| Updated: September 12, 2025Profile of the United States dollar – major economic reports
This lesson will cover the following
- Non-farm payrolls, CPI, PPI
- Trade balance, ISM non-manufacturing, ISM manufacturing
- Michigan confidence, retail sales, industrial production
Major economic reports released by the United States
Non-farm payrolls
Non-farm payrolls (NFP) are the most important and most widely tracked data released in the US jobs report. The figure reflects the change in non-farm payrolls compared with the previous month. A rise in the number means that US employers created more jobs in that month than in the previous one, and vice versa. Job creation is considered of utmost importance to consumer spending, while the latter is a major driving force behind economic growth. The report presents the total number of US employees in any business, excluding the following four groups:
– farm employees
– general government employees
– employees of nonprofit organisations
– private household employees
The monthly NFP report presents data from two different surveys, the Establishment Survey and the Household Survey. The Establishment Survey provides data on non-farm payroll employment, the average hourly workweek and the aggregate hours index. The Household Survey provides information on the labour force, household employment and the unemployment rate.
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The NFP reading most often varies between +10,000 and +250,000 when the US economy is performing well. Despite the volatility and the possibility of large revisions, the non-farm payrolls indicator is the most timely and comprehensive reflection of the current state of the economy. Total non-farm payrolls account for 80% of the workers who produce the entire Gross Domestic Product of the United States. A positive change in non-farm payrolls, especially if it exceeds the median estimate of experts, usually provides strong support to the US dollar. Forex traders usually take into account seasonally adjusted monthly unemployment rates and any notable changes in non-farm payrolls.
Consumer price index (CPI)
The index of consumer prices is based on a basket of goods and services bought and used by consumers on a daily basis. In the United States the Bureau of Labor Statistics (BLS) surveys the prices of 80,000 consumer items in order to calculate the index. The latter reflects prices of commonly purchased items by primarily urban households, which represent about 87% of the US population. The Bureau processes price data from 23,000 retail and service businesses.
Another reported indicator is the core CPI, which does not include food and energy prices. It is usually presented as a seasonally adjusted figure, because consumer patterns vary widely throughout the year. The core CPI is an important measure because this is the gauge that the Federal Reserve Bank examines when adjusting monetary policy. The Fed uses the core CPI because prices of food, oil and gas are highly volatile, while the central bank’s tools are slow-acting.
The CPI has predictive value. Its readings can be interpreted in different ways, depending on the economic context. In a sluggish economy, if the annualised core CPI accelerates more than projected during a given period, moving towards the inflation target set by the Federal Reserve, it may signal that the economic recovery is gathering pace, and traders would tend to support the US dollar.
Conversely, in a sluggish economy, if the annualised core CPI rises by less than projected, it may indicate that inflationary pressure remains weak and that accommodative monetary policy is still needed to spur economic growth, so traders would tend to sell the US dollar.
In a booming economy, very high rates of inflation – well above the Fed’s price-stability objective – can have adverse effects on economic health.
Producer price index (PPI)
The index of producer prices reflects the change in prices of over 8,000 products sold by manufacturers during the respective period. The PPI differs from the CPI, which measures the change in prices from consumers’ perspective, because of subsidies, taxes and distribution costs. If producers are forced to pay more for goods and services, they are more likely to pass these higher costs on to the end consumer. Therefore, the PPI is considered a leading indicator of consumer inflation. The Federal Reserve also studies this report closely to clarify future policy moves that might be needed to manage inflation.
The PPI reveals trends within the wholesale markets, manufacturing industries and commodities markets. All physical goods-producing industries that comprise the economy are included, with the exception of imports.
Another reported indicator is the core PPI. It is of great importance to investors, as it represents the finished-goods PPI index minus the volatile food and energy components. The PPI is meant to reflect only the prices that are paid during the survey month. It is common for companies that do regular business with large customers to have long-term contract rates, which may be agreed at present but not paid until a future date. The PPI excludes future values or contract rates. The PPI report is released in the second or third week of each month by the Bureau of Labor Statistics (BLS).
Trade balance
The trade balance measures the difference in value between a country’s exported and imported goods and services during the reported period. It reflects the net export of goods and services, or one of the components that form a country’s Gross Domestic Product. Market players tend to give higher priority to seasonally adjusted figures reported over a three-month period, because one-month trade data are considered unreliable. A contracting trade deficit or an expanding trade surplus will usually support demand for the US dollar.
ISM non-manufacturing
The non-manufacturing Purchasing Managers’ Index (PMI) is a composite index based on the values of four equally weighted components. These sub-indexes reflect seasonally adjusted new orders, seasonally adjusted employment, seasonally adjusted business activity and supplier deliveries. The report is based on data compiled from monthly replies to questions asked of over 370 purchasing and supply executives operating in more than 62 industries, which represent nine divisions from the Standard Industrial Classification (SIC) categories.
Participants respond with ‘better’, ‘same’ or ‘worse’ to questions about the industries in which they operate. The resulting PMI value ranges from 0 to 100. If the index shows a value of 100.0, 100% of the respondents reported an improvement in conditions. If the index shows a value of 0, 100% of the respondents reported a deterioration in conditions. If all respondents see no change, the index will show a reading of 50.0. Readings above the key level of 50.0 indicate expanding activity in the service sector, which is dollar-positive. The Institute for Supply Management (ISM) publishes this indicator for the United States.
ISM manufacturing
The manufacturing Purchasing Managers’ Index (PMI) is a composite index that represents manufacturing activity in 20 different industries. It is composed of four equally weighted components: seasonally adjusted employment, seasonally adjusted production inventories, seasonally adjusted new orders and supplier deliveries. The index is based on a survey of 300 purchasing managers.
Participants respond with ‘better’, ‘same’ or ‘worse’ to questions about the industries in which they operate. The resulting PMI value ranges from 0 to 100. If the index shows a value of 100.0, 100% of the respondents reported an improvement in conditions. If the index shows a value of 0, 100% of the respondents reported a deterioration in conditions. If all respondents see no change, the index will show a reading of 50.0. Readings above the key level of 50.0 indicate expanding activity in the manufacturing sector, which usually supports the US dollar. The Institute for Supply Management (ISM) publishes this indicator for the United States.
Federal Reserve minutes
The Federal Reserve Bank publishes the minutes from its latest monetary-policy meeting three weeks after the meeting itself. The minutes offer detailed insights into the FOMC’s policy stance. Traders examine the release closely, as it may provide clues to future interest-rate decisions.
Michigan confidence
The monthly survey by Thomson Reuters and the University of Michigan shows how consumer confidence in the United States evolves. The index of consumer confidence, based on the survey, is announced twice – a preliminary and a final value. The preliminary reading usually comes out two weeks ahead of the final data. The survey encompasses about 500 respondents throughout the country, while the index is composed of two major components: a gauge of current conditions and a gauge of expectations. The current conditions index is based on the answers to two standard questions, while the expectations index is based on three. All five questions carry equal weight when determining the overall index value. Higher consumer confidence implies higher consumer spending, while higher spending can lead to an accelerated rate of consumer inflation. Accordingly, a higher reading of the index, especially if it surpasses median forecasts, usually boosts demand for the US dollar.
Retail sales
The report on retail sales reflects the dollar value of merchandise sold within the retail trade by sampling companies operating in the sale of physical end products to consumers. The retail sales report encompasses both fixed point-of-sale businesses and non-store retailers, such as mail catalogues and vending machines. The US Census Bureau, part of the Department of Commerce, surveys about 5,000 companies of all sizes, from huge retailers such as Wal-Mart to independent small family firms.
Core retail sales (retail sales ex-autos) is another reported indicator, which removes large-ticket prices and the historical seasonality of automobile sales.
The retail sales index is considered a coincident indicator; therefore, it reflects the current state of the economy. It is also regarded as a pre-inflationary indicator that investors can use to reassess the probability of an interest-rate hike or cut by the Federal Reserve Bank. In addition, this indicator provides key information regarding consumer spending trends. Consumer expenditures, meanwhile, account for almost two-thirds of the nation’s total Gross Domestic Product. Therefore, a larger-than-expected increase in retail sales usually supports demand for the US dollar.
Industrial production
The index of industrial production reflects the change in the overall inflation-adjusted value of output in sectors such as manufacturing, mining and utilities in the United States. The index is sensitive to consumer demand and interest rates. As such, industrial production becomes an important tool for future GDP and economic-performance forecasts. These figures are also used by central banks to measure inflation, as high levels of industrial production may lead to uncontrolled consumption and rapid inflation. It is a coincident indicator, which means that changes in its level generally mirror shifts in overall economic activity. Any increase in the index usually boosts demand for the US dollar.