Ebook indd

© 1st Forex Trading Academy 2004
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How to read and interpret a weekly economic calendar
Existing home sales
– Number of previously constructed homes with a closed sale during the 
month. Existing homes (also known as home resales) are a large share of the market than new 
homes and indicate housing market trends. This provides a gauge of not only the demand for 
housing, but the economic momentum. People have to be feeling pretty comfortable and confident 
in their own financial position to buy a house. Even though home resales don’t always create 
new output, once the home is sold, it generates revenues for the realtor. It brings a myriad of 
consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a 
few items home buyers might purchase. In a more specific sense, trends in the existing home sales 
date carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings 
companies.
Factory orders
– Dollar level of new orders for manufacturing durable goods and nondurable 
goods. It gives more complete information than durable goods orders which are reported one or 
two weeks earlier in the month. The orders data show how busy factories will be in coming months 
as manufacturers work to fill those orders. This report provides insight to the demand for not 
only hard goods such as refrigerators and cars, but nondurables such as cigarettes and apparel. In 
addition to new orders, analysts monitor unfilled orders, an indicator of the backlog in production. 
Shipments reveal current sales. Inventories give a handle on the strength of current and future 
production. All in all, this report tells investors what to expect from the manufacturing sector, a 
major component of the economy and therefore a major influence on their investments.
Gross Domestic Product (GDP)
– The sum of all goods and services produced either by domestic 
or foreign companies. GDP indicates the pace at which a country’s economy is growing (or 
shrinking) and is considered the broadest indicator of economic output and growth. Investors 
need to closely track the economy because it usually dictates how investments will perform. The 
GDP report contains a treasure-trove of information which not only paints an image of the overall 
economy, but tells investors about important trends within the big picture. GDP components like 
consumer spending, business and residential investments and price (inflation) indexes illuminate 
the economy’s undercurrents, which can translate to investment opportunities and guidance in 
managing a portfolio.
Housing starts
– Housing starts measure the number of residential units on which construction 
is begun each month. Home builders don’t start a house unless they are fairly confident it will sell 
upon or before its competition. Changes in the rate of housing starts tell us a lot about demand 
for homes and the outlook for the construction industry. Furthermore, each time a new home 
is started, construction employment rises and income will be pumped back into the economy. 
Once the home is sold, it generates revenues for the home builder and a myriad of consumption 
opportunities for the buyer. Refrigerators, washers and dryers, furniture and landscaping are just 
a few things new home buyers might spend money on, so the economic “ripple effect” can be 
substantial especially when you think of it in terms of a hundred thousand new households around 
the country doing this every month. Trends in the housing starts date carry valuable clues for the 
stocks of home builders, mortgage lenders and home furnishings companies. Commodity prices 
such as lumber are also very sensitive to housing industry trends.

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