What are Economic Indicators?

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Economic Indicators are the statistics about the economy that helps us to analyze the economy.

Economic Indicators allow analysis of Economic Performance and Predictions of Future Performances.

Economic Indicators include various Indices like: BSE SENSEX and Economic Summaries like Unemployment data, Consumer Price Index (CPI) data, Industrial Production, GDP etc.

Types of Economic Indicators

There are Three Types of Economic Indicators:

  1. Leading Indicators
  2. Coincident Indicators
  3. Lagging Indicator

1. Leading Indicators: 

  • Leading Indicators are events which happen immediately before an economic shift.
  • Leading Indicators Signal Future Events.
  • The state of the major stock markets is one of the major leading indicators.
  • Money Supply, Interest rate spread are also examples of leading indicators.

2. Coincident Indicators:

  • Coincident Indicators happens at the same time as the economic activity.
  • For Example: Company Payrolls – because they make payment and simultaneously increase the local economy.
  • Other Examples are Industrial Production, Manufacturing and Trade Sales.

3. Lagging Indicators:

  • Lagging Indicator is an event which happens after the corresponding economic cause occurrence.
  • Unemployment Rate – As the economy weakens, the unemployment rate increases correspondingly.
  • Other Examples are Inventories to Sales Ratio, Average Prime rate etc.

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