Introduction
Economic indicators are the statistics that are periodically released by private organizations and the government to allow economists to analyze how the economy is performing and be able to predict future performances. Economic indicators are used in studying the business cycles of a state. The indicators include earnings reports, economic summaries and various indices. They can be used to analyze the direction of the foreign exchange market. Economic indicators are categorized into; leading, coincident, lagging and unclassified.
Leading economic indicators are economic statistics which changes even before actual change takes place in the economy. A good example is the stock market. When the economy is about to fall, the stock market fall and then when the economy is about to rise the stock prices improves. This gives light on what to do with the rates of interest.
Coincidence economic indicators are indicators that change with the economy. This means that the various statistical figures improve when the economy is performing well and falls when there is a poor economic performance. It covers a wide range of data to determine the business cycles. Coincident indicators are measure so as to determine the current changes in the economy.
Lagging economic indicators are the statistics that changes long after the economy has changed. If the economy grows, it will time sometime before the lagging indicators grow. However, they finally grow to reflect the change in the economy. A good example is the level of employment. When the economy weakens, businesses will slowly lay off their workers and when the economy improves they again employ more people with time.
Unclassified economic indicators are the indicators whose changes cannot be classified according to the timing. The changes may occur either before, when or after there is a change in the economy. For instance, costs of production may rise when the economy about to improve, when it is improving or after it has improved.
The economic indicators are very important when planning the economy. Their analysis determines whether there will be any economic development or not.
