Individual responses to BTS and the Forecasting of Manufactured Production

In this paper, we compare the performances of balances of opinion with those of competing dis-aggregate indicators derived from the Mitchell, Smith and Weale (MSW) methodology as concerns the one-quarter forecasting of the manufactured production growth rate. The data used are the Business Tendency Survey in Industry carried out by INSEE and the French Quarterly Accounts. The dis-aggregate indicators are derived from the entrepreneurs individual responses to the survey questions relating to either past or expected production. They are of two kinds: the parametric indicators are based on ordered discrete-choice models at the firm level (polytomic logit models); the other indicators are derived from simpler non-parametric methodology. MSWs applications to British and German data suggest that their indicators perform better than a set of three competing aggregate indicators, but they do not obtain the same result on Portuguese and Swedish data. Based on a thorough out-of-sample analysis, our application to French data leads to the conclusion that the forecast performances of the MSW are less good or, at best, equivalent to those of the balances of opinion, depending on the models used.