Economic indicators are statistical data points or metrics that provide insights into the overall health and direction of an economy.
They help economists, policymakers, investors, traders, and businesses analyze and understand economic trends, performance, and potential future outcomes.
The economy goes through four broad cycles: expansion, peak, contraction, and trough.
During the expansion and peak, there are lots of jobs and most people are optimistic about how things are going.
During the contraction and trough phases, things get tougher.
Eventually, the whole cycle then starts again.
Economic indicators tell us where in the cycle we are, in which direction we are moving, and when we may (or are) entering the next phase.
This is accomplished through three types of economic indicators: leading, lagging, and coincident.
Economic indicators can be further classified as quantitative or qualitative.
Quantitative indicators are numerical data that can be measured and analyzed, such as GDP, inflation rates, and employment figures.
Qualitative indicators, on the other hand, are based on surveys and subjective assessments, like consumer and business confidence indices.
Most analysts and traders don’t focus on the specific number from an economic indicator but rather look for trends in the data over several releases.
Data on the economic indicator data is released at recurring scheduled times and can be viewed on the BabyPips.com Economic Calendar.