- The latest US jobs report is just one of several critical measurements watched by investors, politicians, and analysts to forecast the economy’s future.
- While some metrics are published by government agencies, surveys from the Institute for Supply Management and the University of Michigan are also regarded as important indicators.
- Here are six of the most watched economic metrics, how frequently they’re released, and what they measure.
- Visit the Markets Insider homepage for more stories.
A recent US employment report revealed a hiring slowdown in August and offered the latest look into how the nation’s economy is handling the US-China trade war.
Government data is among the most reliable economic indicators, and previews how big-picture trends might affect everyday consumers. Other establishments like the Institute of Supply Management also provide high-quality statistics closely watched by investors, government officials, and economists.
Following these metrics can help discern whether the economic landscape is trending upward or heading toward a recession. Here are six of the most important measurements of the US economy, what they mean, and how often they’re published.
- Focus: The US Bureau of Labor Statistics gathers nonfarm payroll data every month, highlighting updates to the unemployment rate and average wages. The data is broken down by gender, age, level of employment, and sector. Any considerable drop in wages or employment can signal a downturn, as unemployed consumers will likely spend less and stave off economic expansion.
- Frequency: The Employment Situation reports are released at 8:30 a.m. ET every first Friday of the month. The report on September hiring trends is set for an October 4 release.
- Source:Bureau of Labor Statistics
- Focus: Gross domestic product has been the main tool for measuring economies around the world for nearly eight decades. The monetary figure measures the value of a nation’s final goods and services produced in a specific time period. While it leaves out crucial variables like sustainability and social welfare, GDP’s simplicity makes it a go-to stat for determining the rate of a country’s economic expansion.
- Frequency: The third and final measurement for quarterly US GDP is released every three months. The figure for the second quarter of 2019 will be published September 26.
- However, preliminary estimates are released each month, and the first third-quarter estimate will be published October 30.
- Source:Bureau of Economic Analysis
Federal Reserve interest rate
- Focus: The Federal Reserve uses the federal funds rate as a policy tool to either encourage borrowing or saving across the US. Interest rate hikes and cuts are voted on at Federal Open Market Committee meetings, when the Fed chair and regional presidents convene to discuss the current economic outlook.
- Frequency: The FOMC holds meetings eight months each year, with additional meetings planned if deemed necessary. The next meeting is slated for September 17 and 18.
- Many economists tune in to Fed officials’ speeches and interviews throughout the year to find hints at future FOMC policy decisions. Some analysts even assign positive or negative values to officials’ public statements in an attempt to quantify their sentiment toward the economy.
- Source: The Federal Reserve
REUTERS/ Gary Cameron
- Focus: Homes are often consumers’ biggest investment, and a slowdown in house construction could stem from collective uncertainty toward economic conditions. The housing starts report reveals national construction trends as well as regional views that indicate which areas of the US are seeing increased homeowner and developer interest.
- Frequency: Reports on new residential construction are released on the twelfth workday of every month, at 8:30 a.m. ET.
- Source:Census Bureau
- Focus: This survey measures a random sample of consumers’ views on the economy, their own financial positions, and how they view the economy compared to the past. Consumer spending drives about 70% of the national economy, so a consensus shift can bring major consequences. By surveying consumers instead of using other, less direct indicators, the sentiment index gives a hugely relevant look at how spending habits shift.
- Frequency: Every other Friday, with a preliminary estimate arriving in the middle of the month and a final reading released at the end of the month or start of the following month.
- Source:University of Michigan Survey of Consumers
ISM Purchasing Managers’ Index
- Focus: The Institute for Supply Management is the oldest such association in the world, and publishes an index tracking purchasing managers’ inventory counts and spending activities. Though manufacturing has been a shrinking sector over the past several decades, purchasing managers play a massive role in forecasting whether companies should ramp up or slow down production. If the index falls below 50, it indicates the manufacturing sector may be contracting.
- Frequency: The index is updated on the first workday of every month at 10:00 am ET, with the next report arriving October 1.
- Source: Institute for Supply Management