TradeSense: Economic Indicators, 12 May
This page is updated daily with information that can help expand your trading knowledge and add to your betting armoury.
Here we cover details of some of the more important economic reports of the day, including when they are released, what they mean and how they may affect the financial markets.
Visit us daily for the latest posting from the TradeSense databank (the complete databank resides in the client area of our website and contains a full list of reports for every economic indicator that we cover).
Japan - Money Supply M2 + CD (April)
Released by: Bank of Japan (monthly report)
Time: 00.50
What is it?
A money indicator used by the Bank of Japan which closely correlates with real economic avtivity. The figure includes all currency in circulation as well as bank deposits (CD = Certificates of Deposit).
The headline figure is a percentage change from the previous year.
Why is it important?
Growth in Money supply has historically been shown to be a leading indicator of gowth in GDP. This figure focuses for the most part on individual deposit accounts, rather than institutional accounts, making it a better indicator than broader measures.
What are market expectations?
A survey of 25 analysts conducted by Bloomberg shows a consensus of +2.2% (year-on-year), unchanged from last month's figure.
Australia - Investment Lending (March)
Released by: Australian Bureau of Statistics (monthly)
Time: 02.30
What is it?
A reports that measures the change in value of loans that have been provided to individuals and corporations.
The headline figure is reported as a percentage change from the previous month that is seasonally adjusted.
Why is it important?
An increase in investment lending tends to act as a leading indicator of growth in the economy, as greater capital investments generally finance expansions of output and productivity and typically happend during periods of high consumer and business confidence.
This figure generally does not have a significant impact upon the markets.
Australia - Home Loans (March)
Released by: Australian Bureau of Statistics (monthly)
Time: 02.30
What is it?
A report containing the number and value of outstanding home loans in Australia.
The headline figure is the percentage change in the value of loans from the previous month.
Why is it important?
Changes in the value of home loans gives a clear indication of how the housing market is faring. The housing market often bears a strong correlation with economic growth, as the purchase of a new home leads to a ripple effect of expenditure on such items as furnishing and domestic applicances, and growth in the housing market therefore generally leads to increased consumer spending. The report can also be used as a guide to consumer confidence, as consumers will usually take out such a significant loan if htey are confident about their ability to repay it in the future.
What are market expectations?
A Bloomberg survey of 20 ecomonists yielded a median forecast of a month on month drop of 0.8%, compared with last month's drop of 5.9%.
Japan - Machine Tool Orders (April, preliminary)
Released by: Japan Machine Tool Builders Association (JMTBA) (monthly report)
Time: 07.00
What is it?
This release tracks the total value of machine tool orders placed at leading manufacturers in Japan.
Why is it important?
The survey is held to provide an early view of trends in corporate capital spending. Favourable figures are often seen as a sign of a healthy business outlook.
Higher capital spending is also positive for the Japanese labour market, as companies will generally require new employees to run and maintain new machinery.
UK – PPI Input (April)
Released by: U.K. Office of National Statistics (monthly report)
Time: 09.30
What is it?
A measure of the change in prices paid by UK manufacturers for materials and running costs.
The figure is also calculated as core figure, excluding volatile components, such as food and energy, so as to avoid having the data skewed by short-term spikes in these areas.
Why is it important?
Higher costs being incurred by manufacturers are likely to be passed on to consumers via higher retail prices. This figure can therefore be used as a measure of inflation.
A high figure may influence the MPC's monetary policy to be more hawkish, and is generally considered to be bullish for GBP.
What are market expectations?
A Bloomberg survey of 23 analysts yielded a median estimate of a month on month increase of 1.8%, unchanged from last month's release.
UK – PPI Output (April)
Released by: U.K. Office of National Statistics (monthly report)
Time: 09.30
What is it?
A measure of the change in prices of goods produced by UK manufacturers.
This figure is also known as 'Factory Gate Price' as it represents the price of goods upon leaving the factory. The figure is also calculated as core figure, excluding volatile components, such as food and energy, so as to avoid having the data distorted by temporary fluctuations.
Why is it important?
Manufacturers charging higher prices for the goods they produce almost inevitably leads to higher prices being paid by consumers at a retail level.
Such increases may indicate increases in demand.
What are market expectations?
A Bloomberg survey of 25 analysts forecast a month on month increase of 0.6%, as compared with the previous figure of +0.9%.
UK – Visible Trade Balance (March)
Released by: Office of National Statistics (monthly report)
Time: 09.30
What is it?
Visible Trade Balance differs from Trade Balance (or Total Trade Balance) in that it only records physical goods and consequently does not include intangibles, such as services.
Just as with the total Trade Balance, a positive Visible Trade Balance (a trade surplus) indicates that exports outweigh imports, while A negative Trade Balance (a trade deficit) indicates that exports are exceeded by imports.
The headline figure is reported in billions of pounds.
Why is it important?
Trade plays a large part in the UK's economy, and Visible Trade Balance data therefore offers insights into economic developments that will have an influence on the financial markets, particularly sterling exchange rates.
A trade surplus indicates flow of money into the UK in exchange for exported goods; this flow of sterling into the economy may often result in sterling appreciating in value. Trade deficits, on the other hand, signal the opposite and are a sign that sterling is seeping out of the country, which may have a negative impact on the value of sterling.
What are market expectations?
The 24 economists polled in a Bloomberg survey gave a median forecast of -£7.5 billion. February's figure was -£7.487 billion.
UK – Trade Balance (March)
Released by: Office of National Statistics (monthly report)
Time: 09.30
What is it?
The Trade Balance measures the value of exports of goods and services out of the UK minus the value of and imports to the UK.
A positive Trade Balance (a trade surplus) indicates that exports outweigh imports. A negative Trade Balance (a trade deficit) indicates that exports are exceeded by imports.
The headline figure is reported in billions of pounds and is presented alongside a year-on-year percentage change.
Why is it important?
The Trade Balance is one of the largest constituents of the UK's Balance of Payments and accordingly offers a useful glimpse into pressures on the value of sterling.
A trade deficit essentially signals that sterling is seeping out of the country, in order to purchase foreign imports with foreign currency. This outflow of currency can have a negative impact on the value of sterling, if not offset by comparable capital inflows.
What are market expectations?
The 13 economists polled in a Bloomberg survey gave a median forecast of -£4.4 billion, compared with the February figure (release last month) of -£4.439 billion.
US - Budget Statement (April)
Released by: Financial Management Service, U.S. Department of Treasury (monthly report)
Time: 19.00
What is it?
A monthly report of the deficit or surplus held by the U.S. federal government. The report provides detailed information regarding federal receipts and outlays based on accounting reports of Federal entities, disbursing officers, and Federal Reserve Bank reports.
Why is it important?
A positive Monthly Budget Statement (surplus) indicates that receipts exceed outlays. Conversely, a negative figure (deficit) is indicative of government debt.
A high deficit indicates that the government needs to raise greater funds via debt (i.e. sell more Treasury notes and bonds). If demand remains constant, the law of supply and demand dictates that this should push the price of notes and bonds down.
What are market expectations?
The 21 economists surveyed by Bloomberg shows a median expectation of -$160 billion, compared with last month's figure of -$177.7 billion.