Clearing the Fog

Official statistical agencies produce a number of data series that are more timely and of higher frequency than the published estimates of GDP growth. There are also numerous private-sector measures and surveys that provide a running commentary on economic developments. In this article we assess the extent to which the major economic indicators in the UK, US and euro area can be used to reduce uncertainty about the prevailing pace of economic growth. We find that, whatever timely indicators are used, uncertainty about GDP growth in the current quarter and in the recent past remains high, but that the most consistent stand-alone indicator of contemporaneous activity is industrial production. However, the low share of industry in the economic output of ‘industrialised’ economies means that sole reliance on IP as an indicator in predominantly services-based economies is unsatisfactory. We are, therefore, drawn towards the conclusion that more timely indicators of services activity – both in the form of official data and business surveys – would be helpful.