The Economic Growth Data tab in the EdgeFinder provides key insights into the health of an economy, offering traders valuable information to make informed decisions. This data is derived from four major economic indicators: GDP Growth, PMI Data, Retail Sales, and Consumer Confidence, each of which impacts market trends and sentiment.

GDP growth

GDP measures a country’s total economic output, with higher growth indicating stronger economic health.

Interpreting GDP:

Stronger-than-expected GDP results are scored positively, while weaker-than-expected results have a negative impact.

Why It Matters:

GDP growth influences currency pairs and overall market sentiment, as a growing economy typically leads to stronger demand for goods and services.

How To Use The GDP Growth Tab

How is GDP scored on the edgeFinder?

edgeFinder GDP score calculation (indices)

For scoring indices, the EdgeFinder considers the latest produced GDP figures relative to the forecasted value.

In reference to the stock market, strong GDP prints can suggest growth, and in turn can help to boost corporate earnings.

If the latest figure is higher than what was forecasted, the EdgeFinder's scoring system considers this bullish (+1) for the associated stock market index/indices.

If the latest figure is lower than what was forecasted, the EdgeFinder's scoring system considers this bearish (-1) for the associated stock market index/indices.

For example, if US GDP comes out higher than expected, this would be considered bullish for the Nasdaq, DOW Jones, S&P500, and Russell 2000 and each would receive a +1 in the "GDP" column of the EdgeFinder's total scoring system.

edgeFinder GDP score calculation (Gold)

For scoring gold, the EdgeFinder considers the latest produced GDP figures relative to the forecasted value.

In reference to gold, strong GDP prints can suggest growth and prosperity - which makes gold look less attractive. Gold is traditionally considered a safe haven, in which investors will flock to in times of uncertainty.

If the latest US GDP figure is higher than what was forecasted, the EdgeFinder's scoring system considers this bearish (+1) for gold.

If the latest US GDP figure is lower than what was forecasted, the EdgeFinder's scoring system considers this bullish (+1) for gold.

edgeFinder GDP score calculation (Industrial commodities)

For scoring industrial commodities (copper, silver, platinum, oil), the EdgeFinder considers the latest produced GDP figures relative to the forecasted value.

In reference to industrial commodities, strong GDP prints can suggest growth, and in turn can help to boost demand for raw materials.

If the latest figure is higher than what was forecasted, the EdgeFinder's scoring system considers this bullish (+1) for industrial commodities.

If the latest figure is lower than what was forecasted, the EdgeFinder's scoring system considers this bearish (-1) for industrial commodities.

PMI Data (Purchasing Managers' Index)

PMI data gauges the economic activity in both the manufacturing and services sectors.

Manufacturing PMI: A higher PMI indicates confidence in the manufacturing sector, pointing to potential growth.

Services PMI: Similar to Manufacturing PMI, a strong Services PMI suggests positive economic expectations.

How to Use It: PMI figures higher than forecast signal optimism and growth, while weaker-than-expected numbers may point to economic slowdowns.

How is pMI scored on the edgeFinder?

Manufacturing & Services PMI Score Calculation

The EdgeFinder considers the change from previous data to latest data in mPMI & sPMI. If positive growth, bullish for currency & stock market, bearish for gold, bullish for commodities and crypto. If negative growth, all signals are reversed. For currency pairs, both respective economies are considered, leading to the possibility of a range from -2 to +2 in score for this category.

retail sales

Retail Sales measure consumer spending, a critical driver of economic health.

Rising Retail Sales:

Suggest increased consumer confidence and economic strength.

Declining Retail Sales:

Indicate consumer caution, often linked to economic uncertainty.

Why It’s Important:

Strong retail sales are typically associated with robust economic activity, higher employment, and better corporate earnings.

How is retail sales scored on the edgeFinder?

retail sales score calculation

The EdgeFinder considers the the latest retail sales data, relative to the forecasted number. If the latest retail sales data is stronger than forecasted, we consider this bullish (+1) for currency & the stock market, bearish (-1) for gold, bullish (+1) for commodities and crypto. If retail sales come in lower than forecasted, all previously explained signals are reversed.

For currency pairs, both respective economies are considered, leading to the possibility of a range from -2 to +2 in score for this category.

Consumer confidence

Consumer Confidence reflects how optimistic or pessimistic consumers are about the economy’s future.

Rising Confidence: Signals consumer optimism, often leading to bullish sentiment in markets.

Declining Confidence: A decline may indicate economic pessimism, possibly affecting risk-sensitive assets.

How to Use It: Tracking consumer confidence alongside other data can help predict shifts in market trends and economic conditions.

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how to use economic growth data