DEFINITION OF ‘INDICATOR’
Indicators are statistics used to measure current conditions as well as to forecast financial or economic trends. Economic indicators are statistical metrics used to measure the growth or contraction of the economy as a whole or sectors within the economy. Technical indicators are used extensively in technical analysis to predict changes in stock trends or price patterns in any traded asset. In fundamental analysis, economic indicators that quantify current economic and industry conditions are used to provide insight into the future profitability potential of public companies.
INVESTOPEDIA EXPLAINS ‘INDICATOR’
There are many economic indicators created by different sources in both the private and the public sector. For example, the Bureau of Labour Statistics, which is the research arm of the U.S. Department of labour, compiles data on prices, employment and unemployment, compensation and work conditions and productivity. Within the price report is information on inflation, import and export prices and consumer spending.
The Institute for Supply Management (ISM) is a not-for-profit professional association for supply management and purchasing professionals. It has published its ISM Manufacturing Report on Business monthly since 1931. The report contains a composite index, the Purchasing Managers’ Index (PMI), which contains information on manufacturing and non-manufacturing orders. The index is a closely watched barometer of economic activity. The U.S. Department of Commerce uses ISM data in its evaluation of the economy.
For most of the 21st century, housing a real estate have been leading economic indicators. There are several metrics used to measure housing growth including the S & P/Case-Shiller Index, which measures house sale prices, and the NAHB/Wells Fargo Housing Market Index, which is a survey of home builders that measures the market appetite for new homes.