Major Economic Data Releases

Economists and analysts at major sell side and buy side institutions will prognosticate on where these numbers end up. Theoretically, current asset prices reflect these expectations.

If numbers are better than expected, this will be a positive for affected assets and vice versa. Country specific data will lead to an appreciating currency if the data is favorable (e.g. US exports coming in higher than consensus forecasts). However, the market will usually adjust as analysts dissect the underlying reasons behind why there was a beat or a miss.

The trading floor is very sensitive to data releases, whether for positioning and getting out of trades for traders or updating commentary and pitches for salespeople. For major releases, the trading floor will be frantic for the morning, especially if the data comes in very far from what was expected.

Jobs Data and Unemployment

Economists will look at various employment catalysts to predict how many net jobs were added every month.

As the mandate of most central banks is to look at employment (in addition to inflation), jobs data has ramifications for monetary policy.

The quality of jobs must also be considered – full time jobs are better than part time jobs, but analysts are beginning to recognize that employment dynamics are evolving in a more fluid “gig” economy.

Also, private sector hiring is more positively viewed than large numbers of public sector hiring.

Non-Farm Payrolls

Non-farm payrolls is a US job report on the first Friday of every month (at 8:30) that looks at all additions to non-farming jobs, unincorporated proprietors (people who work for themselves), employment in private households (cooks, maids, butlers) and the military.

This is a good indicator of job creation and the broader economy and is closely followed by all traders. Good reports where non-farms beat expectations are positive for the USD and negative for fixed income (bonds).

Housing Starts, Building Permits

Housing starts are the number of new residential units every month. Each separate unit is considered a housing start, so this means that a small wood-frame apartment with 6 separate dwelling units will count for 6 while a house with 6 rooms will count as one. Good housing starts numbers suggest a strong economy.

For new construction, permits to build granted by relevant authorities may affect these figures – so starts are somewhat dictated by policy at various government levels (municipal). Higher interest rates will also constrain housing starts as it is more difficult for homebuyers to take on a larger mortgage.

Housing starts are affected by seasonality and weather, so figures are annualized with adjustments for comparability purposes. Canadian annualized housing starts in December 2017 was ~217k.

Building permits are also a data release. They are looked at but will not affect markets unless something really stands out.

Consumer Price Index (CPI) and Producer Price Index (PPI)

CPI is the price change for a basket of goods over a period of time. CPI is widely used as a measurement of inflation. PPI measures the change over time between the selling prices realized by domestic producers.

CPI and PPI are major data releases and US and Chinese releases will move global markets.

Export Data and Trade Balance

Economists will look at whether trade surpluses or deficits widened or narrowed.

Wholesale Inventories

Rising inventories are a sign of economic strength as companies invest in anticipation of greater sales. Wholesale inventories are not a major release. This is sometimes evaluated with and without automobiles. Automobiles may be looked at separately (sales of wholesalers and sales of motor vehicles). Analysts will look at this figure in terms of months of sales required to clear their shelves.

US Retail Sales

Retail sales are a leading economic indicator reported monthly and split into several sub-segments. Analysts will look at trailing one year aggregate data for comparability purposes given the seasonality of retail sales.

The US Census Bureau will provide this data with and without auto sales and gasoline given the lumpy nature of sales and how expensive a car is relative to other goods, leading to difficulties in comparability. Retail sales are also looked at excluding autos, gasoline, building products and food service (the Retail Sales Control Group).

Good retail sales mean that there is consumption – a positive for the US dollar and stock market and negative for fixed income.

Industrial Production

Industrial production (IP) is a forecasting variable that measures the industrial output of an economy as defined as mining, manufacturing and utilities. IP is a leading indicator because the underlying industries are sensitive to consumer demand and interest rates. IP data is not a major market mover compared to the ISM Manufacturing Index.