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Extracting Information from the Business Outlook Survey Using Statistical Approaches


  • Lise Pichette


Since the autumn of 1997, the regional offices of the Bank of Canada have conducted quarterly consultations with businesses across Canada. These consultations, summarized in the Business Outlook Survey (BOS), are structured around a survey questionnaire that covers topics of importance to the Bank, notably business activity, pressures on production capacity, prices and inflation, and credit conditions. The author aims to enhance our understanding of the survey’s information content by extending the early work of Martin and Papile (2004) in two key ways. First, since all BOS questions are designed to capture some aspect of economic activity and are therefore interrelated, various approaches were considered to extract the common underlying variations among the indicators: a subjective approach (a simple average), principal-component analysis and factor analysis. Second, the information content of these common movements is assessed, using regression analysis and a forecasting assessment. The results suggest that all approaches to extract the information from the BOS provide very similar measures of underlying common variations. This underlying variable appears to be a useful indicator of economic activity, particularly for providing information on investment spending. However, the balance of opinion on future sales growth remains a better indicator than any measures of common movements for the growth of real GDP.

Suggested Citation

  • Lise Pichette, 2012. "Extracting Information from the Business Outlook Survey Using Statistical Approaches," Discussion Papers 12-8, Bank of Canada.
  • Handle: RePEc:bca:bocadp:12-8

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    References listed on IDEAS

    1. Paul Jenkins & David Longworth, 2002. "Monetary Policy and Uncertainty," Bank of Canada Review, Bank of Canada, vol. 2002(Summer), pages 3-10.
    2. Bruno, Giancarlo & Malgarini, Marco, 2002. "An Indicator of Economic Sentiment for the Italian Economy," MPRA Paper 42331, University Library of Munich, Germany.
    3. Hansson, Jesper & Jansson, Per & Löf, Mårten, 2003. "Business Survey Data: Do They Help in Forecasting the Macro Economy?," Working Papers 84, National Institute of Economic Research.
    4. Lise Pichette & Lori Rennison, 2011. "Extracting Information from the Business Outlook Survey: A Principal-Component Approach," Bank of Canada Review, Bank of Canada, vol. 2011(Autumn), pages 21-28.
    5. Mark W. Watson & James H. Stock, 2004. "Combination forecasts of output growth in a seven-country data set," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 23(6), pages 405-430.
    6. Graeme Chamberlin, 2007. "Forcasting GDP using external data sources," Economic & Labour Market Review, Palgrave Macmillan;Office for National Statistics, vol. 1(8), pages 18-23, August.
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    Cited by:

    1. Kevin Moran & Simplice Aime Nono, 2016. "Using Confidence Data to Forecast the Canadian Business Cycle," Cahiers de recherche 1606, Centre de recherche sur les risques, les enjeux économiques, et les politiques publiques.
    2. repec:ukb:journl:y:2016:i:235:p:43-56 is not listed on IDEAS
    3. Matthieu Verstraete & Lena Suchanek, 2017. "Understanding Monetary Policy and its Effects: Evidence from Canadian Firms Using the Business Outlook Survey," Staff Working Papers 17-24, Bank of Canada.

    More about this item


    Business fluctuations and cycles; Regional economic developments;

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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