Understanding the various classifications of indicators is essential for interpreting financial and economic data effectively. Indicators can be grouped based on their timing relative to economic or market events, their methodological approach, and the type of information they provide. Below, we outline the primary categories: leading, coincident, lagging, sentiment, technical, monetary, and fiscal indicators.

Leading Indicators

What is a leading indicator?

A leading indicator is a measurable data point or statistic that tends to change before the broader economy or financial markets move in a particular direction. These indicators are used to forecast future trends and potential turning points in the business cycle, making them valuable for investors, policymakers, and analysts1 2 3. Alternative names include “predictive indicators.”

Examples

  • Stock market indices (e.g., S\&P 500)
  • Manufacturing orders (e.g., Purchasing Managers’ Index)
  • Building permits
  • Consumer confidence indices
  • Yield curve (difference between long-term and short-term interest rates)3

Coincident Indicators

What is a coincident indicator?

A coincident indicator is a metric that reflects the current state of economic activity, moving in tandem with the overall economy. These indicators provide a real-time snapshot of economic conditions, helping analysts and policymakers assess the present situation4 5 6. They are sometimes referred to as “concurrent indicators.”

Examples

  • Employment levels
  • Gross Domestic Product (GDP)
  • Personal income
  • Industrial production
  • Retail sales5 6

Lagging Indicators

What is a lagging indicator?

A lagging indicator is a measurable factor that changes after the economy or financial markets have already begun to follow a particular trend. Lagging indicators are primarily used to confirm long-term trends and changes, rather than to predict them6 7 8. They may also be called “confirmatory indicators.”

Examples

  • Unemployment rate
  • Inflation rate (Consumer Price Index)
  • Corporate profits
  • Labor cost per unit of output
  • Monthly or annual recurring revenue (MRR/ARR) in business contexts6 7 8

Sentiment Indicators

What is a sentiment indicator?

Sentiment indicators gauge the emotions, expectations, and confidence levels of market participants, such as investors and traders. These indicators help assess prevailing moods—optimism, pessimism, fear, or greed—and can signal potential market turning points9 10. They are sometimes called “market mood indicators.”

Examples

  • CBOE Volatility Index (VIX)
  • CNN Fear and Greed Index
  • AAII Investor Sentiment Survey
  • Put/Call Ratio
  • Social media or news sentiment analysis10

Technical Indicators

What is a technical indicator?

A technical indicator is a mathematical calculation based on historical price, volume, or open interest data. Technical indicators are used in chart analysis to identify trends, momentum, volatility, and market strength, supporting trading decisions11 12. They are also known as “chart indicators” or “market indicators.”

Examples

  • Moving Averages (trend-following)
  • Relative Strength Index (RSI, momentum oscillator)
  • MACD (trend and momentum)
  • Bollinger Bands (volatility)
  • On-Balance Volume (volume)11 12

Monetary Indicators

What is a monetary indicator?

Monetary indicators are statistics that reflect the effects of monetary policy and credit market conditions. They are used to gauge the stance and impact of central bank actions on the economy13. Alternative terms include “money market indicators.”

Examples

  • Central bank interest rates (e.g., Federal Funds Rate)
  • Money supply measures (M1, M2)
  • Credit market conditions
  • Treasury bill rates
  • Interbank lending rates13

Fiscal Indicators

What is a fiscal indicator?

Fiscal indicators measure the stance and effectiveness of government fiscal policy, including budgetary and tax policies. They are crucial for monitoring and coordinating public finances and budgetary health at both national and supranational levels14.

Examples

  • Government budget deficit or surplus
  • Public debt-to-GDP ratio
  • Tax revenue as a percentage of GDP
  • Government expenditure levels14

  1. https://www.investopedia.com/terms/l/leadingindicator.asp

  2. https://ec.europa.eu/eurostat/statistics-explained/index.php/Glossary:Leading_indicator

  3. https://www.babypips.com/forexpedia/leading-economic-indicators

  4. https://www.blueskyadvisors.net/blog/58279-coincident-indicators

  5. https://www.superfastcpa.com/what-is-a-coincident-indicator/

  6. https://www.trading212.com/learn/investing-101/economic-indicators

  7. https://www.investopedia.com/terms/l/laggingindicator.asp

  8. https://amplitude.com/blog/leading-lagging-indicators

  9. https://www.ebc.com/forex/what-are-market-sentiment-indicators

  10. https://www.uptrends.ai/article/top-10-market-sentiment-indicators-for-investors

  11. https://www.fxpro.com/help-section/traders-glossary/technical-indicator

  12. https://www.investopedia.com/top-7-technical-analysis-tools-4773275

  13. https://www.allbusiness.com/dictionary-monetary-indicators-4951366-1.html

  14. https://ec.europa.eu/economy_finance/publications/pages/publication11373_en.pdf