Economists and financial experts frequently use various economic indicators to develop and support their opinions on subjects such as the state of the Australian and global economy, or to explain why financial markets including share prices have risen or fallen dramatically.
So what are some commonly used economic indicators and what do they actually tell us?
Where do indicators come from?
There are many statistical indicators released on a regular basis. The information can be compiled by government entities such as the Australian Bureau of Statistics or be compiled from regular surveys conducted by banks and industry groups.
What are indicators used for?
Some indicators, such as the Reserve Bank Cash rate, can impact many Australians directly through interest rates on borrowings and savings and movement in the Australian dollar. Other indicators are used as a measure of the health of the Australian or other countries’ economies and can signal whether an economy is growing or contracting or has the potential to change in the future.
Commonly referred to indicators
The following list comprises some of the more commonly referred to Australian indicators, along with how often they are released, what they measure and how the data may be used. These indicators may be used either individually or in combination with other indicators to measure the current health of, or future trends within the Australian economy. These indicators are most commonly published on the issuing entities’ websites and are often quoted in the media once they are released.
Indicator
|
Frequency
|
What is it for?
|
| Gross Domestic Product (GDP) |
Quarterly (3 months in arrears) |
The market value of all final goods and services produced in Australia during a specific period. GDP is used as a broad gauge of overall economic health. |
| Current Account – Australia |
Quarterly |
Measures the flow of all goods and services, income and transfer payments to and from Australia. This figure acts as a gauge of how Australia's economy interacts with the rest of the world. |
| Consumer Price Index (CPI) |
Quarterly |
An important economic indicator of inflation or deflation. CPI provides a general measure of changes in prices of consumer goods and services acquired by Australian households. CPI is used in the development and analysis of economic policy and as a baseline for the adjustment of wages and pensions. |
| RBA Cash Rate |
First Tuesday of every month (except) January |
RBA Cash Rate decisions have a large influence on financial markets. Actual or anticipated changes in rates can affect interest rates for loans and mortgages, bond rates and the Australian dollar. |
| Westpac Consumer Confidence Index |
Monthly |
Measures the level of consumer confidence of households regarding expenditure, saving, political policy and economic conditions. If they are less confident consumers are less likely to borrow and spend, which has flow on effects in the economy. |
| National Australia Bank Business Survey |
Monthly and Quarterly |
From surveying hundreds of small to large businesses it provides insight into the state of the Australian economy and provides indicators to its future direction. Unexpected findings can impact markets. |
| Unemployment Rate |
Monthly |
The percent of unemployed persons in the total workforce. An indicator of the health of the labour market. Can have a significant impact on the market because of the overall importance of employment for the economy. |
| ANZ Job Advertisements |
Monthly |
Measures the number of jobs advertised in the major daily newspapers and internet sites in major Australian cities. A good leading indicator of future labour market conditions and an effective tool for forecasting employment growth or contraction. |
| Construction Work |
Quarterly (3 months in arrears) |
Measures the value of construction work completed in a quarter. Total from all construction sectors including infrastructure and commercial developments, residential renovations as well as new homes. It is an indicator of economic output and the rest of the housing market. |
| House Price Index |
Quarterly (2 months in arrears) |
Tracks the weighted average percentage change from the previous quarter to housing prices in Australia's capital cities. The housing price index measures inflationary pressures from the housing sector. |
| Building Approvals |
Monthly |
Measures the number of domestic building permits granted for the month. Real estate generally informs economic developments - housing tends to thrive at the start of booms and wane at the onset of recession. This figure can be used with others to forecast future growth in the economy as a whole. A strong housing market also suggests increased consumer spending. |
| Retail Trade (Retail Sales) |
Monthly |
A measure of the total sales of goods and services by retail stores in Australia. An important measure of consumer spending and inflationary pressures in Australia. This figure is extremely important in understanding Australia's economy. |
| New Motor Vehicle Sales |
Monthly |
Though motor vehicle sales are a small component of the overall economy, expenditures on "big-ticket" items provide insight into consumer and business spending, ability and confidence. Consumers are unlikely to make large outlays if they are pessimistic about current and future economic well being. |
What can you do?
Economic indicators may affect market movements, but when it comes to your super, depending on your circumstances it may be best not to overreact to them. Super is a long-term investment, and you should choose an investment option to fit your specific goals and investment timeframe. Unless these factors change, there may not be any reason to move your super between options.