The industrial production index is
Hello dear readers. To be honest, I'm not a fan of long telephone conversations.
But this is clearly not about my friend Oksana. She is a little telephone terrorist - ready to talk for at least a few hours on end.
She works at an analytics company, so today she spent an hour sharing details about how she studied PPI.
Calm down, now everything will fall into place when you learn about the index of industrial production - what it is and how it is determined. So let's not delay this moment!
Industrial production index (IP) is an indicator of the volume of industrial production in the mining and manufacturing industries, in the field of energy conservation and utilities.
The index reflects the growth or decline in production and services in the country, excluding the construction sector. Otherwise, it is called "clean production". Expressed as a percentage.
Industrial production occupies approximately 40% of the US economy, and has a close relationship with indicators such as GDP. The advantage of the index is that it takes into account only the volume of production, and not its monetary value.
This makes it one of the main indicators for reflecting the state national economy and, accordingly, an important fundamental unit that affects the movement of the exchange rate.
The growth of the indicator means the strengthening of the economy and contributes to the growth of the US currency.
The index is accounted for by 255 grouped sectors of the economy, each of which has a huge number of industrial enterprises.
The data is based on an entry in work books indicating the number of hours worked by workers in the industrial sector. The total volume for each month is expressed as a percentage of gross production compared to the previous year.
In addition, the Federal Reserve Service (FRS) separately calculates the production diffusion index, which is equal to the percentage of industries where production increased over the past month.
Also, another economic indicator is inextricably linked with the index of industrial production - productive capacity(Capacity Utilization).
The IP Index is published monthly at 2:15 pm (GMT) or 5:15 pm (MSK) on the 15th of each day by the Board of Governors of the Federal Reserve System and shows the change from the previous month. Impact on the forex market: average.
The industrial production indicator is a reliable benchmark for tracking the business cycle.
Indicators higher than expected are considered as positive for the dollar, lower than expected - as negative.
Often, the index values are analyzed together with the NAMP Index and the Unemployment Rates, since the growth of industrial production leads to a decrease in unemployment and, consequently, to an increase in the income of companies, their stock indices and finally GDP.
Source: https://freshforex.org/encyclopedia-forex/industrial-production-index/
The production index is a relative indicator that characterizes the change in the scale of production in the periods being compared. The production index is used in the analysis of the dynamics of the physical volume of production.
There are individual and composite production indices. Individual production indices reflect the change in the output of one product and are calculated as the ratio of production volumes of this type of product in physical terms in the periods being compared.
Composite production indices characterize the cumulative changes in all types of products and reflect changes in the value created in the production process as a result of changes only in the physical volume of manufactured products.
To calculate the composite production index, individual indices for specific types of products are gradually aggregated into indices by type of activity, subgroups, groups, subclasses, classes and sections of OKVED2 (OK 029–2014 (NACE Rev. 2).
Industrial production index is an aggregate index of production by types of activity "Mining", "Manufacturing", "Ensuring electrical energy, gas and steam; air conditioning”, “Water supply; water disposal, organization of collection and disposal of waste, activities to eliminate pollution.
Attention!
Transition to the use in statistical practice of new versions of the All-Russian Species Classifier economic activity(OKVED2) and the All-Russian Classifier of Products by Type of Economic Activity (OKPD2), harmonized respectively with the Statistical Classification of Economic Activities in the European Economic Community (NACE Rev.2) and the Statistical Classification of Products by Type of Activity in the European Economic Community (CPA 2008) was carried out with January 1, 2017.
The structure of gross value added by actual types of economic activity of OKVED2 for 2010 is used as weights.
Data for Russian Federation according to the industrial production index and production indices by types of economic activity "Mining", "Manufacturing", "Provision of electricity, gas and steam; air conditioning”, “Water supply; wastewater disposal, waste collection and disposal, pollution control activities” are adjusted for informal activities.
Source: http://site/www.gks.ru/free_doc/new_site/method/prom/met_ip.htm
Industrial Production is an index of industrial production. The indicator reflects changes observed in US industrial production in industries such as: mining, manufacturing, electricity and gas (adjusted for inflation).
The indicator is calculated by the Bureau of Labor Statistics and US trade associations. Each index in the report is derived using the Fisher formula
MV=PQ,
where M is the amount of money in circulation, V is the velocity in circulation, P is the price of the good, and Q is the volume of the good.
In calculations, the base year is 2000, and the baseline is always 100. Changes in each index are considered as volume or decline in a particular industry sector.
The index is published monthly, 16 days after the month following the reporting month, at 9:15 AM ET.
As a rule, after its release, there is no increase in trading, but the index is important because it reflects data on employment and income of workers, and can indirectly indicate business activity.
The growth of the index in the short term should be considered as an increase in business activity and employment.
The growth of the index will indicate an increase in employment, and, as a rule, marks an increase in inflation and an increase in% rates, which is not promising for investors, since it does not promise an increase in profits.
In the same situation, the stock market may go up, because. employment growth "promises" that the population will spend more, which is very good for business.
A decline or a slight increase in Industrial Production will most likely form a negative scenario on the stock market.
Source: https://ffin.ru/market/directory/indicators/industrial_production/
One of the fundamental indices included in the macroeconomic indicator of any country is the industrial production index (IPI, Industrial Production Index).
The industrial production index is a macroeconomic indicator that characterizes the change in the production process with a combination of services and goods grouped into the following types of the all-Russian classifier types of economic activity: “Processing”, “Mining”, “Production and distribution of electricity, gas and water”.
The industrial production index is calculated monthly and takes into account the change in the physical volumes of production, as well as the spent working hours and consumed energy.
The output index covers the manufacturing sectors of the economy. Also, this index is an average of the manufacturing, mining, utilities and construction indices.
It is based on physical volume measures and excludes private and public services.
The industrial production index is an excellent way to study, in cases where it is impossible to sum up, but it is necessary to compare.
The index method is designed to solve the following main tasks:
Industrial production index data The following methods are used to construct the industrial production index:
The index begins to form upon receipt of data on the dynamics of production and release of goods of a certain line.
For large populations, the index is averaged based on the constituent elements that form these populations.
When forming elementary, large and other aggregates into indices, a classification is created into groups, subgroups, sections, subsections, industrial and production areas, in accordance with the classifier of types of economic activity.
The index is calculated in the following order:
At the initial stage, production indices are determined for each type of activity separately by comparing the output of goods in the reporting period with their output in the base period.
Attention!
Also at this stage, an index of gross output is formed, but not value added.
The industrial production index has a huge impact on performance economic growth any country.
The growth of the indicator contributes to the strengthening and appreciation of the exchange rate national currency economy and directly affects the market itself.
On the foreign exchange market The index indicator is also of great importance, due to its connection with the dynamics of the business cycle.
With the help of the dynamics of the index, while waiting for changes in the policies of central banks, it is possible to track the direction of these upcoming changes.
According to analytical data provided by competent organizations, with a decrease in the production index, the process of reducing the profits of enterprises will not necessarily occur, since inflation increases the revenue and profits of producers even if in reality production does not grow.
This is an occasion for reflection for any trader who considers the index to be a very important tool in assessing future performance, as well as assets in the market itself.
The growth of production itself has a positive effect on the balance of power in financial market, suggesting an increase in stock prices and positive investor sentiment.
This also means strengthening the country's economy as a whole, including strengthening positions in the macroeconomics, and this, in turn, entails increased competition for goods in the main world markets, as a result of which, an increase in the trade balance and the exchange rate of the national currency.
It is believed that the index of industrial production is not among the important ones, but there were cases when the involvement of this indicator from the side of the economy was useful for fundamental analysis market.
In turn, this indicates the need to consider each indicator separately if the goal is to qualitatively and in detail analyze the market and not be among the traders who find themselves out of work.
Another important observation that has been studied and fully analyzed by many analysts is the following: when the index of industrial production begins to grow faster than GDP, this indicates that fundamental industries are gaining momentum.
When the growth of the index lags behind the growth of the domestic gross product, there is a decline in the growth of the same industries.
The State Statistics Committee of the Russian Federation publishes reports on the dynamics of industrial production, which contain data on all indicators of the dynamics of volume, and for each of the following industries in particular:
In the Eurozone, data on industrial indices are distributed by Eurostat, in the USA - by the Federal Reserve System (which takes into account index performance to adjust monetary policy), in Japan - by the Ministry of Economy, Trade and Industry.
Source: https://equity.today/indeks-promyshlennogo-proizvodstva.html
One of the most important components of the economy of any country is industrial production.
At its core, industrial production is the manufacture of ready-to-eat products from raw materials using special equipment.
The development of production began in the Middle Ages, when people just started to engage in pottery, processing animal skins, etc.
Already at the turn of the 18th-19th centuries, an industrial revolution took place in England, which later spread to other countries. major countries. After that, machines and equipment began to be used in production instead of manual labor.
Nowadays, it is impossible to imagine any developed country without modern industrial production.
For economic growth, new plants and factories should always be opened. Old enterprises must constantly improve, because technologies are developing more rapidly every year, and competition is only growing all the time.
Modern industry consists of two branches:
In order to assess the level at which the industry is located in a particular state, the parameters of the industry are constantly studied. For this, a special indicator was introduced, which evaluates the industry in the country.
Attention!
It is called the index of industrial production (IPI, industrial production). This indicator shows the change in production volumes in a particular country.
It is calculated by dividing the amount of output for the current period by the amount of output produced in billing period and the result is multiplied by 100 percent.
First, the index for each product is calculated, the weighting coefficients of these products are found out and with their help the indices for industries are calculated, which are subsequently reduced to a general index of industrial production.
As a result, you can see both the overall indicator and in various sections and areas. The index takes into account the following components:
The US Industrial Production Index is released by the US Federal Reserve Research Department on the 15th of the previous month.
To predict the index, indexes such as the Industrial Orders Index and the Business Activity Index are commonly used.
The index is considered both for the entire industry, in general, and for individual groups of goods. Goods are distributed according to several parameters, but the main divisions are as follows:
Not included in the industrial production index building production, since this market is subject to strong fluctuations, which will affect the overall indicator too much.
For studying construction market there is the same index that takes the same into account, as well as the building section. It is called the Manufacturing Production Index (production index).
Since the index is one of the main indicators of the state of the economy, the state's GDP depends heavily on it.
Therefore, as a rule, Gross domestic product and IPP change in parallel with each other.
If industrial production is growing faster than GDP, this indicates that industrial sectors are growing faster than other areas participating in GDP.
Conversely, if industry grows at a slower pace than GDP, it means that the level of industry lags behind overall growth.
In addition, based on this index, the following phenomena can be predicted:
The industrial production index strongly affects the currency of the country where the index is published. An increase in the index always leads to an increase in the value of the currency, and a decrease in the index means that the exchange rate will fall.
It is also worth noting that in order to make a decision to buy or sell a currency, it is necessary to compare the readings of the industrial production index with other economic parameters, such as business cycles, inflation, GDP, etc.
This is important, because the growth of this index can be associated not only with the growth of production, but also with the growth of inflation or due to seasonal growth.
Source: http://website/binaryoptionsfull.com/promyshlennoe-proizvodstvo
Country: USA. Definition: An indicator of the dynamics of the volume of production in the enterprises of the manufacturing and mining industries, and in the public services sector.
Description: Shows the total output of national factories, mines, total utilities, etc.
The Federal Reserve's statistical report contains an indicator of the change in the volume of production by the country's industrial enterprises, shares and bonds of public utilities and a calculation of the used production capacities.
Industrial production is a key indicator of the state of a country's industry. It accounts for about 40 of the economy of the entire country, which justifies a high degree influence on the stock market.
Of particular interest is the percentage change in industrial production from the previous month.
If production grows, then the value of money grows accordingly, which involuntarily stimulates the stock market to rise, and the bond market to fall.
Mechanism of influence: Fast growth production implies an increase in the value of money and a fall in the bond market.
However, since this indicator is easier to predict than others, changes in it are reflected in the price in advance and gradually.
Degree of influence: 2. Release frequency: Published monthly at the middle of each month at 09:15 ET. Source: Federal Reserve System (Federal Reserve).
Source: http://website/forex2.info/industrial_production
A component of GDP is the Industrial Production Index. This index can be considered a constituent part of GDP, since it reflects the change in output in the following leading sectors of the economy:
In fact, this index shows the change in GDP due to the leading fundamental sectors of the economy.
Attention!
All companies in these industries underlie the capitalization of everything stock market Russia. These include: Lukoil, Gazprom, RusHydro, as well as the largest engineering companies.
The growth of the IPP informs the growth of production, which increases profits, and in turn this finds expression in the rising share price of companies that are associated with industrial production.
If there is a decrease in the PPI, the reverse process will not occur in without fail because inflation can increase producer profits and revenue even when real production does not increase.
For example, if we analyze the data for 2009-2010-2011. we can get three PPI indicators
We can interpret the obtained indicators as follows:
When comparing the data presented above with changes in GDP over the same periods, we can conclude how the volume of production has changed in fundamental industries relative to other sectors of services and production.
That is, if the IPP indicator increases faster than GDP, then this indicates an accelerated pace of development of directly fundamental industries.
If the IPP indicator lags behind the growth of the GDP indicator, there is a reverse development trend.
Undoubtedly, the data on the growth of the IPP has a positive effect on the market. But often they are already included in the price of shares at the level of earlier forecasts and therefore do not cause a sharp increase in shares, and sometimes, if a more significant increase in IPP was predicted than in fact, then the price of shares may decrease.
The method of calculating potential profitability is often used, the essence of which is to compare the current and forecast value of a share.
The change in the IPP indicator is predicted by analysts and is included in the forecast for the value of shares of companies that form the fundamental sector of the economy.
Then forecast price shares is compared with its current value, which creates an opportunity to determine the potential profitability of shares.
For example, when predicting an increase in IPP:
IPP, being a part of GDP, makes it possible to identify changes in the real volume of production in the fundamental sectors of the economy.
Comparing the industrial production index and GDP, one can determine the performance of companies in fundamental sectors of the economy relative to other sectors.
Often, news about changes in the IPP indicator is already included in the share price due to forecasts. Therefore, when real indicators are released, they do not always have a significant impact on quotes.
Source: http://site/tempofox.com/ipp-i-kursovaya-stoimost-akcij/
The principle of influence of this subgroup is based on the axiom that the value of any currency is a derivative of the state of development of the economy of a given country.
The stability of the development of the economy determines the interest of foreign investors in investing in it and, accordingly, the demand for a certain currency.
They include such key indicators as trade and balance of payments, inflation rates, unemployment, gross national product, etc.
On the FOREX market developed a unified system of currency quotations through the US dollar.
Thus, the development American economy and cost US dollar is an important, if not decisive, factor determining the direction of the market, common to major currencies.
Therefore, the main attention of currency brokers or dealers is directed to the US dollar and its behavior, causing certain reactions from other currencies.
True, this does not at all reduce the influence of other factors - the policies of national banks or the influence of adjacent markets, which will be discussed briefly below.
Key indicators are published monthly or quarterly in the United States economic development.
Trade negotiations are important integral part economic policy any country. In particular, the ratio of imports and exports gives such important indicator economic development as a trade deficit.
Attention!
For the US, the trade deficit has been a major problem over the past few years, playing a significant role in the fall of the US dollar against major European currencies.
The result of trade negotiations finds an immediate response in the market, sometimes more than significant.
The main task of central banks is to regulate the internal economic life countries as the main task. In addition, the adjustment of the internal and external value of the currency is also included in his duties.
Therefore, any meeting central bank- or rather, its working committee - attracts the close attention of foreign exchange market participants.
One of the main means of stimulating or, on the contrary, slowing down the growth of the economy, attracting foreign capital, the attractiveness of government bonds, and, as a result, the value of the currency, is the regulation of interest rates.
Source: http://website/krok-forex.ru/finance_22-3.php
As you know, the release of economic indicators of the state has a significant impact on the exchange rate of the country. Below are the main indicators in the context of national economies.
Consumer confidence / Indicator of consumer confidence. This survey is an attempt to measure consumer optimism. The index has been calculated since 1967. At first it was 100.
It has a limited impact on the market as it may not reflect the real state of the economy. However, it has traditionally been used to predict employment trends and the overall health of the economy.
The growth of the index value is a positive factor for the development of the national economy and leads to an increase in the dollar.
Its value is published after the 20th of each month at 10:00 AM EST (New York).
Determines the change in the level of retail prices for a "basket" of goods and services.
Index consumer prices is considered more reliable if it does not take into account food and energy industry industry.
When calculating the index, prices for imported goods and services. The consumer price index is the main indicator of the level of inflation in the country. This index is analyzed together with the "PPI" (Producer Price Index).
If the economy develops under normal conditions, then the growth of CPI and PPI indicators may lead to an increase in the main interest rates in the country.
This, in turn, leads to an increase in the dollar, as the attractiveness of investing in a currency with a higher interest rate increases.
Its value is published in the middle of each month (shortly after the release of the PPI indicator) at 08:30 EST (New York).
Current account / Current account balance. Represents the ratio between the amount of payments coming from abroad and the amount of payments going abroad.
A positive balance (or a decrease in the size of a negative balance) is a favorable factor for the growth of the national currency. Has a limited impact on the market.
Its value is published every quarter, in the middle of the publication month at 10:00 AM EST (New York).
Existing home sales Shows the number of houses sold in the secondary real estate market for the year.
Can give an indication of consumer optimism (buyer confidence) and their ability to buy high-value items. These data, due to the peculiarities of the real estate market, are subject to seasonal fluctuations.
The construction process is directly related to the state of income of the population, therefore, an increase in construction volumes characterizes the improvement of its well-being and the healthy development of the economy.
Production orders include orders for durable goods (more than 50% of all orders) and non-durable goods.
Non-durable goods include food, clothing, goods light industry and goods designed to operate with durable goods.
Durable goods are goods with a useful life of more than three years. These include: cars, furniture, etc.
This indicator has a limited impact on the market. Particular attention is paid to trends in its development.
The growth of the index value is a positive factor for the development of the national economy and leads to an increase in the dollar. Its value is published on the first of each month at 10:00 AM EST (New York).
GDP - Gross domestic product / Gross domestic product (GDP). It is the main indicator reflecting the state of the national economy.
According to the Keynesian model of economic development, GDP can be represented as follows: GDP = C + I + S + E - M, where C - consumption, I - investment, S - government spending, E - export, M - import.
GDP is expressed as an index relative to the previous review period, and as an absolute value of the sum of prices for goods and services produced.
It has a significant impact on the market. GDP growth leads to an increase in the exchange rate of the national currency.
It is one of the main indicators reflecting the state of the national economy.
The index shows the level of change in the volume of output of industrial production and utilities in the country. Its value is published in the middle of each month at 09:15 EST (New York).
Represents the difference between the sum of the prices of goods exported from a given state and the sum of the prices of goods imported into the territory of this state.
That is, the difference between exports and imports. If the sum of prices of exported goods exceeds the sum of prices of imported goods, then the trade balance is active (surplus), if imports exceed exports, it is passive (negative balance).
A positive balance (or a decrease in the size of a negative balance) is a favorable factor for the growth of the national currency. It has a significant impact on the market.
Its value is published on the third week of each month (usually on Thursday) at 08:30 EST (New York).
Initial jobless claims. Shows the weekly change in the number of applications for unemployment benefits.
Published every week on Thursdays at 08:30 EST (New York). These figures do not always reflect the real picture of events, as they are sometimes distorted by short-term factors such as federal or local holidays.
This indicator can give you an idea of what the Nonfarm payrolls indicator will be like next.
For example, if the value of the "Jobless claims" indicator consistently decreases over the course of a month, then it is likely that the value of the "Nonfarm payrolls" indicator will be large.
Has a limited impact on the market. The decrease in the number of applications for unemployment benefits is a favorable factor for the growth of the dollar.
ISM Manufacturing/ISM Manufacturing Index. ISM - Institute Supply Management (Institute of Supply Management).
The index calculated by this organization is the results of a survey of purchasing managers in the industry.
Attention!
The indicator is used to assess changes in new production orders, industrial output, employment, and inventory and supplier speed.
The index does not include California. Since industrial production is not a source of consumer demand, this indicator is approached with caution.
The value is published on the first business day of each month at 10:00 AM EST (New York). Has a limited impact on the market. An increase in the index value leads to an increase in the dollar exchange rate.
ISM Non Manuf. Composite/ISM index for non-manufacturing sector. It is the results of a survey of managers in the service sector in order to assess the changes taking place in this industry.
Figures below "45-50" are an indicator of a slowdown in economic development. Often the value of this index is influenced by psychological factors rather than the actual state of affairs.
The process of consumption of services tends to change at a relatively constant rate, so it is psychological factors that influence sharp changes in the value of this indicator, and when analyzing the index, they pay special attention to this.
Its value is published on the first of each month at 10:00 AM EST (New York) one day after the publication of the ISM Manufacturing Index.
Leading indicators index. It is a weighted average index of such indicators as:
It is believed that it characterizes the development of the economy over the next 6 months.
There is also a rule of thumb that the indicator's negative value for three consecutive months is an indicator of a slowdown in the country's economy.
Has a limited impact on the market. Its limited influence is explained by the fact that the index value comes out a month after the reporting period, when almost all the main indicators have already been published.
An increase in the index value leads to an increase in the dollar exchange rate. Its value is published, as a rule, on the first days of each month at 10:00 EST (New York).
New home sales. Shows the number of homes sold in the primary real estate market for the year.
Can give an indication of consumer optimism (buyer confidence) and their ability to buy high-value items.
Net long-term TIC flows/Net purchases of US valuable papers foreign investors.
Represents the difference between the volume of securities purchased by foreign investors from US resident sellers and the volume of securities sold by foreign investors to US resident sellers. This refers to various categories of long-term securities.
Nonfarm payrolls / Change in the number of people employed in the non-agricultural sector
It is called "the indicator that moves the markets". There is a rule of thumb that an increase in its value by 200,000 per month equates to an increase in GDP by 3.0%.
Published generally on the first Friday of each month at 08:30 EST (New York).
Determines the change in the price level for the "basket" of goods produced in industry. Until 1978 it was called "Wholesale price index» (Wholesale price index).
The selling price includes the cost of labor and gives an idea of the inflation associated with changes in the cost of labor.
The producer price index is considered more reliable if it does not take into account the food and energy industries. When calculating the index, prices for imported goods and services are not taken into account.
It has a significant impact on the market. In the context of the expectation of an increase in the main interest rates, an increase in its value leads to an increase in the dollar.
Published every month, usually on next week after the release of "Nonfarm payrolls", at 08:30 EST (New York).
The index shows the change in retail sales. Characterizes the level of consumer spending and demand.
This indicator is divided into: “sales of cars” and “sales of everything else”. Since the number of cars sold is a very variable quantity, the part of the indicator that does not take into account “car sales” carries the most correct information.
The growth of retail trade is a positive factor for the development of the national economy and leads to an increase in the national currency.
Published mid-monthly at 08:30 EST (New York). It has a limited impact on the market (mainly in the medium and long term).
Shows the percentage of the number of unemployed to the total working-age population. It comes out simultaneously with the "Nonfarm payrolls" indicator.
It has a significant impact on the market. Typically, the analysis of the unemployment rate is carried out in the context of figures reflecting the value of the Nonfarm payrolls indicator.
For example, an increase in the value of the “Nonfarm payrolls” indicator with an increase in the unemployment rate indicates an increase in unemployment in the agricultural sectors of the economy, etc.
Published typically on the first Friday of every month at 08:30 AM EST (New York) at the same time as Nonfarm payrolls.
U. of Michigan confidence. This index represents the results of a survey of consumers on the subject of confidence in the current economic situation.
The survey is conducted by the staff of the University of Michigan USA. The report is published twice a month: in the second week (usually on Friday) around the 15th of the reporting month (provisional), and two weeks later (final).
Published at 10:00 AM EST (New York). This indicator is nothing more than a reflection of the desire of consumers to spend their money.
Has a limited impact on the market. An increase in the index value leads to an increase in the dollar exchange rate.
Current account total/Balance of payments. The indicator is the ratio between the amount of payments coming from abroad and the amount of payments going abroad.
If payments incoming to the country exceed payments to other countries and international organizations, the balance of payments is active (positive balance), if vice versa, then it is passive (negative balance).
A positive balance (or a decrease in the size of a negative balance) is a favorable factor for the growth of the national currency. Published monthly. The indicator is taken into account by the market.
Consumer price index (CPI) / Consumer price index. Determines the change in the price level for the "basket" of consumer goods. The consumer price index is the main indicator of the level of inflation in the country. Published monthly. The indicator is taken into account by the market.
Industrial production / Change in the volume of industrial production The initial value of the index is released at the end of each month.
In two weeks, the index value will be updated. The growth of this indicator leads to an increase in the exchange rate of the national currency. It has a significant impact on the market.
Attention!
Leading indices of business conditions (LEI). The index of leading indicators is weighted average 13 main different indicators.
Used to determine the future state of the economy. The index of coinciding indicators consists of 11 indicators and is designed to assess the current state of the economy (the indicator level of 50% is “zero”). They come out monthly. Weak influence on the market.
Retail sales. The indicator reflects the change in the level of retail trade. The statistics cover department stores and supermarkets.
Shows the level of consumer spending and demand. Published monthly. It has little effect on the market.
Tankan report/Quarterly economic review published by the research and statistics department of the Bank of Japan. Quarterly economic review published by the research and statistics department of the Bank of Japan.
The review is compiled on the basis of assessments of more than 8,000 companies, firms and institutions on the following economic parameters:
Tankan is the most important Japanese indicator.
High unemployment, while reflecting high labor efficiency, could jeopardize an economic recovery by promoting accumulation rather than consumption. Published monthly. The indicator is taken into account by the market.
Domestic CGPI (Domestic Corporate Goods Price Index). Reflects the change in the price level of large consignments of goods.
It is calculated as a weighted average of three components: domestic wholesale prices, export wholesale prices and import wholesale prices.
This index is considered a better indicator of inflation than CPI, as it directly reflects the state of the business sector. The indicator is taken into account by the market.
Non-EU trade balance / Trade balance excluding trade with EU countries
Gross domestic product (GDP)
Despite the importance of the indicator, its impact on the market is reduced because its value is usually predicted by the market based on other data, and also due to repeated revisions of the GDP value after the first release. Published quarterly.
Industrial production / Change in the volume of industrial production. It includes the volume of production of the processing industry (manufacturing production), and also takes into account the volume of production in such industries as mining and processing of minerals, utilities.
It is an indicator of economic growth. The indicator is not decisive for the direction of economic development, since more than 60% of the gross domestic product is currently provided by the service sector. Published monthly. The indicator is taken into account by the market.
M4 money supply. The most commonly used indicator is the change in the money supply.
Includes volume cash currency in circulation, total amount loans issued by banks, as well as the amount of government borrowing.
M4 is considered good indicator for the inflation rate. Published monthly. The indicator is taken into account by the market.
Manufacturing production / Change in the volume of production of the processing industry. It is an indicator of economic growth.
The value of the indicator for the market is small, since the contribution of the manufacturing industry to the gross domestic product has recently been less than 20%. Published monthly.
Producer input prices (PPI input). It is defined as a change in the price level for components and semi-finished products in the industry (an increase in purchase prices may not affect the inflation index, since it is possible to reduce costs in the production process).
Attention!
Strong indicator of inflation. From the total value of the indicator, a part is usually distinguished that does not take into account the prices of food, alcohol, tobacco products and fuel (the prices of these goods are considered to be very volatile). Published monthly. The indicator is taken into account by the market.
Producer output prices (PPI output). It is defined as a change in the level of selling prices for goods in industry. Strong indicator of inflation.
Reflects inflationary pressures on the economy from manufacturers (an increase in selling prices may not be reflected in the inflation index, as trade costs may decrease).
From the total value of the indicator, a part is usually distinguished that does not take into account the prices of food, alcohol, tobacco products and fuel (the prices of these goods are considered to be very volatile). Published monthly. It has a significant impact on the market.
PMI - Chartered Institute of Purchasing and Supply (supply and demand research institute).
The index reflects the change in the pace of industrial production. Published monthly. The indicator value above 50% reflects the growth of industrial production, below 50% - slowdown. The indicator is taken into account by the market.
Retail price index (RPI). Determines the change in the price level for the "basket" of consumer goods. The indicator of the inflation rate is the index of retail prices, excluding payments on mortgage loans.
The retail price index, calculated using a single formula, for comparison with similar indices in other countries, is called harmonized (HICP).
If the growth rate of the index exceeds the planned value, then usually the Bank of England raises interest rates. Published monthly. It has a significant impact on the market.
Retail Sales. It is an indicator of the level of consumption. If the level of consumption is higher than the level of production, then this usually leads to an increase in inflation.
It should be noted that the monthly retail sales index is a very variable value. Averaged over the previous three months, the value of the index better describes what is happening. Published monthly. The indicator is taken into account by the market.
Claimant count rate/Unemployment rate. Claimant count - the number of applications of the unemployed for employment in employment centers.
The lower the unemployment rate, the more people get paid, which causes inflation to rise. Published monthly. The indicator is taken into account by the market.
Gross domestic product (GDP)/Gross domestic product (GDP). The sum of goods and services produced in a country expressed in terms of prices.
IFO survey/Overview of the German research institute IFO. The survey evaluates the level of business activity in the country. The value of the indicator can vary from 80 to 120; the level of business activity in 1991 is taken as 100. Published monthly. It has a significant impact on the market.
Industrial production / Change in the volume of industrial production. Shows the level of change in the volume of industrial production in the country.
Attention!
Factory orders/Changing the volume of production orders. Shows the change in the volume of output produced by the manufacturing industry. Published monthly. The indicator is taken into account by the market.
Producer price index (PPI). Determines the change in the selling price level for industrial goods. It is an indicator of inflation. Published monthly. The indicator is taken into account by the market.
Retail sales. It is an indicator of the level of consumption.
If the level of consumption is higher than the level of production, then this usually leads to an increase in inflation. Published monthly. The indicator is taken into account by the market
Unemployment/Unemployment rate
It has a strong influence on the decisions made by politicians and central bank. Published monthly. It has a significant impact on the market.
ZEW Survey / Overview of the German Research Institute ZEW. A key indicator of investor confidence. Calculated based on a survey of 322 analysts and institutional investors.
It reflects the ratio of positive and negative economic expectations for the next six months. If the majority of respondents are optimistic, the indicator is above zero. If pessimistic - lower. Has a significant impact on the market
CPI/Consumer Price Index. Determines the change in the price level for the "basket" of consumer goods.
The consumer price index is the main indicator of the level of inflation in the country. Published monthly. The indicator is taken into account by the market.
GDP/Gross Domestic Product (GDP). The sum of goods and services produced in a country expressed in terms of prices.
The value of the indicator, by the time of its release, is usually well predicted by the market based on other data, so it does not have a big impact on the market. Published quarterly. The index value is reviewed several times.
Industrial production / Change in the volume of industrial production. Shows the level of change in the volume of industrial production in the country.
The indicator takes into account the manufacturing and extractive industries, forestry and electricity generation. Published monthly. The indicator is taken into account by the market.
Purchasing managers index (PMI). PMI - Chartered Institute of Purchasing and Supply (supply and demand research institute). Reflects the change in the pace of industrial production.
Published monthly. The indicator value above 50% reflects the growth of industrial production, below 50% - slowdown. The indicator is taken into account by the market.
Trade balance/Foreign trade balance. The difference between exports and imports expressed in terms of prices.
The index is gradually losing its influence on the market, as capital flows become more important, rather than goods. At the same time, the growth of imports indicates an increase in the level of consumption in the country, and the growth of exports - an increase in the level of production.
In the UK, it is customary to single out the value of the trade balance with countries outside the European Union. Published monthly.
Unemployment rate. The indicator is very important for politicians in Germany and Europe (since Europe has a traditionally high unemployment rate, which causes concern among the population).
It has a strong influence on the decisions made by politicians and the central bank. Published monthly. It has a significant impact on the market.
Federal Agency for Education
Russian State University of Oil and Gas named after I.M. Gubkin
Chair financial management
Coursework on the topic:
Methodology for calculating the main indices
industrial production.
Executed Checked
Student gr. EU-08-2 senior teacher Kvitko N.S. Tarasenko P.F.
In statistics, generalizing indicators in the form of averages, relative values and various coefficients are widely used to characterize processes and phenomena. various areas social activities. Indices are among the most important generalizing indicators. Indices form the most important economic indicators national economy and its separate branches.
Indices are an indispensable research tool in cases where it is necessary to compare in time or space two sets, the elements of which cannot be directly summarized. Therefore, one of the common methods used in statistical studies and allowing characterizing the change in complex phenomena is index method.
In general, the index method is aimed at solving the following problems:
1) a description of the general change in the level of a complex socio-economic phenomenon;
2) analysis of the influence of each of the factors on the change in the indexed value by eliminating the impact of other factors;
3) analysis of the impact of structural shifts on the change in the indexed value
Each of these tasks is solved using different indexes.
This course work consists of two main parts: theoretical and practical.
The theoretical part gives a general concept of indices and their classification, as well as forms and types of indices and their scope.
In the practical part, a detailed description of OAO Tomskneft VNK for 2007-2009 is given, in addition, the calculation and analysis of the main indices of industrial production based on data on OAO Tomskneft VNK is described in detail.
The word "index" has several meanings: indicator, index, inventory, register. It is used as a concept in mathematics, economics, meteorology and other sciences.
In international practice, indexes are usually denoted by symbols i and I(the initial letter of the Latin word index). The letter " i» are denoted by individual (private) indices, the letter « I» - common indices. The sign at the bottom right means the period: 0 - basic, 1 - reporting. In addition, certain symbols are used to denote indexed indicators:
q- Quantity (volume) of any goods in physical terms;
p- unit price of goods;
z- unit cost of production;
t- time spent on the production of a unit of output;
w- production output in value terms per worker or per unit of time;
v- output in physical terms per worker or per unit of time;
T- total time spent (tq) or number of workers;
pq- the cost of production or turnover;
zq- production costs.
All economic indices can be classified according to the following features:
degree of coverage of the phenomenon;
comparison base;
type of scales (co-meter);
form of construction;
the nature of the object of study;
· object of study;
The composition of the phenomenon
calculation period.
By degree of coverage Phenomena indexes are individual and consolidated. Individual indices serve to characterize the change in individual elements of a complex phenomenon. Their example can be changes in the volume of production of certain types of products, as well as the price of shares of an enterprise. To measure the dynamics of a complex phenomenon, the components of which are directly incommensurable (changes in the physical volume of products, including heterogeneous goods, the price index of shares of enterprises in the region, etc.), composite or general indices are calculated.
If the indices do not cover all elements of a complex phenomenon, but only a part of them, then such indices are called group or sub-indices, for example, indices of physical volume of production for individual industries, price indices for groups of food and non-food products. Group indices reflect patterns in the development of individual parts of the studied phenomena. In such indices, their connection with the grouping method is manifested.
Based on comparison All indices can be divided into two groups: dynamic and territorial. The first group of indices reflects the change in the phenomenon over time.
When calculating dynamic indices, the value of the indicator in the reporting period is compared with the value of the same indicator for the previous period, which is called the base period. However, both forecast and planned indicators can be used as the latter.
Dynamic indexes are basic and chain.
The second group of indices (territorial) is used for interregional comparisons. These indices are of great importance in international statistics when comparing indicators of the socio-economic development of various countries.
By type of weight indexes are subdivided into indexes with constant and variable weights.
depending from the form of construction , aggregate and average indices differ. The latter are divided into arithmetic and harmonic. The aggregate form of general indices is the basic form economic indices. Average indices are derivatives, they are obtained as a result of the transformation of aggregate indices.
depending on the nature of the scope of the study there are indices of quantitative (volumetric) indicators and indices of qualitative indicators. The indexes of volume indicators include indices of trade turnover, physical volume of production, national income of consumption, etc. Indexes of qualitative indicators include indices of prices, labor productivity, cost, etc.
By object of study indices are: labor productivity indices, cost indices, product cost indices, indices of the physical volume of production, etc.
According to the composition of the phenomenon two groups of indices can be distinguished: indices of constant (fixed) composition and indices of variable composition. The division of indices into these two groups is used to analyze the dynamics of average indicators.
By calculation period indices are divided into annual, quarterly, monthly, weekly.
The simplest indicator used in index analysis is an individual index that characterizes the change in time of economic values related to one object. Depending on the economic purpose, individual indices are: physical volume of production, cost, prices, labor intensity, etc. An individual index is denoted by the letter i and is followed by a subscript of the indicator being indexed.
General form individual index:
,Where: x – indexed value
1 - reporting period
0 - base period
In economic calculations, the most commonly used general indexes , which characterize the change as a whole. The construction of these indices is the content of the index methodology.
General indices are built for quantitative (volumetric) and qualitative indicators. Depending on the purpose of the study and the availability of initial data, various forms of constructing general indices are used: aggregate and weighted average.
The general index is indicated by the letter I and is also accompanied by a subscript of the indexed indicator.
The peculiarity of general indices is that they express the relative change in complex phenomena, the individual parts and elements of which are directly incommensurable, and therefore the indices are synthetic indicators.
In some cases, it is required to compare data not for two, but for three or more periods. In such cases, it is necessary to choose a base of comparison. Depending on the basis of comparison, there are basic and chain indices .
Under basic indices understand such indices that have the same period of time taken as the basis for calculations.
If, when calculating the index, the base for calculations will change and the period preceding the calculation of the index is taken as such a base, then the index will be called chain . The basic indices provide a more illustrative description of the general trend in the development of the phenomenon under study, while the chain indices reflect the sequence of changes in levels over time.
Good afternoon, my dear aspiring macroeconomists. I continue a series of articles on the main factors that influence investor decision making. Today I will try to explain on my fingers how the industrial production index works, what it is, how it is calculated and what it directly affects. Get comfortable.
IPI, also known as the index of output, is a simple ratio of the value of manufactured industrial goods in the current period to the value of goods produced in the base period. Industrial production includes basic goods and services, such as:
The production index shows the dynamics of the development or decline of the country's economy. It is used by investors to predict future cash flows, profitability of projects, authorities - to calculate the main budget indicators, enterprises - to adjust business plans, prices, industrial production volumes.
The IPP in Russia is calculated by Rosstat, the methodology is fixed by Order No. 301 dated May 08, 2014.
To calculate the index, a model is used, which is preferred in European countries, as well as the United States. It's called the Laspeyres index.
The calculations are carried out in several stages, each of which calculates three series of indicators:
The base period is considered to be the period when prices, composition and quantity of goods produced were more or less stable, and no significant fluctuations were expected in the next few years.
So, 2008 was used as a base for 2010-2013, since 2014 they began to use 2010.
Determination of the index of industrial production volumes is characterized by a decrease in accuracy over time, as the structure of prices and industries as a whole changes. Therefore, in the world, as a rule, the revision of the base is carried out approximately every 5 years. More often, a year is chosen that ends in zero or five.
Thus, we can get 3 indicators for each category of manufacturers.
Theory is good, but to understand the logic, let's try to calculate the indicator using an example.
As we said, our index consists of 4 categories, each of which has its own weight in the total. Suppose, in the base and current periods, the results indicated in the table were obtained. We know the volume of industrial production in the base period. We can calculate the index.
| Category | Price in base period | Quantity produced in the current period | Volume in the current period | Volume in the base period | Category weight |
| Extraction of useful fossils | 100000 | 3 | 300000 | 250000 | 56,18% |
| Processing production | 1500 | 40 | 60000 | 48000 | 11,24% |
| Mining distribution of electricity, gas and steam | 3000 | 18 | 54000 | 50000 | 10,11% |
| Water supply, sewerage, waste disposal | 10000 | 12 | 120000 | 120000 | 22,47% |
| Total | 534000 | 468000 | 100% |
As can be seen from the table, first of all, the volume of each category in the current period is calculated (as the product of price and quantity) and only after that the weight is determined (dividing the volume of the category by the aggregate indicator).
So the index is 115%.
Industrial production in % to the previous year
| Year | Index |
| 1992 | 84,0 |
| 1993 | 86,3 |
| 1994 | 78,4 |
| 1995 | 95,4 |
| 1996 | 92,4 |
| 1997 | 101,0 |
| 1998 | 95,2 |
| 1999 | 108,9 |
| 2000 | 108,7 |
| 2001 | 102,9 |
| 2002 | 103,1 |
| 2003 | 108,9 |
| 2004 | 108,0 |
| 2005 | 105,1 |
| 2006 | 106,3 |
| 2007 | 106,8 |
| 2008 | 100,6 |
| 2009 | 89,3 |
| 2010 | 107,3 |
| 2011 | 105,0 |
| 2012 | 103,4 |
| 2013 | 100,4 |
| 2014 | 101,7 |
| 2015 | 99,2 |
| 2016 | 102,2 |
| 2017*) | 102,1 |
You can download the data here.
The index is also published every quarter and month. The calculated IPP can be found on the official website of Rosstat.
US industrial production indices and European Union are called Industrial production index. They are published monthly by the Federal Reserve and Eurostat respectively.
| Year | Eurozone | USA |
| 2007 | 105.9 | 114 |
| 2008 | 91.7 | 103.6 |
| 2009 | 88 | 100.3 |
| 2010 | 96.4 | 94.9 |
| 2011 | 97.1 | 95.3 |
| 2012 | 94.1 | 98.1 |
| 2013 | 96.4 | 103.2 |
| 2014 | 98 | 106.5 |
| 2015 | 100.7 | 102.9 |
| 2016 | 102.7 | 102.8 |
| 2017 | 108.5 | 105.8 |
| 2018* | 108.1 | 108 |
*As of July 2018
As we can see from the table, the industrial index correlates with the general economic condition in the country. During a crisis, it drops sharply, pointing out to investors, officials and manufacturers themselves to problematic industries. The indicator, in contrast to, for example, the index of the physical volume of industrial production, is also associated with such indicators as:
I would like to touch on this topic separately. Since companies representing fundamental industries are mostly listed on the stock exchange and form the basis of the capitalization of the entire Russian market, the industrial production index they form shows the general state of affairs in the industry. Thus, the growth of IPP indicates an increase in production, which, in turn, improves financial indicators, which can be reflected in the value of shares of companies such as Gazprom, Lukoil, RusHydro, the largest machine-building enterprises and other manufacturing giants.
Experienced speculator investors keep a calendar where all important economic releases are marked, including the IPP - the days and times when it is published. On the day of the release of the news, they monitor whether the data coincides with the forecasts of experts - the so-called consensus. If yes, and the indicator will grow at the same time, the market will go up; if not, it will fall.
However, on long-term investment horizons, analysts use this indicator to predict the future value of the shares of an issuer in order to determine their growth potential. This is a rather complicated and painstaking process, which is carried out by specially trained people in brokerage companies.
Summing up, I can say that the IPP is one of the main benchmark indicators for an investor. For example, if we compare the IPP with GDP for similar periods, then we can talk about the dynamics of production in fundamental industries compared to other areas. If the index grew faster than GDP, then the industry developed faster and vice versa. This can serve as a good signal to buy shares of fundamental companies.
If you understand the processes that are taking place in the country's economy, then it will be much easier for you to make informed and effective decisions. To do this, you just need to subscribe to this blog and read my educational program on investing. See you soon, friends!
Industrial production index, abbreviated as IPP. IPP - an indicator of the dynamics of the volume of industrial production, its rise or fall, is defined as the ratio of the current volume of production in monetary terms to the volume of industrial production in the previous or other base year. It is determined by selecting representative goods, characterized as the most important types of industrial products.
That is, this index characterizes the change in GDP due to fundamental sectors of the economy.
The IPP in Russia is calculated in accordance with the Official Statistical Methodology for Calculating the Industrial Production Index (approved by Rosstat Order No. 301 dated May 08, 2014). Companies representing fundamental industries form the basis of the capitalization of the entire stock market of the Russian Federation. Such companies include: Gazprom, Lukoil, RusHydro, the largest machine-building manufacturers, and so on. The growth of the IPP indicates an increase in production, which, in turn, increases profits, which can be expressed in the rising value of the shares of companies associated with industrial production.
With a decrease in the IPI, the reverse process will not necessarily occur, since inflation increases the revenue and profits of producers even if real production does not grow. Consider a hypothetical situation that could arise in May 2010.
From this data, we can derive three IPI indicators.
These indicators can be interpreted as follows:
If we compare this information with changes in GDP over the same periods, we can conclude how the volume of production in fundamental industries has changed relative to all other sectors of production and services. That is, if the IPP grows faster than GDP, then this indicates a faster pace of development of fundamental industries. In a situation where the IPP lags behind GDP growth, the reverse trend is observed.
One of the fundamental indices included in the macroeconomic indicator of any country is ( IPP, Industrial Production Index). In order to understand its significance in the economy of the country and other industries, it is necessary to study its definition.
Industrial production index- this is a macroeconomic indicator that characterizes the change in the production process with a combination of services and goods grouped according to the following types of the all-Russian classifier of types of economic activity: Processing», « Mining», « Production and distribution of electricity, gas and water».
Industrial production index is calculated monthly and takes into account the change in the physical volumes of manufactured products, as well as the spent working hours and consumed energy.
You can also follow the data of the index of industrial production in, and find out the date of the next publication of the macroeconomic indicator.
The output index covers the manufacturing sectors of the economy. Also, this index is an average of the manufacturing, mining, utilities and construction indices. It is based on physical volume measures and excludes private and public services.
The industrial production index is an excellent way to study, in cases where it is impossible to sum up, but it is necessary to compare. That is why one of the proven methods used in statistical calculations, which allows you to characterize the change in some phenomena, is the index method.
The index method is designed to solve the following main tasks:
When constructing the industrial production index, the following methods are used:
The index starts to form upon receipt data on the dynamics of production and production of goods of a certain line. Further, there is a division and formation of indices depending on the type of economic activity.
For large populations, the index is averaged based on the constituent elements that form these populations.
When forming elementary, large and other aggregates into indices, a classification is created into groups, subgroups, sections, subsections, industrial and production areas, in accordance with the classifier of types of economic activity.
The index is calculated in the following order:
The calculation of the index of industrial production is carried out in several stages, as well as in repeated recalculations for each individual stage.
At the initial stage, production indices are determined for each type of activity separately by comparing the output of goods in the reporting period with their output in the base period. Also at this stage, an index of gross output is formed, but not value added.
The industrial production index has a huge impact on the economic growth of any country. The growth of the indicator contributes to the strengthening and appreciation of the national currency, the economy and directly affects the market itself.
In the foreign exchange market, the index indicator is also of great importance, due to its connection with the dynamics of the business cycle. With the help of the dynamics of the index, while waiting for changes in the policies of central banks, it is possible to track the direction of these upcoming changes.
According to analytical data provided by competent organizations, with a decrease in the production index, not necessary there will be a process of reducing the profits of enterprises, since inflation increases the revenue and profits of producers, even if in reality production does not grow. This is an occasion for reflection for any trader who considers the index to be a very important tool in assessing future performance, as well as assets in the market itself.
The growth of production itself has a positive effect on the balance of power in the financial market, suggesting an increase in stock prices and a positive mood of investors. This also means strengthening the country's economy as a whole,including the strengthening of positions in the macroeconomics, and this, in turn, entails increased competition for goods in the main world markets, as a result of which, the growth of the trade balance and the exchange rate of the national currency.
It is believed that the index of industrial production is not among the important ones, but there were cases when the involvement of this indicator on the part of the economy was useful for fundamental market analysis.
In turn, this indicates the need to consider each indicator separately if the goal is to qualitatively and in detail analyze the market and not be among the traders who find themselves " out of work».
Another important observation, which has been studied and fully analyzed by many analysts is the following: when the index of industrial production begins to grow faster, this indicates that fundamental industries are gaining momentum. In the case when the growth of the index lags behind the growth of the gross domestic product, there is a decline in the growth of the same industries.
The State Statistics Committee of the Russian Federation publishes reports on the dynamics of industrial production, which contain data on all indicators of the dynamics of volume, and for each of the following industries in particular:
In the Eurozone, data on industrial indices are distributed by Eurostat, in the USA - by the Federal Reserve System ( which takes into account index performance to adjust monetary policy), in Japan - by the Ministry of Economy, Trade and Industry.
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