Leading Macro Indicators: An Overview

News rundowns are a dime a dozen. Here at The Macro Mail, we want to do things differently. Instead of getting hung up about the past, we want to cut through the noise and turn your focus to the future.

We aim to cover and update you on the latest changes in leading macroeconomic indicators including the ISM, consumer sentiment and building permits to give you a better understanding of where the economy might be headed and which sectors might do well.

We also aim to provide you with a weekly update on how different sectors and asset classes have performed relative to each other over the past week and what this might suggest about the future.

In the meantime, here’s a brief overview of some of the most important indicators we’ll cover:

ISM Manufacturing Purchasing Managers Index:

Often hailed as the most important economic indicator available, this report is released on the first business day of every month and is the culmination of data compiled from surveys sent to the purchasing managers of over 400 industrial companies across the US.

The ISM Manufacturing PMI exhibits remarkable correlation with the S&P 500, as seen in the charts below. A PMI reading of above 50 indicates that the manufacturing segment of the economy is expanding, and a reading below 50 suggests it’s contracting.

Not only does the ISM tell you about the state of manufacturing, it also ranks the sectors by growth based upon several key factors including new orders, production, employment, and inventories.

Here’s an overview of what happened in September:

University of Michigan Consumer Sentiment Index:

Perhaps one of the most underused leading indicators, this index assesses consumer attitudes to business, personal finance, spending, and economic conditions. The data is normalized to an index value of 100 in 1966 and is derived from a series of telephone interviews across the US.

Again, this indicator exhibits correlation to the S&P 500, evidenced by the charts below:

Census Bureau Building Permits Survey:

The US Building Permits Survey is another important and often misunderstood leading indicator which provides a keen insight into the health of the housing sector, the lending market, consumer confidence and thereby the overall economy. See how building permits leads the S&P 500 below:

These indicators and others will be used to give you regular updates on the state of the economy and what you might be able to expect going forward. Real, fundamental information. Not yesterday’s news.

So, what are you waiting for? Cut through the noise, hit that subscribe button and stay tuned for our first newsletter.

Sincerely,

The Macro Mail