The Eurozone is awash with data, both from each member country and the Eurozone central office. So which ones are likely to affect our trading? (Check out my other pieces on U.K. economic data and U.S. indicators.)

Whether it’s reacting to a geopolitical conflict, voting on Eurovision, or producing economic statistics the story’s the same; it just isn’t practical to co-ordinate a sensible, timely response from so many countries. Some data merely confirm earlier releases by individual countries whilst other releases are undermined by their erratic nature.

This is probably why more attention is paid to the forward looking surveys. This article will take a look at the key historic data releases, and in the next we’ll check out the more relevant sentiment and predictive indicators.

Most key Eurozone numbers are compiled by Eurostat after receiving numbers from the national statistics offices of member countries. However, a few come from the European Central Bank.

Inflation
Consumer Price Inflation (CPI) is to Europe what the Non-Farm Payrolls number is to the US. This dates back to the days of the Weimar Republic when Germans carried their cash around in wheelbarrows rather than wallets.

In contrast to the US and UK central banks, the ECB’s primary objective is to maintain price stability, defined as below, but close to, 2% over the longer term. No consideration is given to growth or the level of employment; it’s solely the CPI that determines interest rate policy and is therefore the key Eurozone release.

As is often the case there are several inflation numbers, but the key release is the Monetary Union Index of Consumer Prices (MUICP). Don’t waste time looking for it under that name though; it’s commonly known as the Eurozone HICP (Harmonized Index of Consumer Prices). This is the weighted average of the HICPs calculated by the individual member countries. It isn’t seasonally adjusted, but is subject to occasional revisions.

As the name implies the measures are harmonised across the Eurozone, but aren’t identical; they’re meant to be representative of each country’s household expenditure, so France’s basket might have more wine and cheese and less ladyshaves, whilst Holland might have a special weighting for drugs, but no category for climbing equipment.

Inflation is such a big deal that Eurostat even releases an advance (Flash estimate) as a sort of early taster. This estimate is calculated by applying regression analysis to country data available at the month end, chucking in some energy numbers for good measure. The Flash estimate tends to predict the final number to within 0.1% and is released around 18 days earlier.

Money Supply
This used to be the daddy of European numbers before Germany’s powerful Bundesbank had its power diluted by European Union. “Control the money supply and you’ll control inflation,” used to be the cry.

The key measure of money supply is M3, which is the broad measure comprising all money in circulation, deposits, repurchase agreements and money market funds. However, as with the UK’s M4 measure, the inclusion of repo-agreements and other transactions by financial institutions clouded the picture and took away some of the data’s significance. This data is published by the European Central Bank.

Unemployment
Eurostat produces harmonised unemployment rates for individual EU member states and the EU. These are based on the International Labour Organisation (ILO) recommended definition and use the results of the European Union Labour Force Survey (LFS). Unemployment rates represent the unemployed as a percentage of the labour force.

This statistic, perhaps more than any other, illustrates the difficulties of compiling something sensible from so many differing sources. There’s a whole job centre of structural differences ranging from Spain’s 18% unemployment to French workers being more protected than the white rhino. Variable flexible working patterns and huge differences in female, long-term and youth employment make for a slightly meaningless compromise figure.

So if in doubt revert to Germany, the industrial centre of Europe with a hard work ethic. The German change in unemployment is released with its seasonally adjusted unemployment rate. The numbers are worth watching but unlikely to shake the market.

Gross Domestic Product (GDP)
GDP measures the sum of all goods and services produced within the economy (except Italy where only the small legitimate part is included). This number is taken quarterly, but requires three monthly stabs to try and get a right answer so unless the number is a real shocker it’s often too historic to be much use.

There are three ways of getting to a GDP number:

1. Expenditure – this is the most common and measures private and government consumption, investment, the change in inventories and the balance of import/exports.
2. Output – this attempts to measure the ‘added value’ output of firms (ie sales –raw material costs) across industrial, agricultural, transport, construction and finance sectors.
3. Income – this measures employment income, company profits/ losses, and taxes-subsidies.

Retail Sales
This sector covers retail trade as well as the repair of personal and household goods. The biggest weighting by far goes to food, drinks and tobacco, with household goods, books & newspapers, and clothing & footwear a long way behind.

The index measures volume (stripping out inflation) and is adjusted for working days and the time of year. All this means is that it’s a highly volatile series where analysts rely more on the 3-month average rate to get a smoother picture.

Industrial Production
More specifically, German industrial production is the number to follow. It accounts for around a third of German GDP and the same proportion of Eurozone industrial output. France and Italy weigh in with around 18% apiece, depending on the weather (whether they can be bothered).

Industrial production covers the manufacture of food and other products, mining and quarrying, and utilities, but not construction. Demonstrating true German efficiency the initial monthly data reflects approximately 77% of industrial production. Subsequent revisions take this figure up to 80%.

In the next article I’ll bring you the numbers that do get traders rushing back from Starbucks; the top predictive and confidence numbers across the Eurozone that do move markets.