10 Economic Indicators Every Business Owner Should Track
Your business does not exist in a bubble. Even if you have a loyal customer base and efficient operations, external forces, such as shifts in the economy, can still change the environment where you operate. While you can’t control these forces, you can prepare for them and even use them to your advantage. By understanding key economic indicators, you can gain the foresight needed to adjust your strategies before challenges become problems or opportunities pass you by.
It can seem overwhelming to keep track of every factor that influences your business environment. The key is to focus on the most relevant indicators so you can make more informed decisions about pricing, expansion, hiring, and investments. Which economic factors deserve your attention? Start with the following:
Gross Domestic Product (GDP) Growth Rate
GDP measures the total value of goods and services produced in the country, and it’s usually reported quarterly and annually. It’s a big-picture snapshot of a country’s economic health. Strong GDP growth generally means a healthy economy with rising consumer spending, while slower growth can suggest weaker demand.
When you see GDP trending upward, it may be a good time to pursue expansion, launch new products, or enter new markets. On the other hand, when growth slows, you might focus on tightening costs or improving operational efficiency. You can track GDP data through releases from the Philippine Statistics Authority (PSA) and the Bangko Sentral ng Pilipinas (BSP).
Inflation Rate
Inflation measures the speed at which prices for goods and services are rising. It directly affects both the cost of your inputs and the purchasing power of your customers. Even moderate inflation can influence how people spend, and sudden spikes can squeeze profit margins.
If inflation is climbing, you may need to adjust pricing or renegotiate supplier contracts. It may also be an option to look for alternative materials. If inflation is stable or low, it could be an opportunity to lock long-term supplier agreements. Monthly PSA and BSP reports will help you monitor this trend.
Interest Rates
The BSP sets benchmark interest rates that influence what banks charge for loans and offer for deposits. This affects both your borrowing costs and your customers’ willingness to spend on credit.
When rates rise, financing becomes more expensive, which can slow investments or reduce consumer spending. Meanwhile, lower rates make borrowing more attractive, potentially encouraging expansion or larger purchases. Using business banking online tools, like those that come with a Maya Business account, can help you quickly compare loan options, monitor interest changes, and adjust your financing strategy. Keeping an eye on BSP policy announcements ensures you can anticipate changes and respond before they impact your bottom line.
Exchange Rates
The value of the Philippine peso against foreign currencies like the US dollar impacts import costs, export revenues, and even tourism. A weaker peso makes imports more expensive but can make your exports more competitive. Meanwhile, a stronger peso can lower import costs but potentially hurt exporters. Even if your business is local, exchange rate movements can still affect you. This is because imported goods and fuel costs influence retail prices, transportation expenses, and consumer behavior.
Unemployment Rate
The unemployment rate measures the percentage of the labor force actively looking for work. It reflects the overall state of the job market, which influences both wage expectations and consumer spending.
Why should this number matter? When unemployment is high, you may find it easier to hire skilled workers, though demand for your products may be weaker. When it’s low, you may face more competition for talent and rising wage costs. You can find the current unemployment rate on the PSA’s labor force surveys.
Consumer Confidence Index (CCI)
CCI measures how optimistic or pessimistic consumers are about the economy and their personal finances. High confidence often leads to more spending, while low confidence tends to make people save rather than spend. As such, this index can help you anticipate demand shifts before they appear in your sales figures. A rising CCI could be your cue to invest in marketing or inventory, while a drop might signal a need to offer more promotions or value-based products.
Business Confidence Index (BCI)
Meanwhile, BCI captures how businesses themselves feel about the economic outlook. BSP surveys and industry reports are the main sources for this data.
Like consumer confidence, BCI is based on surveys, but it focuses on business owners and managers. High business confidence often means more investment and hiring, which can create ripple effects across sectors. A decline in BCI could indicate a cautious environment where partnerships and credit terms become tighter.
Balance of Trade
Also called trade balance, this metric measures the difference between the value of the country’s exports and imports. A trade surplus suggests strong exports and potential currency strength, while a deficit could mean a weaker peso and higher import costs.
Understanding the balance of trade can help you plan for changes in supply chain costs or export opportunities. For example, if imports are becoming more expensive due to a widening trade deficit, you might explore sourcing locally.
Government Fiscal Position
The fiscal position, which refers to whether the government is running a budget deficit or surplus, affects taxation, spending, and economic stimulus. A deficit can increase taxes or reduce public spending, while a surplus can enable infrastructure investment or fiscal incentives. Regular reports from the Department of Finance (DOF) give insight into how government fiscal policy could influence your sector in the months ahead.
Industry-Specific Indicators
Beyond national metrics, you should track the indicators most relevant to your industry. If you’re in tourism, this might be foreign visitor arrivals. For manufacturing, it could be industrial production figures. Retailers may want to follow consumer spending trends or foot traffic reports. These industry-focused indicators often reveal market changes sooner than broader economic data.
While you can’t control the economy, you can control how prepared you are for its shifts. By tracking these economic indicators, you’re not just reacting to the market—you’re anticipating it. Understanding how GDP, inflation, interest rates, and other metrics influence both costs and customer behavior ensures that you’re better equipped to make decisions with confidence. Staying informed about these trends keeps your business resilient and agile, no matter what the broader environment brings.
