Economic indicator
An economic indicator is a statistic used to assess the performance of an economy or understand how economic conditions are changing. Indicators cover areas such as growth, inflation, employment, consumer spending, business activity, trade and financial conditions. Economists, investors, businesses and policymakers use economic indicators to build a picture of current conditions and assess how the economy may develop. No single indicator provides a complete view, so data is usually considered alongside other measures.
What are the main types of economic indicator?
Economic indicators are often grouped according to when they tend to move relative to the wider economy:
- Leading indicators may change before the broader economy and can therefore provide signals about future activity. Business surveys, new orders and some financial-market indicators can fall into this category.
- Coincident indicators tend to move broadly in line with current economic activity. Measures of output and employment are common examples.
- Lagging indicators tend to move after economic conditions have already changed. Unemployment, for example, may continue rising after economic output has begun to recover.
Indicators can also be divided into hard data, based on measured economic activity, and soft data, such as surveys of business or consumer sentiment.
