Macro Economic Indicators - European Union

1) Balance of Payments

This important indicator used to describe the financial state of the country represents the sum of all payments from and payments to the country during a specified period. In the case of the EU, also a separate balance for the Eurozone is calculated, which is approved by the European Central Bank. The ECB also collects data, and its balance of payments for the Eurozone may be different from the balance of Eurostat, as data from the countries - members of the Union are collected by the Bank and Eurostat at different times. The Balance of Payments is divided into two sub-accounts: 1)Current Account  and 2)Capital and Financial Account

Both for the entire balance and for its separate parts the negative balance and its increase have a bad impact on the national currency.

• Release Frequency: monthly.
• Release Schedule: 9:00 GMT, about 50 days after the reporting month.
• Source: Eurostat.

2) Capital and Financial Account

This indicator is a part of the Balance of Payments. The Capital and Financial Account is the ratio of the movement of public and private funds into and out of a country, received and issued credits and results of transactions on government reserves.

• Release Frequency: monthly.
• Release Schedule: 9:00 GMT, about 50 days after the reporting month.
• Source: Eurostat.

3) Consumer Confidence Indicator (CCI)

The index is the average of the balance of answers to four questions: evaluating the financial state of the family household, evaluating the general economic situation in the country in the past and opinion about its future, the acceptability of making large purchases at the moment.

The survey is carried out in all segments of the population. Only unambiguous answers are allowed: "yes — no", "bad — good". The final figure is the difference between positive and negative responses. Thus, the value above zero indicates a greater number of positive responses.

Release of this index should be watched, but as a rule it rarely affects markets.

• Release Frequency: monthly.
• Release Schedule: 09:00 GMT, the last week of the month.
• Source: European Commission, Directorate General for Economic and Financial Affairs

4) Current Account

This indicator is a part of the Balance of payments. Current account balance is the export of goods and services by business entities of the country minus import of goods and services plus net investment income plus balance of transfer payments (payments not related to the movement of capital, i. e. loans, purchases of securities, salaries, etc. ). In other words, the balance of payments is the ratio between the amount of payments received from abroad, and the amount of payments moving abroad. The balance can be either positive or negative.

The indicator is similar to the English RSNCR. It has little impact on the market.

• Release Frequency: monthly.
• Release Schedule: 9:00 GMT, about 50 days after the reporting month.
• Source: Eurostat

5) Economic Sentiment Indicator

This indicator is the most important one in terms of assessing the prospects for economic growth. It is a composite indicator with complicated calculations. Its value is equally influenced by the Industrial Confidence Indicator and Consumer Confidence Indicator. In addition, construction confidence index and stock prices index are used for calculating; their influence is reduced due to the use of reduction factors.

As an integral indicator for the majority of survey of indexes, it has a big impact on financial markets, and from this point of view it is the main survey index. High or rising values of the index indicates a healthy level of purchases, business expenses and investments which positively affects the economic situation and leads to strengthening of the euro.

• Release Frequency: monthly.
• Release Schedule: 09:00 GMT, the last week of the month.
• Source: European Commission, Directorate General for Economic and Financial Affairs.

6) Gross Domestic Product (GDP)

GDP is considered in the three independent components:

• GDP as the sum in money for all goods and services produced by business entities, plus taxes, minus subsidies on production of certain goods and services.
• GDP as the amount of funds spent on consumption of goods and services produced, plus export, minus import of goods and services.
• GDP as the amount of the revenue the economy as a whole (i.e. salaries, taxes, balance profit of businesses, etc. ).

After obtaining the data on these parameters and checking their balance, the value of GDP is obtained, which is included in the official documents.

It is important to track GDP. Its growth relates to the factors that contribute to strengthening of the national currency, but despite its importance, they rarely have a strong impact on foreign exchange markets.

Release Frequency: quarterly.

Release Schedule: 9:00 GMT, about two months after the quarter.

Source: Eurostat.

7) Harmonized Index of Consumer Price (HICP)

The indicator is taken into account by the market. During the cycle of interest rates growth, the index gains more importance, since its growth entails further tightening of monetary policy in the country, and therefore entails the growth of the national currency. Indices of consumer price inflation are more important than the index of industrial inflation.

To compare the values of indexes for different periods, the index value for the base year 1996 equal to 100 is used.

• Release Frequency: monthly.
• Release Schedule: 09:00 GMT, about three weeks after the end of the reporting period.
• Source: Eurostat.

8) IFO Business Climate

This survey is one of the key indicators of country's business sentiment. The survey is conducted monthly, querying German firms on the current German business climate as well as their expectations for the next six months. As the largest economy in the Euro-zone, Germany is responsible for approximately a quarter of the total Euro-Zone GDP. Consequently, the German IFO is a significant economic health indicator for the Euro-zone as a whole.

The figures below 100 are an indicator of a slowing down economy, and is clearly regarded by the market as a negative factor. Values above 100 indicate growing optimism, which in turn causes the strengthening of the Euro.

The survey presents two equally weighted sub-indices: Current Assessment and Business Expectations.

• Release Frequency: monthly.
• Release Schedule: 08:00 GMT, the last week of the month.
• Source: CESifo Group.

9) Industrial Confidence Indicator

This index is calculated similarly to Consumer Confidence Index. Heads of industrial enterprises evaluates the production prospects in general, as well as the prospects of orders growth and growth of shares of industrial firms.

• Release Frequency: monthly.
• Release Schedule: 09:00 GMT, the last week of the month.
• Source: European Commission, Directorate General for Economic and Financial Affairs.

10) Labor Cost Index

This index is the sum of all payments made to the working population, divided by the number of employees and hours worked. It is calculated without taking into account employees in agriculture, health and education.

In addition to reflecting the employees' income situation, the index reflects the prospects for inflation. Increased labor costs are considered as an indicator of impending inflation, which could raise interest rates. Index changes have little effect on the euro.

• Release Frequency: quarterly.
• Release Schedule: 09:00 GMT, in the middle of the third month after the reporting quarter.
• Source: Eurostat.

11) Money Supply Growth

In European statistics agencies, money supply is divided into aggregates M1, M2 and M3, each of them is measured on a monthly basis.

• M1 consists of cash in circulation and deposits with very little urgency from which the money can almost instantly be used as a means of payment. These are overnight deposits.
• M2 consists of all the components of M1 together with deposits up to two years and revocable deposits up to three months.
• M3 consists of all the components of M2 together with repo trades, securities and debt securities of up to two years.

The biggest attention when deciding on monetary policy is given to aggregate M3 based on which the European Central Bank sets the inflation target.

• Release Frequency: monthly.
• Release Schedule: 9:00 GMT.
• Source: Eurostat, the European Central Bank.

12) PMI Manufacturing

This index assesses business conditions in the manufacturing sector. Because the manufacturing sector represents nearly a quarter of the total Eurozone GDP, the Eurozone PMI Manufacturing is a significant and timely indicator of business conditions and the general health of the economy.

The indicator values about 50 points indicate that during the reporting period there was neither extension no reduction of the manufacturing sector. Values above 50 indicate growth in this sector. Figures below 50 may indicate deterioration in the manufacturing sector.

• Release Frequency: monthly.
• Release Schedule: 09:00 GMT, the first working day of the month.
• Source: NTC Research.

13) PMI Services

This index reflects the business optimism in the service sector. The indicator is calculated based on interviewing of executives in Germany, France, Ireland, Italy and Spain. Together, these countries account for about 4/5 of all activity in the service sector of Eurozone.

The indicator values about 50 points indicate that during the reporting period there was neither extension no reduction of the service sector. Values above 50 indicate growth in this sector. Figures below 50 may indicate deterioration in the service sector.

Because 2/3 of GDP is created in the service sector, PMI Services is an important and timely indicator of health of economy. The index has a significant impact on the market.

• Release Frequency: monthly.
• Release Schedule: 09:00 GMT, the third working day of the month.
• Source: NTC Research.

14) Purchasing Managers Index (PMI)

The index is based on a survey of a large number of participants who answer questions like "Have the conditions improved for your business in terms of new orders, prices, labor market, the timing of orders, etc.?", while the respondent selects one of the three types of response: "No", "Yes" or "Not changed". Such indexes very effectively monitor the dynamics of the economic cycle being leading indicators.

When the index starts to fall after a period of growth, this predicts the transition of the business cycle from the growth stage to decline, while its turn upwards after the foll predicts the beginning of recovery.

The indicator values about 50 points indicate that during the reporting period there was neither extension no reduction of the manufacturing sector. Values above 50 indicate growth in this sector. Figures below 50 may indicate deterioration in the industry.

The index has a significant impact on the market.

• Release Frequency: monthly.
• Release Schedule: 09:00 GMT.
• Source: NTC Research.

15) Refinancing Tender Rate

Refinancing Tender Rate is the possibly least interest rate for funds attracting claims in the tender of the European Central Bank. Every two weeks the ECB holds a tender for funds investment, which is necessary for liquidity support in money system.

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: 11:45 GMT, usually on the first Thursday of the month.
• Source: The European Central Bank. 

16) Retail Trade Confidence Indicator

This index is calculated similarly to Consumer Confidence Index. Owners of retail businesses answer questions about the trading situation at the moment and estimate prospects for the future.

• Release Frequency: monthly.
• Release Schedule: 09:00 GMT, the last week of the month.
• Source: European Commission, Directorate General for Economic and Financial Affairs.

17) Unemployment Rate

The unemployment rate is the percentage of working-age population who are actively looking for a job but can't find it. A low or falling unemployment rate is associated with increased expenditure, given that more people are employed and have incoming wages.

This is a significant indicator of economic activity in a region, particularly because it is released earlier than the GDP. However, it receives less attention, because the corresponding figures for member countries are released before the aggregate rate for the Eurozone.

• Release Frequency: monthly.
• Release Schedule: 09:00 GMT, two months after the reporting period, the first week of the month.
• Source: Eurostat.

18) ZEW Survey

A German firm, the Center for European Economic Research (ZEW), queries financial experts throughout Europe every month in order to make a medium-term forecast about Eurozone's economic situation. The results are calculation of the difference between positive and negative reviews.

There are two types of the indicator:

• ZEW Economic Expectations Index — this indicator is made up of assessments of expected events— the direction of inflation, interest rates and exchange rates over the next six months.
• Zew Current Situation — in contrast to the previous indicator, it assesses the current economic situation. Experts are invited to select one of the variants: "better", "worse" or "unchanged." The final figure is the difference between positive and negative rates.

High figures indicate a positive economic environment and good business climate in the Eurozone.

• Release Frequency: monthly.
• Release Schedule: 09:00 GMT, the first half of the month.
• Source: Center for European Economic Research.