How to use Economic Indicators?

A statistic pertaining to an economic activity is an economic indicator. Economic indicators enable performance monitoring and future performance forecasting. One application of economic indicators is the study of business cycle.

The Purchasing Managers’ Index (PMI)

The industrial and service sectors’ current economic trends are measured by the Purchasing Managers’ Index (PMI).The PMI is based on a monthly poll of 19 different industries’ supply chain managers, which includes both upstream and downstream activities. There are 0 to 100 points in the headline PMI. A PMI that is higher than 50 indicates growth from the previous month. A PMI reading below 50 denotes a contraction, whereas one above 50 denotes no change.

Interest Rates

Borrowers are less inclined to take out loans as interest rates rise. This deters people from taking on debt and stops companies from growing, which might cause GDP growth to stagnate.

An rise in the demand for money and a greater chance of inflation might result from excessively low interest rates. Increased inflation has the potential to devalue the currency and affect the economy. The economy’s current state and potential future direction can both be inferred from the current interest rates.

Prices for Commodities

A commodity is a fundamental good that is used in trade and may be exchanged for other commodities of the same kind. The most frequent use of commodities is as raw materials for the creation of other products or services.

Gross Domestic Product (GDP)

The total dollar worth of all completed goods and services produced in a nation during a given time period is known as the gross domestic product (GDP). An estimate of a nation’s GDP can be used to determine the size and growth rate of an economy.Although it has its limitations, GDP is an important tool for assisting investors, corporations, and policymakers in making strategic decisions.

Corruption Index

Political, economic, and social growth are still significantly hampered by corruption. The consequences of corruption and associated fraud are especially severe for those who are economically vulnerable. This is due to the fact that they frequently rely largely on public services and are unable to pay bribes. Additionally, the International Finance Corporation points to rising corporate costs as a result of corruption.

Import & Export per Category

Exports support business growth, job creation, and market expansion while also increasing the gross domestic product of the exporting nation. When native industries are unable to provide comparable goods and services affordably or effectively, consumers are drawn to imported goods and services.