. This survey produces the unemployment rate. The establishment survey is a survey of 375,000 businesses. This survey produces the nonfarm payrolls, average workweek, and average hourly earnings figures, to name a few. Both surveys cover the payroll period which includes the 12th of each month.
The reports both measure employment levels, just from different angles. Due to the vastly different size of the survey samples (the establishment survey not only surveys more businesses, but each business employs many individuals), the measures of employment may differ markedly from month to month. The household survey is used only for the unemployment measure - the market focusses primarily on the more comprehensive establishment survey. Together, these two surveys make up the employment report, the most timely and broad indicator of economic activity released each month.
Total payrolls are broken down into sectors such as manufacturing, mining, construction, services, and government. The markets follows these components closely as indicators of the trends in sectors of the economy; the manufacturing sector is watched the most closely as it often leads the business cycle. The data also include breakdowns of hours worked, overtime, and average hourly earnings.
The average workweek (also known as hours worked) is important for two reasons. First, it is a critical determinant of such monthly indicators as industrial production and personal income. Second, it is considered a useful indicator of labor market conditions: a rising workweek early in the business cycle may be the first indication that employers are preparing to boost their payrolls, while late in the cycle a rising workweek may indicate that employers are having difficulty finding qualified applicants for open positions. Average earnings are closely followed as an indicator of potential inflation. Like the price of any good or service, the price of labor reacts to an overly accommodative monetary policy. If the price of labor is rising sharply, it may be an indication that too much money is chasing too few goods, or in this case employees.
In Depth
The employment report is really two reports - the household survey and the establishment survey. These two surveys contain a wealth of timely information which justify this report's status as the most important economic release of the month. This same wealth of information can nevertheless turn into a dearth of knowledge if it is not placed in the proper context.
Household and Establishment Surveys
The household and establishment surveys differ due to the source of the data, as the names suggest. The household survey is a survey of households and the establishment survey is a surveys of businesses. The establishment survey, which is sometimes referred to as the payrolls survey, is favored by the market for a simple reason - it is far more comprehensive. Both surveys attempt to measure employment conditions at the roughly the same point in time - the household survey covers the calendar week which includes the 12th of the month while the establishment survey covers the pay period (be it a week, two weeks, or longer) which includes the 12th. But the establishment survey covers 390,000 businesses which employ 47 million people, while the household survey covers just 50,000 individuals. With a sample size which is 940 times larger than the household survey, it is hardly surprising that the market is more interested in the establishment survey.
Aside from the sample size, the surveys differ in other significant ways. The household survey counts farm workers, the self-employed, unpaid family workers, and private household workers as employed; the establishment survey does not. The household survey can only count one individual as employed once, even if that person holds two jobs. The establishment survey will double count an individual who appears on the payrolls of two companies. There are other, less significant differences, but let's turn now to the statistics produced by the two surveys.
The Household Survey
The Unemployment Rate
As we noted earlier, the household survey is not nearly as reliable as the establishment survey due to the small size of the survey sample. This survey nevertheless receives attention, primarily because it is responsible for the one figure which is guaranteed to lead the nightly news - the unemployment rate. The unemployment rate demands little explanation, though it is worth noting that the rate can occasionally sees significant monthly changes which are due to flukes in the data. The rate is simply the result of dividing the number of people unemployed (labor force less employed) by the number of people in the labor force.
The problem is that the employment and labor force measures in the household survey are far more volatile than even nonfarm payrolls. The reason, of course, is the small survey sample size. It is therefore useful to look at the labor force and employment figures themselves to determine if changes in the unemployment rate are due to aberrant swings in one or both of these series.
Beyond the basics of tallying up the labor force and employment, the household survey breaks down these totals in every way imaginable - by gender, race, age, type of job, duration of unemployment, and on and on. These breakdowns seldom are of interest to the financial markets. Perhaps the only two exceptions are the discouraged worker and part-time worker measures.
Discouraged Workers
Discouraged workers are people who have dropped out of the labor force because they have become discouraged about their job prospects. During hard times, this statistic is often watched alongside the unemployment rate. If the job situation gets exceptionally bleak, it is possible to see the unemployment rate remaining stable not because people are finding jobs, but because they have given up looking and dropped out of the labor force.
Part-Time Workers
The issue of part time employment has arisen in recent years as many analysts have argued that strong payroll growth reflected the increase in the number of workers holding multiple part-time jobs. Since the payroll data do not differentiate between full and part-time workers, it is possible that a sudden surge in part-time employment which reflected poor full-time job prospects would actually boost payroll growth. In reality, it does not appear that this has happened, as part-time employment has been relatively steady in recent years. This figure nevertheless receives attention from time to time.
The Big Picture
Given the wealth of data contained in the employment report, it is important to take all of these indicators into account when passing judgment on the report. Looking at payrolls along is often misleading, as the workweek, earnings, and household employment measures may be telling a different story. Taken together, however, and taken with the caveats concerning monthly volatility and revisions, the employment report offers the best monthly glimpse of the economy.
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| 03/09/2010 | 12:30 | | | Non-Farm Payroll | | -108.0k | -131.0k | Aug | |
Country: US
Source: Bureau of Labor Statistics, U.S. Department of Labor.
Raw Data Available At: http://stats.bls.gov/news.release/empsit.toc.htm
Release Time: First Friday of the month at 8:30 ET for the prior month.
In Brief
The employment report is actually two separate reports which are the results of two separate surveys. The household survey is a survey of roughly 60,000 households. This survey produces the unemployment rate. The establishment survey is a survey of 375,000 businesses. This survey produces the nonfarm payrolls, average workweek, and average hourly earnings figures, to name a few. Both surveys cover the payroll period which includes the 12th of each month.
The reports both measure employment levels, just from different angles. Due to the vastly different size of the survey samples (the establishment survey not only surveys more businesses, but each business employs many individuals), the measures of employment may differ markedly from month to month. The household survey is used only for the unemployment measure - the market focusses primarily on the more comprehensive establishment survey. Together, these two surveys make up the employment report, the most timely and broad indicator of economic activity released each month.
Total payrolls are broken down into sectors such as manufacturing, mining, construction, services, and government. The markets follows these components closely as indicators of the trends in sectors of the economy; the manufacturing sector is watched the most closely as it often leads the business cycle. The data also include breakdowns of hours worked, overtime, and average hourly earnings.
The average workweek (also known as hours worked) is important for two reasons. First, it is a critical determinant of such monthly indicators as industrial production and personal income. Second, it is considered a useful indicator of labor market conditions: a rising workweek early in the business cycle may be the first indication that employers are preparing to boost their payrolls, while late in the cycle a rising workweek may indicate that employers are having difficulty finding qualified applicants for open positions. Average earnings are closely followed as an indicator of potential inflation. Like the price of any good or service, the price of labor reacts to an overly accommodative monetary policy. If the price of labor is rising sharply, it may be an indication that too much money is chasing too few goods, or in this case employees.
In Depth
The employment report is really two reports - the household survey and the establishment survey. These two surveys contain a wealth of timely information which justify this report's status as the most important economic release of the month. This same wealth of information can nevertheless turn into a dearth of knowledge if it is not placed in the proper context.
Household and Establishment Surveys
The household and establishment surveys differ due to the source of the data, as the names suggest. The household survey is a survey of households and the establishment survey is a surveys of businesses. The establishment survey, which is sometimes referred to as the payrolls survey, is favored by the market for a simple reason - it is far more comprehensive. Both surveys attempt to measure employment conditions at the roughly the same point in time - the household survey covers the calendar week which includes the 12th of the month while the establishment survey covers the pay period (be it a week, two weeks, or longer) which includes the 12th. But the establishment survey covers 390,000 businesses which employ 47 million people, while the household survey covers just 50,000 individuals. With a sample size which is 940 times larger than the household survey, it is hardly surprising that the market is more interested in the establishment survey.
Aside from the sample size, the surveys differ in other significant ways. The household survey counts farm workers, the self-employed, unpaid family workers, and private household workers as employed; the establishment survey does not. The household survey can only count one individual as employed once, even if that person holds two jobs. The establishment survey will double count an individual who appears on the payrolls of two companies. There are other, less significant differences, but let's turn now to the statistics produced by the two surveys.
The Establishment Survey
Nonfarm Payrolls
Without question, the single most important piece of data contained in the employment report generally and the establishment survey specifically is nonfarm payrolls. As the name implies, nonfarm payrolls measure the number of people on the payrolls of all non-agricultural businesses. The monthly changes in payrolls can be quite volatile, occasionally varying by better than 200K from one month to the next. Even with this volatility and the possibility of large revisions to past data, the payrolls figures offer the most timely and comprehensive snapshot of the economy.
Average Workweek
The workweek, also referred to as hours worked, is an often underrated indicator in the establishment survey. The average number of hours worked by employees on nonfarm payrolls is an important determinant of both industrial production and personal income in any given month. The workweek typically sees changes of a tenth or two each month, but can see much larger swings, such as the four tenth decline reported for October. To understand the importance of these changes in the workweek, note that a one tenth decline in the average workweek of 120 mln workers (roughly the current level of employment) results in 12 mln fewer hours worked. To create a similar decline in manhours through a change in employment, payrolls would have to fall 340K. For the purposes of production and income calculations, a one tenth of an hour change in the workweek is equivalent to a 340K change in employment. Needless to say, the workweek data are therefore critical in judging the overall strength or weakness of the employment report.
Aggregate Hours Worked
The aggregate hours worked index simply brings together the two series we just noted. By calculating an index which looks at both employment and the workweek, we get a complete picture of the total hours worked each month. This indicator is seen as a monthly proxy for GDP. By definition, the quarterly change in the amount of goods produced is equal to the change in manhours plus the change in productivity. As productivity is somewhat predictable from quarter to quarter, the aggregate hours worked index provides a helpful monthly read on the overall economy.
Average Hourly Earnings
The last indicator from the establishment survey which is worthy of close inspection is average hourly earnings, which is important for two reasons. Alongside total manhours, the average earnings figure gives us a good indication of personal income growth during the month. Second, the earnings figures are closely watched during periods of strong economic growth for evidence of increasing wage pressures. Such has certainly been the case over the past year, as the market's reaction to the employment data has often turned on the change in hourly earnings and its implications for the inflation outlook.
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| 03/09/2010 | 14:00 | | | Services PMI | | 57.0 | 57.4 | Aug | |
Country: US
Source: Institute for Supply Management.
Raw Data Available At: http://www.ism.ws/ISMReport/index.cfm
Release Time: 10:00 ET on the first business day of the month for the prior month.
ISM: Institute for Supply Management
formerly NAPM: National Association of Purchasing Managers
In Brief
The ISM report is a national survey of purchasing managers which covers such indicators as new orders, production, employment, inventories, delivery times, prices, export orders, and import orders. Diffusion indexes are produced for each of these categories, with a reading over 50% indicating expansion relative to the prior month, and a sub-50% reading indicating contraction.
The total index is calculated based on a weighted average of the following five sub-indexes, with weights in parentheses: new orders (30%), production (25%), employment (20%), deliveries (15%), and inventories (10%).
The ISM is one of the first comprehensive economic releases of the month, typically preceding the employment report. Though it covers only the manufacturing sector, it can often provide accurate hints regarding the tone of subsequent releases. During periods of inflation concerns, the prices paid and vendor deliveries indexes often determine the bond market's reaction to the report.
In Depth
The Institute for Supply Management's monthly Report on Business is probably the most widely watched economic indicator produced by the private sector. There are two key reasons for the ISM's prominence. First, its longevity - the report was first produced in 1931, and after a break during World War II, it has produced continuously since 1948. Second , its leading quality - the ISM has been one of the better predictors of the business cycle over the years.
More than 370 purchasing and supply management professionals in the non-manufacturing sector participate in the survey by completing a monthly questionnaire covering Business Activity, New Orders, Backlog of Orders, New Export Orders, Inventory Change, Inventory Sentiment, Imports, Prices, Employment, and Supplier Deliveries. The respondents are from more than 60 different sectors representing nine divisions from the Standard Industrial Code classification system including Agriculture, Forestry, & Fisheries; Mining; Construction; Transportation, Communications, Electric, Gas, and Sanitary Services; Wholesale Trade; Retail Trade; Finance, Insurance & Real Estate; Services; and Public Administration. Geographic location is also a consideration
The results of the responses are compiled in the Non-Manufacturing NAPM Report on Business®by Ralph G. Kauffman, Ph.D., C.P.M, chair of the Non-Manufacturing Business Survey Committee. Following the initial release, this new report will be issued on the third business day of each month at 10:00 a.m. eastern Time via Business Wire and Xpedite Broadcast Fax.
The National Association of Purchasing Management is a not-for-profit association that provides national and international leadership in purchasing and supply management research and education. NAPM provides its more than 44,000 members in its 180 affiliated associations with opportunities to expand their professional skills and knowledge.
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