Economic Indicators: What Is It?
In a word, it’s a tip (of information), an insight, that provides a deeper look into the economy.
Speaking of the UK, it may be an inflation rate, Balance of Trade, GDP Growth Rate, Core Consumer Prices, CPI Transportation or a wealth of other indicators that reveal the statistics and trends.
What to Consider in the First Place?
Gross Domestic Product, or GDP for short, has it all. It reflects the overall value of goods and services provided in a country during a particular period. No wonder, that out of an array of economic indicators Gross Domestic Product remains the most important one, as it displays the health of the national economy.
Speaking of the UK, here GDP is calculated by the Office for National Statistics.
So, what’s the point of GDP for investors? Equity investors concentrated on corporate growth should pay special attention to GDP.
The indicator is a good forecaster and sometimes an explainer of a stock market behaviour.
For example, if you are involved in the labour market, then dig for the unemployment rate, compare labour costs, examine the number of job vacancies, etc. Of course, you should also look at the GPD and inflation, but be sure you’ve studied all you need to give you an insight into the niche you are interested in.
Plan to invest in currency market? Go for money reports then. Look at the interest rates, dive into banks’ balance sheets, learn more about money supplies and so on.
Sieve information, pick up what is useful for you, combine and compare.
What’s All About?
A little knowledge goes a long way, learning more about what’s going on make your investment strategy better. Keep up with news and updates, maintain awareness. Economic indicators can guide you to the present or future state of the economy. Don’t neglect them! Think of this data as an indispensable part of a bigger picture and a key element of your investment planning.