​Investment -Economic Indicators 
Indicators focus on a small, manageable set of facts that gives a sense of the wider picture. Economic indicators provide examination of economic performance and predictions of future performance.  

Economic Indicators 
We observed earlier that economic growth is not straightforward to quantify. Real GDP is normally measured quarterly and is an important measure of the wealth of a country. However, it is rarely 100% correct when it is published because all the essential information is not yet available. It is estimated with a large time lag and is subject to modifications over time as additional data become available. In fact, modifications might occur well over a year after the original report date.

Economic indicators are metrics that offer insight into economic activity and are reported with more regularity than GDP. They are estimated and reported by governments and commercial groups. Economic indicators can be used to influence projections of economic activity, financial market performance, and currency rates.


In the United States, for example, the Institute for Supply Management’s Purchasing Managers’ Index, or PMI, one of the most followed economic indicators, is a survey sent to businesses covering all North American industry categories to collect information on production levels, new orders, inventories, backlogs, and employment. The information is used to forecast total business confidence. 

The following are other indices of economic activity:  


Consumer purchasing indexes 
Average weekly hours of production workers 
Initial claims for unemployment insurance  
Retail sales Spending on the building of residential and commercial properties   
Sentiment surveys spanning the manufacturing and consumer sectors

Sentiment surveys seek to quantify the confidence that economic entities, such as manufacturers and consumers, have in the economy and their expected levels of activity. Sentiment surveys may be valuable as predictors of spending plans, but they have limitations:    

They measure just overall sentiments about economic conditions rather than actual spending or output.  
The sample may not be representative. For example, only large enterprises may be sampled, or the sample of consumers may be passersby at a single street corner. Because of sampling error, these surveys might not fairly reflect the broad view of the entire economy.    
The poll may just ask respondents to pick between more, the same, or fewer sales, employment, output, and so on. As such, the replies may reveal the direction of the projected shift but not its amount.    

Economic indicators are frequently classed as trailing, coincident, or leading; based on whether they signify changes in economic activity that have already happened, that are under way, or that are likely to happen in the future.  

Leading indicators signal future changes in the economy and are considered important for economic forecast and policy formation. Examples include the following: 

Stock market indices
Retail sales
Building permits
Housing starts (new residential construction)
Manufacturing activity levels

Lagging indicators reflect a change in economic activity after output has already altered. Examples include the following:   

GDP growth
Unemployment rate 
Inflation rate (the consumer price index or CPI) 
Income and wage growth  

Coincident Indicators
Coincident indicators show present economic situations, but do not have forecasting relevance. Examples include the following: 

Employment
Personal income statistics