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Monitoring the coherence between ONS and PMI data - An update
Abstract
In the last couple of years there has been strong interest in economic statistics as the UK economy recovers from its deepest post war recession. This article updates previous work examining the coherence between official economic data published by the Office for National Statistics and widely-used business survey data in the form of the Purchasing Managers Index to include this latest period.
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True values of key macroeconomic variables are unobservable and can only be estimated. A key question for the Monetary Policy Committee is how best to take account of the resultant uncertainty in its economic assessment. Official estimates of economic variables are produced by the Office for National Statistics (ONS), and some private sector organisations publish surveys of business activity that may also give clues as to the underlying state of the economy. This article presents a simple methodology for deriving 'best guesses' of the true values of economic variables by weighting together official estimates and information from business surveys.
Most macroeconomic data are uncertain - they are estimates rather than perfect measures. One symptom of that uncertainty is the propensity of statistical agencies to revise their estimates in light of new information or methodological advances. While revisions should move estimates closer to the "truth," the potential for early estimates to be revised poses challenges for forecasting and economic analysis. Over the past few years, Bank staff have undertaken a range of research into how best to deal with the ensuing uncertainty. The results of that research have been used for some time as part of the toolkit available to staff when briefing the Monetary Policy Committee. This article describes some further developments in that research effort aimed at refining the staff's toolkit.
Carlson and Parkin [Economica 42 (1975) 123] quantify qualitative survey data on expectations assuming aggregate expectations are normally distributed. Using UK survey data we find normal distributions provide as accurate expectations of inflation and output growth as any permitted non-normal alternative.
Outlines a methodology for the above, demonstrating that apparently significant divergence can often be accounted for by coverage differencesThis article outlines a methodology for monitoring the coherence between official data published by the Office for National Statistics (ONS) and business survey data in the form of Purchasing Managers' Indices (PMI). PMI data, particularly relating to the services sector, are being increasingly used by policy-makers and analysts in forming their view of current economic trends. The article demonstrates that what may sometimes appear as significant divergence between the two sources can often be accounted for by differences between their coverage and that the underlying signals in the two approaches are generally coherent. Economic & Labour Market Review (2008) 2, 23–28; doi:10.1057/elmr.2008.72
Proposes an extended quality framework for meeting commitments to monitor closely quarterly estimates and publish material on specific data setsThe Office for National Statistics (ONS) regularly monitors and publishes indicators of the quality of its statistics. However, when publishing plans for the modernisation of the National Accounts, ONS said in February 2007 that it would monitor closely the quality of quarterly estimates through 2007 and 2008. In its response to the Treasury Committee report on the ONS efficiency programme, the Government noted that ?ONS plans to publish material on the quality of specific National Accounts data sets early next year?. This article proposes an extended quality framework for meeting these two commitments. Economic & Labour Market Review (2008) 2, 24–33; doi:10.1057/elmr.2008.39
Data obtained from business and consumer surveys are often used in forecasting models and in testing different expectation formation schemes. Their use, however, requires a previous step of transformation of the qualitative data into quantitative figures. This paper contains a critical review of the different quantification methods, highlighting the limits of their use in macroeconomic modelling. Copyright Blackwell Publishing Ltd, 2003.
GDP doubts. What evidence?', HSBC Global Research Office for National Statistics Economic & Labour Market Review
- J Butler
Butler J (2005) 'GDP doubts. What evidence?', HSBC Global Research
Office for National Statistics Economic & Labour Market Review
Mar 2011