Economic indicators are statistical measures that provide insights into economic performance and future trends. These indicators include employment data, inflation measures, GDP growth, manufacturing indices, and consumer confidence surveys. Economic indicators are classified as leading (predicting future activity), lagging (confirming past trends), or coincident (reflecting current conditions).

Financial markets react strongly to economic indicator releases, especially when results significantly differ from expectations. Traders use economic calendars to anticipate market-moving releases and position accordingly. Understanding indicator relationships and historical patterns helps predict market reactions and identify trading opportunities around scheduled releases.

Real-world example: ISM Manufacturing PMI reading of 52.5 versus 50.8 expected signals stronger manufacturing growth, causing industrial stocks to rally and USD to strengthen on expectations of continued economic expansion.