Economic Indicators That Are Good For Business

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If you’re reading this, it means you really want to get stuck into the world of trading and start making your hard-earned cash start working a bit harder for you. It also means you are pretty clued up on the basics of trading and now want to know what indicators are out there; the kind that experienced traders know they need to keep a sharp eye on in order to reduce the risks. That’s the secret to a successful trade. It’s knowing where the potential bumps in the road are coming from so that you can reduce how much any volatility harms your investment.

The fact you know to do this is a great news. It shows you are taking this whole trading thing very seriously, which you need to do. Of course, knowing you need to do this and knowing which indicators you need to focus on are two entirely different things, which is why we have pulled together a list of the best. Good luck.

  1. GDP

When it comes to looking at the overall health of the economy, nothing is going to help you out more than a quick glance at the GDP. Sure, the fact it takes such a long time to compile that expectations are usually fairly accurate, but it is still the best measure for confirming exactly where we are in the so-called ‘business cycle’.

  1. Non-Farm Payrolls

If we had to name the most important indicator in the monthly calendar, it would be the non-farm payroll, something every trader studies on the first Friday of every month. According to CMC Markets, the reason for this is simple: this report has the ability to move the markets substantially.This is essentially because payroll data can be used as a proxy for the quarterly GDP changes.

  1. Unemployment Rates

In its most basic form: this is the percentage of the workforce that is actively looking for work. It’s a sort of lagging indicator. As you can imagine, if unemployment is high, or even growing, then consumer sentiment and attitudes are going to be impacted or, if you’re looking for Layman’s speak, spending will start to slow and that will slow down economic growth.

  1. Consumer Price Index

This lets you know just how much the price of certain everyday goods has risen or fallen, which is a great way of looking at the price stability of certain markets and industries. To help you understand this a little clearer, inflation wants to be around the 2% mark. That’s normal. No. That’s desirable. If it veers away from this, wow, that’s when you might want to start holding your breath because it can have a rather negative impact on the economy and start serving as an indicator of what’s to come.

  1. Retail Sales

This is basically your ways of seeing how the retail sector is doing, which is to say how people are spending their money. It’s all about personal consumption and spending, which is one of the biggest contributors to the economies growth. Essentially, what you want to see is retail sales increasing. That shows good market health and that’s going to make stock prices increases.

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