DOLLAR INDEXDepartments Responsible for Each Economic Report
Indicator Responsible Department/Source
Average Hourly Earnings m/m U.S. Bureau of Labor Statistics (BLS), part of the Department of Labor
Non-Farm Employment Change BLS (Establishment Survey)
Unemployment Rate BLS (Household Survey)
Final Manufacturing PMI S&P Global/Markit (private company)
ISM Manufacturing PMI Institute for Supply Management (ISM, private sector)
ISM Manufacturing Prices Institute for Supply Management (ISM)
Revised University of Michigan (UoM) Consumer Sentiment University of Michigan (private/public university)
Construction Spending m/m U.S. Census Bureau, Department of Commerce
Revised UoM Inflation Expectations University of Michigan
How the Federal Reserve Interprets “Greater Than” or “Lower Than” Forecast
1. Average Hourly Earnings,
2.Non-Farm Payrolls,
3. Unemployment Rate
Higher than forecast (stronger labor market):
Tight labor markets (higher wages, more jobs, lower unemployment) suggest inflationary pressure.
The Fed may view this as a signal to keep rates higher for longer, as wage and job growth could fuel inflation.
Lower than forecast (weaker labor market):
Signals cooling in employment and wage growth, reducing upward pressure on inflation.
The Fed may see this as justification to consider easing policy or at least pausing further rate hikes.
2. Manufacturing PMIs (ISM, S&P)
Above 50: Signals expansion in manufacturing; below 50 indicates contraction.
Higher than forecast: Points to stronger economic momentum; the Fed may see upside risks to inflation.
Lower than forecast: Indicates weaker manufacturing activity; a possible sign of slowing demand, which could support rate cuts or dovish policy if persistent.
3. ISM Manufacturing Prices
Higher than forecast: Suggests inflationary pressures in manufacturing input costs; Fed interprets this as a reason for vigilance on inflation.
Lower than forecast: Implies easing input price pressures, supporting a dovish outlook if inflation remains subdued.
4. University of Michigan Consumer Sentiment & Inflation Expectations
Stronger than forecast sentiment: Consumers are more optimistic, often a sign of solid spending potential. May amplify inflation if this leads to greater demand.
Higher inflation expectations: If consumers expect higher future inflation, this can become self-fulfilling and the Fed may maintain tighter policy.
Weaker sentiment/lower inflation expectations: Reduces inflation risk, gives the Fed more flexibility to ease if needed.
5. Construction Spending
Higher than forecast: Indicates resilient investment and demand in the real economy.
Lower than forecast: Suggests cooling real estate and infrastructure spending; may support a dovish Fed outlook if sustained.
Summary Table
Data Surprises Interpretation for Fed Policy
Higher-than-forecast More hawkish; raises risk of persistent inflation
Lower-than-forecast More dovish; reduces pressure to hold rates higher
The Fed looks at the overall pattern across these data. Persistent upside surprises heighten concerns about inflation, supporting tighter policy. Downside surprises suggest cooling economic momentum and may encourage future rate cuts or pauses. The relative impact depends on which indicators surprise and the broader economic context.
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