Business tendency surveys, part 1

1. Business statistics and registers Business tendency surveys, part 1

2. Qualitative information • Information asked in BTS is qualitative • In most business surveys respondents are asked for quantities • In BTS respondents are asked for judgments, for example ‘higher than normal’ • BTS are easier to respond to than conventional surveys

3. Information collected • BTS collect information about variables which give an overall picture of a sector of the economy • Most BTS collect information on production, order books, new orders, stocks of finished goods, exports, employment and prices • Information may also be collected for variables that are difficult to measure by conventional methods, e.g. • Capacity utilization • Production bottlenecks • Plans and expectations for the immediate future • Managers' views on the overall economic situation

4. Business cycle • The statistical series derived from BTS are particularly suitable for monitoring and forecasting business cycles • Usually the series are seasonally adjusted • Some series provide advance warning of turning points in the business cycle • Such series are known as leading indicators in cyclical analysis

5. Use of business tendency information • BTS in the past were meant for the direct benefit of the respondents • They used to be carried out by trade associations • Today, BTS are a valuable tool for economic analysis for all types of users • So-called confidence indicators derived from BTS summarize key variables in a single synthetic indicator

6. Choice of questions • Priority goes to indicators which: • Measure an early stage of production (e.g. new orders, order books) • Respond rapidly to changes in economic activity (e.g. stocks) • Measure expectations (e.g. future production plans, business climate)

7. Simplicity of questionnaires • Filling out questionnaires should take little time • Two sides of an A4 is considered the maximum • 3-5 option multiple-choice questions are used for most variables

8. Assessment of current situation • Questions about the current situation are about comparison with the ‘normal situation’ • Options can be ( ) above normal ( ) normal ( ) below normal • Questions in this form are e.g. about stock variables such as production capacity, levels of order books or inventories

9. Appreciation of past and future changes • Questions about expected changes have the form of e.g. • ( ) increase ( ) no change ( ) decrease • Questions relate to flow variables such as production, new orders, employment or selling prices • Questions normally specify the reference period, e.g. the last three months or the next six months

10. Capacity utilization • Two common BTS variables require a different form of question: • Capacity utilization • Constraints on production • Questions may be multiple choice between “more than adequate”, “adequate”, “less than adequate” • More commonly, answers are requested in percentage terms, e.g. “Present production capacity utilization rate in percent is: ( ) up to 50; ( ) 51-60; ( ) 61-70; ( ) 91-100”

11. Production restraints • Questions offer a list of possible problems • Respondents are requested to tick one or more boxes, e.g. • Demand constraints: • Insufficient domestic demand ( ) • Insufficient foreign demand ( ) • Supply constraints • Shortage of equipment ( ) • Insufficient capacity ( ) • Shortage of labor ( ) • Shortage of raw materials ( ) • Shortage of capital ( )

12. Seasonality • Many industries have seasonal patterns • Respondents should be told whether or not to take account of seasonality • Questions may start with: “Ignoring seasonal factors are stocks of finished goods ….?” • All data collected in BTS should be tested for seasonality and if necessary adjusted