Economic Indicator, Essential Classification

An economic indicator is a numerical number/figure that reflects a specific component of a financial action/activity of a sector or a nation. This measurement is freely distributed at regular interims by public or private statistical research institutions.

The Classification of Type

There are many economic indicators known in this field. However, this can be classified according to its importance and the impact they have to a business sector at the time of announcement. We recognize three classes of indicators as follows:

  • Leading/Advanced
  • Coincidental
  • Delayed

 

1 – Advanced

These data reflect the actual economic action at ahead of time. They make it conceivable to envision changes in economic trend.

They are hard to investigate since they envision economic movement. Combined with other data, they can or refute certain trends. For instance, a great consumer confidence index figure may suggest higher future consumption, however this trend will be affirmed or turned around with other lagged indicators.

 

2 – Coincidental

These are the most followed data release which assess the actual economic action at the time of announcement. These measurements/figures follow the economic activity as a whole. They permit at an offered minute to take the proportion of of economic activity. They are less complex to analyze than the advance/leading indicators.

 

3 – The delayed

These statistics are based on data already passed so more easily calculable. They measure past economic activity. These data confirm or refute an economic trend. Their publications have a direct impact on the market economy.

 

Every trader should know groups of economic indicators which in this case are included in fundamental analysis. By knowing this grouping, the trader can act appropriately in anticipating each release of certain economic news. Even for a technical trader, it doesn’t hurt to know this grouping so that it can help when he analyzes the currency chart.