Economic facts you need to know

Part 3.

Business volume or retail volumes, orders and inventories

This type of data measures retail turnover. As a general rule, the retail business is, in simple words, a place where you and I go shopping for necessities and luxury items.
It is important because it is an excellent indicator of consumer demand within a particular economy. In some countries, especially the G8 countries, retail trade volumes can account for two-thirds of all consumer spending.
They are a key indicator of consumer confidence. If consumers are confident in their economic situation, an additional demand for goods and services is created.
Economists track the growth in trade turnover, which helps determine whether the economy is doing well. If the turnover falls, things are going wrong in the economy.

Turnover or volume of wholesale trade, orders and stocks

This type of data measures the turnover of wholesale companies.
It is important because it is an indicator of consumer demand, which, as we know, is serious business. A decline in wholesale sales or inventories may imply or confirm a decline in business activity and retail demand. This means that there are free resources that are not currently being used, but will be used if demand increases again.
This type of data isn’t as important as retail trade volumes, but most economists believe it’s still worth keeping an eye on.

Import of goods and services

In this type of data, purchases by national companies from foreign companies are measured. If, for example, you are a Canadian company that purchases raw materials from China, then this is considered an import of goods into Canada.
This type of data is important, as over time imports can substitute for domestic production, which can put strains on financial resources. For example, if everyone in the United States starts buying only German car brands, like BMW and Audi, this will lead to a lack of demand for cars made in the United States, such as Ford and GM . Which will have a negative impact on domestic automakers in the United States.
As a general rule, a country imports the goods and services that it cannot produce on its own. But of course this is not always the case. People and businesses often buy abroad because prices are lower there.
Another reason is that there may be products of the desired quality abroad that are not available at home. For example, if you live in the United States and have a strong desire to drive in a Rolls Royce or Bentley that has just rolled off the assembly line, you will need to buy your car in the UK.
Oil is often not taken into account in the US data, as it has developed that the States are always come forced to import it: the country does not produce enough oil to meet domestic demand. However, thanks to new drilling technology in the EE In the US, oil production is growing: chances are it will eventually be enough to meet demand. You may have to do some independent research on this theme it depends on when you read this material.

Export of goods and services

This type of data measures the country’s commercial turnover with other countries around the world. In a nutshell, this is the opposite of importing goods and services.
It is important because exports generate foreign exchange earnings, which can have a good effect on economic growth. It happens that a foreign currency is more valuable than a local one, which creates additional benefits on the balance sheet of a local company. For example, if a Canadian company sells its product to the United Kingdom, it receives British pounds as payment. This is a very attractive offer, as (at the time of writing) you can exchange 1 pound for 1 Canadian dollar at 75 cents.
Export growth can boost GDP, which will have a positive impact on the economy. The higher the ratio of a country’s exports to its GDP, the faster its economic output will grow.

Trade balance, trade balance of goods

In this type of data, the balance or difference between all exported goods and all imported goods over a given period of time is measured. The main question is: what is more in the country, exports or imports?
It is important because it is an indicator of a country’s fundamental trading position relative to other countries. Obviously, most countries prefer that their exports exceed imports.
A large foreign trade deficit may suggest to economists that there are supply difficulties, as firms cannot meet demand from abroad.
The trade balance reflects the relationship between national savings and investments by citizens and businesses of the country in question. The deficit is an indicator that investments exceed savings in their volumes, and the use of real monetary resources exceeds the general economic result of the country.

Export and import price index, unit price of the product

This type of data measures the prices of goods that a country trades with others.
It is important because it is an indicator of price pressure, possible problems with the exchange rate and changes in competition.
Economists compare export prices with domestic market price indicators to get an idea of ​​the price pressure exerted by domestic producers on foreign buyers.
Economists also monitor import prices to determine the level of external pressure on prices and assess these indicators.

Manufacturing prices and wholesale prices

In this type of data, factory prices are measured, that is, how much it costs the manufacturer to make products without adding additional charges.
It is important because it can be used as a leading indicator of price pressure affecting domestic production volumes. Keep in mind that during a recession, the Producer Price Index (Producer Price Index, PPI) may exaggerate price pressure.
On the other hand, during periods of inflation, the PPI can undermine prices, because contracts and purchases of raw materials are typically negotiated in advance well in advance of production and product launches.

Price expectations: surveys

The purpose of these surveys is to study the opinion of manufacturing companies regarding inflation. In a nutshell, this type of data summarizes what company directors think about the impact of inflation on their business now and in the near future.
It’s important because it allows you to look into the heads of people working in the trenches of production. It can serve as a warning about possible price changes.
Economists, as a rule, track changes in the trend of this indicator to predict a possible increase or decrease in price pressure.

Wages, labor income, labor costs

Wages and labor income give us an idea of ​​how much people earn with their jobs. Labor costs are how much the labor of the workers costs the manufacturer. All of these indicators reflect labor costs and the impact on consumer income.
They are important because they reflect the pressure on prices and demand within the economy. Wages and income are closely related to phase current economic cycle. If incomes are growing faster than consumer price inflation, it means that real spending is growing, which is an indicator of the health of the economy.

Unit labor costs

In this type of data, the labor cost per unit of output is measured. In other words, how much labor costs for the production of one unit of goods cost the manufacturer.
It is important because it is an indicator of the competitiveness of companies and the pressure on prices within the country. For example, if a company is engaged in production in a country with cheap labor and sells their products abroad, these are great potential profits. On the contrary, if a company’s production is located in a country with expensive labor, it will probably not be able to resist competition with foreign companies that use cheaper labor.
This is a key indicator of labor efficiency. If unit labor costs decrease, it means that the same quantity of products can be produced for less money, since manufacturers will have to pay less to their workers for the output of each production unit. Which of course makes the manufacturer more competitive. If labor costs start to rise, this can pose a threat to the viability of companies, because the production of products will start to cost them too much. Obviously, companies need to make money to stay in business, so cheap labor is always preferable.

Consumer or retail prices

This type of data measures the price of a basket of goods and services consumed by an ordinary family to maintain the level of life current. Includes clothing, food, rent, transportation costs, etc. In general, everything you need to eat, sleep and earn enough money to survive.
It is important because it reflects the inflation experienced by a typical family in a particular country.
Here the question must be asked: are ordinary products in general more expensive or cheaper for consumers? Will the consumer have more money in his pocket at the end of this year than at the end of the previous one? The answer can tell us a lot about whether the level of life is rising or falling and where we are in the business cycle now.

Conclusion

As you can see, when it comes to publishing fundamental economic data, there are many key concepts to keep in mind. If you’re having a hard time taking in or remembering all of this information, try not to overload yourself!
Use all the information and you will earn more than the rest!

Good luck!

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