In any given month, the market is peppered with scheduled news releases from government agencies, industry organizations, and universities on the performance of a specific component of the economy. These data points act as bellwethers for economic indicators like the unemployment rate, inflation, and consumer spending.
While each of these info blasts might be relevant to an economist, traders only need to keep abreast of the statistics that will move the market. Below are the more pressing economic data points and whether they have or ever had, the ability to move the market.
There are two separate monthly reports on U.S. nonfarm payroll data. The first comes from management services company ADP, usually two days before the second report from the U.S. Department of Labor’s Bureau of Labor Statistics.
Both gauge the growth or decline in employment, hiring and wages among private and public sectors over the course of the previous month. While the jobs numbers are considered one of the foremost indicators of economic activity, neither really move the market as much as they used to. Time was when this was the case, however, and as such these numbers still hold some cache in the eyes of Wall Street.
Monthly advance reports on retail sales data from the U.S. Census Bureau provide a sample indication of the relative growth or decline in consumer retail, auto, and general merchandise sales. Each retail sales report is collected through a survey of 4,700 companies over the previous month and adjusted for seasonal changes.
The month-over-month and annual change in sales can have a sizable impact on stocks in the retail industry. The correlation of consumer spending has a direct impact on the bottom line of companies in the retail space.
The Bureau of Economic Analysis’ GDP report is released quarterly and reflects the overall economic conditions in the U.S. in each three-month period. GDP is a tally of the net revenue and expenses of the country as a whole. The metric takes into account public and private revenue inflow and outflow from things like goods consumption, private company revenue, spending, and trade.
The release of quarterly GDP data is basically the macroeconomic indicator for U.S. securities and, as a result tends to cause volatility in the S&P futures, major commodities like gold and oil, and some sectors like manufacturing industrial stocks. While positive GDP growth is generally a favorable indicator, the influence of GDP data has a lot to do with historical and global trends.
These two data sets from The Bureau of Labor Statistics measure the change in what consumers and producers pay for necessary goods and services. The indices function as a gauge of inflation.
CPI and PPI differ in that the CPI measures the cost of a basket of staple products while also measuring sales tax and any other associated expenses. This is distinct from the PPI’s measure, which is focused solely on company revenue streams and sales price to consumers, which excludes things like sales tax.
These different measures can both offer traders insight into commodity prices, but the key movement data is in the core PPI, which represents the end sales price of manufactured goods. Monthly discrepancies in this number have broad implications on whether inflation is causing an increase in the baseline costs of certain products.
Monthly home sales data comes from a variety of sources, but data points traders should focus on primarily come from the The National Association of Realtors and the Census Bureau. The former discloses monthly data on both existing and pending home sales, which include statistics as median price and the start of new construction. The Census Bureau, on the other hand, deals primarily with new home sales and construction costs.
As you might imagine, these statistics tend to be most immediately impactful in stocks that deal in materials and construction. However, housing sales have increasingly become a relevant indication of consumer finances, which can cast new light on bank stocks.
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