Macro Economic Indicators - United Kingdom

1) Average Earning Growth

The indicator is calculated by taking into account earnings growth over the past three months (taking into account all payments that were actually made). This is a good indicator of future inflation, as rising wages, if they are not offset by productivity growth, are the cause of rising prices. It is one of the defining indicators, according to which the Bank of England determines interest rates. It has a significant impact on the market.

• Release Frequency: monthly.
• Release Schedule: 09:30 GMT.
• Source: U.K. Office of National Statistics.

2) Balance of Payments

It represents an overall picture of financial flows between the UK and the rest of the world. This parameter consists of a large number of components that take into account all types of cash flows to and from the country. In fact, it is the difference between all cash that entered and left it.

Growth of the balance of payments deficits affects the rate of the national currency, because it means the outflow of funds, i.e. reduce of foreign investment, falling confidence in the country, etc.

• Release Frequency: quarterly.
• Release Schedule: 09:30 GMT, at the end of the month following the reporting quarter.
• Source: U.K. Office of National Statistics.

3) Bank of England Minutes

The Bank of England Monetary Policy Committee keeps notes from its rate decision meetings. The detailed minutes from these meetings give an insight into the process of monetary policy decision making and what the opinion of the Bank of England on economic developments inside and outside the country.

The markets tend to focus most of their attention on the key points discussed that can affect future interest rate changes.

Because minutes come out two weeks after the Bank of England meets, the market does not take into account some information from the report. Market participants tend to track the overall mood of the Bank of England during the meeting. If the Bank is cautious about the inflationary outlook (the mood is called "Hawkish"), then the market expects future rate increases. If the Bank is optimistic ("Dovish") it suggests to markets that inflation is in check and that future rate increases are less likely.

• Release Frequency: monthly.
• Release Schedule: 2 weeks after announcement of rates, usually on Wednesday.
• Source: The Bank of England.

4) CBI Distributive Trades

The review (in the form of figures) reflects business sentiment on trade areas. The review does not have direct connection with the real prospects of economic development. The indicator is taken into account by the market.

• Release Frequency: monthly.
• Release Schedule: 11:00 GMT, 28-30th of the reporting month.
• Source: CBI. 

5) CBI Industrial Order Expectations

This index characterizes the volume of new orders in the industrial sector. The growth of industrial orders is a sign that the economy expands. Increase in orders leads to higher employment in the industry.

Increase in orders will lead to further growth in manufacturing, and hence lead to growth of the national currency and domestic stock market. In the bond market, this leads to an increase in profitability of government securities. The index is certainly important for the market. Sometimes a strong deviation from the forecast values of the index can cause a strong change of the pound sterling rate. Certainly, the indicator is not able to deploy the prevailing trend.

• Release Frequency: monthly.
• Release Schedule: 09:00 GMT.
• Source: CBI.

6) CBI Industrial Trends

The review (in the form of figures) reflects business sentiment on the production sector of the economy. The review does not have direct connection with the real prospects of economic development. It is released monthly. The indicator is taken into account by the market.

• Release Frequency: monthly.
• Release Schedule: 11:00 GMT, 22-27th of the reporting period.
• Source: CBI.

7) Current Account

This is the most important part of the Balance of Payments. It consists of:

• trade balance for goods and services (the sum of export and import flows);
• balance of income of compensatory payments to employees;
• balance of income from direct investment abroad and investment from abroad;
• balance of income from portfolio investment in securities and debt obligations;
• balance of payments of the government for taxes from non-residents operating in England, pension and social benefits to its citizens living abroad, and payments to international organizations.

Changes of this indicator have impact on financial markets. Increase in the deficit on Current Account Balance is negative news for the currency.

• Release Frequency: quarterly.
• Release Schedule: 09:30 GMT, at the end of the month following the reporting quarter.
• Source: U.K. Office of National Statistics.

8) Gross Domestic Product (GDP)

Gross domestic product (GDP) is the sum of domestically produced goods and services expressed in prices. It is a major indicator reflecting the state of the national economy. GDP is calculated in the following way: GDP = C + I + S + E - M, where С — consumption, I — investment, S — state government expenditures, E — export, M — import. GDP is expressed as an index relative to the previous period, and as an absolute value of the sum of prices for manufactured goods and services. Despite the importance of the indicator, its impact on the market is decreasing, because its value is usually predicted by the market based on other data, and also due to repeated revisions of the value of GDP after its first release.

• Release Frequency: quarterly, divided into three values — advance, revised and final.
• Release Schedule: 09:30 GMT
• Source: U.K. Office of National Statistics.

9) Industrial Output (Industrial Production)

It includes the output of the manufacturing sector (manufacturing output), and also takes into account manufacturing in sectors such like mining and processing of minerals, and utilities. It is an indicator of economic growth.

High or rising figures indicate the economic development and strengthening of the Pound. However, the uncontrolled level of production and consumption can lead to inflation. In the case of inflation, the Bank of England can raise interest rates to control growth.

The indicator is not decisive for the direction of economic development, as more than 60% of the gross domestic product is currently provided by the service sector. It is taken into account by the market.

• Release Frequency: monthly.
• Release Schedule: 09:30 GMT, 5-9th of the month following the reporting period.
• Source: U.K. Office of National Statistics.

10) M4 Money Supply

Indicator of M4 Money Supply. More often Money Supply Growth is used. It includes all currency in circulation, the total amount of loans issued by banks, as well as the amount of borrowing by the government. M4 is considered a good indicator for inflation.

• Release Frequency: monthly.
• Release Schedule: 09:30 GMT, next month after the reporting period, 19-21 provisional data are published, in a week - final figures are released.
• Source: The Bank of England.
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11) Major Banks Mortgage Approvals

Taking into account that the state of the UK property market is always in the focus of traders of British currency, the importance of this index is very high. Amount of mortgage approvals will result in the growth of loans and homes sold. Therefore, the indicator can be regarded as a leading indicator of the housing market, in addition the index also characterizes the lending sector.

• Release Frequency: monthly.
• Release Schedule: 09:30 GMT.
• Source: The Bank of England.

12) Manufacturing Output

This indicator shows the volume of products produced by the manufacturing industry as expressed in prices. It is an indicator of economic growth. The indicator is not very important for the market, because the contribution of manufacturing in gross domestic product is less than 20%. It is released monthly.

13) Net Consumer Credit

The amount of loans granted to individuals over the last month. A large value of the indicator can talk about "overheating" of the economy, when consumers take more credits than it is necessary for normal living. A too high level of credits can lead to a recession in the long term if the consumer is too burdened by the loan and will have to reduce consumption or to leave the debt to a financier in case of bankruptcy.

It has a limited impact on the market.

• Release Frequency: monthly.
• Source: The Bank of England.

14) Non-Eu Trade Balance

Non-Eu Trade Balance The difference between exports and imports, expressed in prices. The index is gradually losing its influence on the market because of the the growing importance of capital flows, rather than goods. At the same time, import growth indicates an increase in consumption in the country, and export growth is a sign of an increased level of production. The Non-EU Trade Balance is calculated separately for the UK. Reducing trade deficit (an increase in the surplus of exports over imports) leads to higher prices of the credit market instruments, appreciating currencies and rising prices of shares.

• Release Frequency: monthly.
• Release Schedule: 09:30 GMT, 18-20 of the month following the reporting period.
• Source: U.K. Office of National Statistics.

15) Purchasing Managers Index (PMI)

The indicator reflects the change in the rate of industrial production. Figures above 50% reflect growth of rates of industrial production, below 50% - slowing down. The indicator is taken into account by the market.

• Release Frequency: monthly.
• Release Schedule:  09:30 GMT, the first business day of the month following the reporting period.
• Source: Chartered Institute of Purchasing and Supply.

16) Producer Input Prices (PPI Input)

This indicator is defined as the change in the prices of components and semifinished products in the industry (the growing "input" prices may have no influence on the inflation index, as there can be reduction of costs in the production process). It is a string indicator of inflation. From the total value of the indicator, usually a part is singled out which does not take into account the price of food, alcohol, tobacco and fuel (prices for these commodities are highly volatile). The indicator is taken into account by the market.

• Release Frequency: monthly.
• Release Schedule: 09:30 GMT, 8-13 of the month following the reporting period.
• Source: U.K. Office of National Statistics.

17) Producer Ouput Prices (PPI Output)

This indicator is defined as the change in the level of manufacturer's selling prices in the industry. It is a string indicator of inflation. It reflects the inflationary pressures on the economy from producers (increase of output prices may have no influence on the inflation index, as it can reduce costs in trading). From the total value of the indicator, usually a part is singled out which does not take into account the price of food, alcohol, tobacco and fuel (prices for these commodities are highly volatile). It has a significant impact on the market.

• Release Frequency: monthly.
• Release Schedule: 09:30 GMT, 8-13 of the month following the reporting period.
• Source: U.K. Office of National Statistics.

18) Public Sector Net Cash Requirement (PSNCR)

The need of the public (including governmental) sector of economy in cash. PSNCR is used for determining the overall situation with the finances in England and is a sum of money that need to be borrowed by the public sector from other sectors of the economy and foreign sources to cover the gap between incomes and expenses, resulting from the activities of the public sector.

It includes a budget deficit, i.e. the difference between the budget income and expenditure. Large budget deficit leads to an increase in public debt and can act as a catalyst for accelerating inflation. It results either from large spendings or from low income of the budget.

• Release Frequency: monthly.
• Release Schedule: 09:30 GMT, 18-20 of the month following the reporting period.
• Source: U.K. Office of National Statistics.

19) Repo Rate

Repo Rate is the interest rate for short-term loans secured by securities issued by the Bank of England. This is the major rate in the UK. The Bank of England has set an upper threshold of inflation at 2%; if consumer prices are rising faster than 2%, then increase of rates is high probable.

High interest rates reduce the growth of consumer lending and stimulate the growth of savings, which leads to slower economic growth. The growth of rates usually leads to an increase in capital inflows and the growth of the national currency in the medium term, however, if growth rates are not based on high rates of economic growth, it could lead to economic stagnation and negative impact on the currency markets in the long term.

• Release Frequency: monthly.
• Release Schedule: 11:00 GMT, 4-10 of the month, on Thursday.
• Source: The Bank of England.

20) Retail Price Index

The report tracks changes in the price of a basket of goods and services. The measure of inflation is the retail price index excluding interest payments on loans to purchase real estate (RPI-X). The Retail Price Index calculated by a uniform formula for comparison with similar indices in other countries, is called harmonized (HICP). If the index growth exceeded the planned value, the Bank of England usually raises interest rates. It has a significant impact on the market.

• Release Frequency: monthly.
• Release Schedule: 09:30 GMT, 8-13 months after the reporting period.
• Source: U.K. Office of National Statistics.

21) Retail Sales

It is an indicator of the level of consumption. If the level of consumption is above the level of production, this usually leads to inflation. It should be noted that the index of Retail Sales for a month is very volatile. The index value averaged for three months describes the situation better. The indicator is taken into account by the market.

• Release Frequency: monthly.
• Release Schedule: 09:30 GMT, 17-21 of the month following the reporting period.
• Source: U.K. Office of National Statistics.

22) Rightmove House Price Index (HPI)

The price change for a month requested by sellers from Rightmove - the largest Internet real estate portal in the UK. This figure comes out the first, but it has very limited impact on the market as it characterizes the state of demand prices. In reality the prices of supply and demand do not always correlate.

• Release Frequency: monthly.
• Source: Rightmove.

23) Unemployment (Claimant count rate)

Unemployment rate is the number of unemployed persons in relation to the working-age population. Claimant count is the most regular unemployment rate, it means the number of unemployed persons' applications for employment in employment centers. The lower unemployment rate is, the greater is the number of people paid a salary, which causes inflation. The indicator is taken into account by the market.

• Release Frequency: monthly.
• Release Schedule: 09:30 GMT, 11-17 of the month following the reporting period.
• Source: U.K. Office of National Statistics.

24) Unit Wage Costs

The index characterizes costs associated with the manufacturing of a production unit. This indicator reflects worker productivity and the prevailing wage rate for companies in the UK.

If the growth rate of labor costs exceed the rate of productivity growth, it causes inflationary pressures in the economy. It is released monthly. It has a limited impact on the market.

• Release Frequency: monthly.
• Release Schedule: 09:30 GMT.
• Source: U.K. Office of National Statistics.