UnderstandingKeyEconomicIndicatorUnderstandingKeyEconomicIndicatorsByDesmondLumInthesetimeswhenmarketforcesappearincreasinglycomplicatedandmorevolatile，itisallthemoreimportanttounderstandtheprofessionaljargonandterminologyinthemarketplaceinordertobeabletobettermakeourinvestmentandbusinessdecisions.Understandingkey-economicindicatorswillassistinthedecisionmakingprocess，providingasnapshotofthecurrentsituationandaninsightintothefuture.Eacheconomicindicatortellsussomethingabouttheeconomyorinflation.GrossDomesticProduct(GDP)isprobablythemostimportantreportasitisthewholeframeworkwhereothereconomicindicatorsfallunder.UsingthetextbookformulawhereGrossNationalProduct=Consumption+Investment+GovernmentSpending+Exports-Imports，someoftheindicatorswillfallintotheabove-mentionedcategorye.g.retailsalesfigureswillfallunderConsumption，constructionspendingunderinvestment，tonameafew.Therearealsoindicatorsthatarebroaderthattellusabouttheeconomyitselfratherthanthecomponent，e.g.employmentfigures，leadingindicators，moneysupplyfigures(M3).Inflationfigures，ProducePriceIndex(PPI)andtheConsumerPriceIndex(CPI)will，inshort，informusofthechangesinwholesaleprices，costofconsumer(retail)goodsandservicesrespectively.Anindicatorthatisusefulmustbeaccurate，timelyandreliable.Itdependsentirelyontheintegrityofthenationalstatisticalsystemresponsible.Itisvitaltoknowtheaccuratecomponentsofanindicator.Wehavetobemindfulofthelimitationofthesestatisticalfigurestoo.Someindicatorscanbehistoricorextremelyvolatile，andthereforetheirvaluearereduced.Itisbettertocomparethemostrecentdatawithearliermonths，ortakeamovingaverageforthepast3，6or12monthstosmooththedata.Itwilltellusiftherehasbeenasignificantchangeintrendandwhetheranewdirectionisunderway.Timelinessofanindicatorisalsosignificant.Althoughthereportedfiguresareimportant，itiscrucialtorecognisethatmarketsreacttothevariancetotheconsensusforecastthantotheabsolutechangeintheindicator.Marketsdonotlikesurprisesandcanbefrustratedwithvolatilityuponsubsequentrevisionstothenumbe