Short Term Indicators

Short-term indicators or high frequency data are data made at a frequency higher than annually -- daily, weekly, monthly or quarterly.

A typical short-term indicator could be the Consumer Price Index (CPI), the Producer Price Indices (PPI), a Production index, Retail trade turnover data, Consumer Confidence Barometers, Quarterly National Accounts, or a monetary indicator.

The major mission of a short term indicator is to give early and correct identification of change in the current trend. Thus, short term indicators are typically made available shortly after the end of the period. In addition to being important for the identification of turning points in the economy, short term indicators are also valuable in time series analyses and econometric modeling.

Short term statistics are in general less comprehensive than annual or less frequent data, nevertheless, the indicators are essential input for timely economic analyses and policy formulations.

However, for indicators to be of significant value in time series analyses, the indicators ought to be a continuos measure of the same concepts over discrete consecutive periods of time.

For early identification of turning points in the economy, data over discrete periods ( weeks, months or quarters ) rather than cumulative data is required. Period-to-period changes in discrete data give the earliest identification of turning points, while year-to-year changes identify turning points on average to periods later, and year-to-year changes on cumulative data even later.

Table 1: Quarterly GDP at constant prices


The table illustrates that looking at period-to-period changes the upturn of the economy is detected in the second quarter of 1992. Year-to-year changes, on the other hand, identifies the turn in the forth quarter of 1992, and cumulative data not before the first quarter of 1993.

Turning-points can also be easily identified by graphing discrete data.

Graph 1: Quarterly GDP at constant prices


However,a potential problem when analyzing period-to-period changes is the existence of a regular cyclical within a year pattern, a seasonal pattern.