How to Read an Economic Calendar: Actual, Forecast and Previous

The payrolls row fills in at the scheduled minute. Actual: 150,000. Forecast: 190,000. Previous: 180,000, marked as revised. Hover, and the figure it replaced appears: 210,000. Most people read the first two numbers. The market reacts to the whole row.

Why does the time zone matter?

Economic calendars default to a time zone, often one that is not yours. Set it first. A release listed at 8:30 in one zone lands at a different hour in another, and daylight saving changes on different dates in different countries, so for part of the year the gap shifts by an hour, which matters most if you trade under a daily loss limit or a close-out rule that runs on somebody else’s clock.

How do you filter the calendar?

Country and importance do most of the work. If you hold US stocks, keep US releases and a few large foreign ones. Then filter on importance. Calendars rate each release low, medium or high.

That rating is the calendar’s judgment. It is a sensible starting point and nothing more. A medium release can move one sector hard, a PMI’s new orders line for manufacturers, for instance, which is the case made in watching PMI new orders before the headline PMI.

How do you read Actual against Forecast?

Subtract. Actual minus forecast is the surprise.

The forecast is a consensus of economists’ estimates, gathered before the release. Calendars poll different groups and update at different times, so one may show 190,000 while another shows 185,000 for the same report, and neither is wrong. Small differences don’t change the reading. A 40,000 miss is a miss on any of them.

Why check the revision to Previous?

Because the market had already counted the old number. When a statistics agency revises last month’s figure, the change lands in the same minute as the new release, and together they reset how much the economy has actually done.

Seventy thousand, where the headline miss looked like forty. A trader reading only Actual against Forecast sees a modest miss. The market sees two weak months, and it prices both.

What units is the number in?

Check before you compare anything. The same release often appears on several rows. Inflation, for instance, is usually listed once as the change from the previous month and again as the change from a year earlier, and a 0.3% figure on one row and a 3.0% figure on the next can describe the same report without any contradiction between them.

Other releases come as levels, such as payrolls in thousands of jobs, or as index readings, such as a PMI where 50 separates expansion from contraction. GDP in the US is reported as an annualized rate. Most figures are seasonally adjusted. Each of those conventions is in the row name or the release itself, and the forecast is always in the same units as the actual, which is the one thing that makes the subtraction safe.

Which releases move rate expectations?

The ones that change what the central bank is likely to do. In the US that means the monthly employment report, the consumer and producer price indexes, the PCE price index, and the Federal Reserve’s own rate decisions and statements. Weekly initial jobless claims matter most when jobs are the worry. Retail sales and GDP move rates too, less reliably.

Rates matter to stocks because they set the discount on future earnings. When expected rates rise, the value of earnings far in the future falls, which is why a strong jobs number can knock growth stocks lower even as it says the economy is fine. The lesson on the economic releases that move markets goes release by release.

How should you plan around a high-importance release?

Decide before it, never during. At the release minute, prices can move several times their normal range in seconds, spreads widen, and stops fill well past their price, so any decision made in that minute gets made at some of the worst quotes of the day.

Choose your position in advance: hold at a size you can afford to gap, reduce to that size, or stay flat until the number has printed and the first move has settled. Each is reasonable for different traders. Forgetting it was payrolls day is the only bad choice. The economics hub and the course on macro weather for stock pickers cover what the numbers mean once you can read them.