Business Expectations Survey

[Lore Dosher]

TheBusiness Trends and Outlook Survey (BTOS) provides insight into the state of the economy by providing timely data for key economic measures and business expectations about future conditions. By providing detailed geographic and subsector data, BTOS provides local, state, and federal officials near real-time data for policy and decision-making including after natural disasters or during economic crises. The BTOS provides insight into recovery after these events.

The BTOS sample consists of approximately 1.2 million businesses split into six panels (approximately 200,000 cases per panel). Businesses in each panel will be asked to report once every 12 weeks for a year. Data collection will occur every two weeks. The BTOS is comprised of a set of core questions and supplemental content, which is included as needed.

For the data period from July 2022 to September 2023, BTOS data are representative of all single location employer businesses in the U.S. economy, excluding farms. For data released after September 2023, the BTOS sample includes all employer businesses (single location and multi-location) in the U.S., excluding farms. Data are released every two weeks and are available by 2017 North American Industry Classification System (NAICS) sector, by state and for the 25 most populous Metropolitan Statistical Areas. Data are also available by subsector (three-digit NAICS) and state by sector. Data released after September 2023 are also available by additional employment size classes.

Our monthly Business Inflation Expectations (BIE) Survey goes to about 640 panel members (as of June 2023), who occupy executive and managerial positions at 6th district's firms. We contact panel members each month by email, and they respond via a web-based instrument.

Survey questions pertain to current, past, and future outcomes at the respondent's firm. Our primary objective is to elicit the respondent's subjective forecast distributions over own-firm future unit-cost growth. We gather qualitative information on firms' sales levels and margins on a monthly basis. We include a set of rotating quarterly questions covering firms' longer-run probabilistic unit-cost expectations, quantitative sales gaps, and factors influencing pricing. Our survey also includes space of special questions on timely, policy-relevant topics.

The survey period runs from Monday to Friday, typically at midmonth. Survey release dates are scheduled for the following Wednesday, except in cases where the release would conflict with the Federal Open Market Committee (FOMC) blackout period, which begins at midnight ET the second Saturday before meetings of the FOMC and lasts until midnight ET the day after a meeting ends. In such cases, the release is changed to respect the FOMC's communications guidelines.

To make sound policy decisions in a shifting landscape, our policymakers look to business leaders to learn more about their expectations, the challenges they face, and their overall view of economy. Now more than ever, input from business decision-makers will be key to our understanding of the path forward. We hope you will consider lending your voice to this important work.

The Directorate General for Economic and Financial Affairs of the European Commission conducts regular harmonised surveys for different sectors of the economies in the European Union (EU) and in the applicant countries. They are addressed to representatives of the industry (manufacturing), services, retail trade and construction sectors, as well as to consumers. These surveys allow comparisons among different countries' business cycles and have become an indispensable tool for monitoring the evolution of the EU and the euro area economies, as well as monitoring developments in the applicant countries.

NAME OF ORGANISATION

Australian Bureau of Statistics (ABS)

OVERVIEW

The Business Expectations Survey (BES) is a quarterly survey which provides data on the expectations of businesses in both the short (next three months) and medium terms (the current quarter of the following year) for a range of indicators (operating income, selling prices, profit, capital expenditure, stocks, employment, wage and salary expenses, other 'labour' expenses and other expenses). The BES samples at the MU level for businesses in all industries except agriculture, forestry and fishing; general government; and private households. Expectations are provided by respondents as percentage changes between a constant period and two future periods. Expectations are published at an aggregate level as weighted net balances or expected aggregate changes, with the expected aggregate change being the preferred expectations measure. These data are classified by industry, business size and State or Territory.

PURPOSE

The purpose of the survey is to:provide more accurate and reliable statistical information to forecast future Australian business activity than the information currently available from other sources (private sector surveys provide qualitative indicators - net balances - while the BES provides a quantitative indicator - expected aggregate change) andensure the objectivity, relevance and timeliness of these statistics.

SCOPE

The scope of the BES survey is all business units in the Australian economy except for :

Management units belonging to the following ANZSIC divisions/subdivisions;Division A Agriculture, Forestry and Fishing Division M Government Administration and Defence Subdivision 97 Private Households Employing StaffNon-employing businesses in all other industries, i.e. businesses which have not registered as group employers with the ATO (Australian Taxation Office); andBusinesses classified to the General Government sector. Note: government-owned Public Trading Enterprises are included.

DATA DETAILConceptual framework

Economic forecasting relies on information from a range of sources about trends in the economy and its component sectors. The measure of business expectations is a leading economic indicator and an important source of such information. Business expectation surveys have increasingly been accepted in Australia as providing a guide to likely developments as perceived by business decision-makers, perceptions which can become self-fulfilling because of the powerful role of expectations in shaping economic behaviour. In 1992, the Government funded the ABS to develop a comprehensive and statistically sound survey which would be able to deliver a quantitative measure of expected economic activity for a range of business performance indicators.Main outputs

The results from the BES are published every quarter in Australian Business Expectations (ABS Cat No 5250.0)

The BES is the largest and most comprehensive survey of its type conducted in Australia and is the only survey which provides both a qualitative indicator of business confidence (a weighted net balance) and a quantitative measure of expected change (a weighted aggregate) for a range of business performance indicators.

The BES publication gives detailed information by size of business, industry and state, for the short term (the next quarter) and the medium term (current quarter next year).

The survey outputs expected aggregate changes (expressed as a percentage) in a range of economic indicator items for two periods of time in the future. The items collected include operating income, selling prices, total wage and salary expenses, other labour expenses, all other expenses, stocks, profit, employment and capital expenditure. Data is collected for the following quarter and the current quarter of the following year. Accuracy of the results is aimed at the lowest possible variance based on a sample size of approximately 3500 units. Results of each quarters survey are released prior to the commencement of the reference quarter.Classifications

BES data is presented by three main classifications: ANZSIC, business size and State.

ANZSIC

The BES publication (see above) presents statistics classified according to the Australian and New Zealand Standard Industrial Classification (ANZSIC) (Cat No 1292.0). Each statistical unit selected in the survey is classified to a single industry. The industry allocated is based on an estimate of the primary income earning activity of the management unit irrespective of whether a range of activities or a single activity is undertaken by the unit. Data from BES can generally be provided for ANZSIC Division and subdivision.

BES collects data from employing businesses in all industries and sectors of the Australian economy exceptagriculture, forestry and fishing; general government; andprivate households

Business Size

Data is classified by three business sizes:Small (less than 20 employees, except for manufacturers where it is less than 100);Medium (20 to 99 employees, except for manufacturers where it is 100 to 599 employees);Large (100 or more employees, except for manufacturers where it is 600 or more employees).

State

Statistics are published for each State of Australia, other than the Northern Territory and ACT, and for Australia as a whole. For large and many medium-sized businesses the State of selection reflects the head office of the Australian-wide unit, and therefore to obtain State expectations data a synthetic estimation process is used in which sales expectations for each State/Territory are estimated by applying the proportion of a business' economic activity contributed by each State to the benchmark and attributing the same, i.e. Australian-level sales expectation, to each State in which the business operates. To facilitate this process selected businesses are required to provide the percentage of total business activity in each State or Territory.State data is subject to a greater degree of variance than the Australian data.

Other concepts (summary)

Glossary of terms used in Australian Business Expectations:

Capital expenditure The expected change in the value of capital expenditure in new tangible assets.

Inventories The expected change in the book value of inventories between the end of the collection quarter and the end of the reference periods.

Non-wage labour expenses The expected change in the total amount of employment related expenses not paid directly to employees.

Examples of these expenses include payroll tax, worker's compensation and superannuation.

Operating income The expected change in operating income derived from the sale of goods or the provision of services by a business in terms of value.

Financial institutions report on the expected change in gross interest income plus fees and commissions.

Non-profit or charitable organisations report on the expected change in fees received for services, donations from the public and government grants and subsidies.

Other operating expenses The expected change in the total amount of all expenses which are not classified as labour expenses.

Examples of these expenses include overheads, advertising, raw materials and packaging and handling.

Paid persons working The expected change in the number of paid persons working. Where part time or casual employees are involved employers are requested to convert to a full-time equivalent. It should be noted that most other ABS series which provide data on paid persons working do not use a full-time equivalent measure.

Profit Profit is a derived item based on the present trading performance of a business and the expected changes to the level of sales of goods and services and the sum of all expense items.

The difference between the new benchmarks for the sales of goods and services and the sum of all expenses items (the sum of total wage expense, non-wage labour expense and all other operating expenses) as determined by the responses received, the Economic Activity Survey benchmarks for those items and an indicator of present trading performance (cost/income ratio) are used to determine the expected change for profit for the reference periods.

Because of reporting difficulties experienced with the cost/income ratios, caution should be exercised in interpreting profit expectations.

Reference PeriodsThere are two reference periods surveyed each quarter:Short term (eg if the current quarter is the March quarter 2000, then the quarter being surveyed is the June quarter 2000); andMedium term (eg if the current quarter is the March quarter 2000, then the quarter being surveyed is the March quarter 2001).

Selling prices The expected change in the unit price of goods sold or services provided by the business. Where a business sells a range of products or services a representative product or service is used.

Financial institutions should report on interest rates, services and commissions charged.

Businesses providing services should report on contract rates, hourly rates or ticket prices.

Community organisations should report on rates or fees levied.

The benchmark for weighting the selling prices response is derived from associating selling prices with total expenses.

(Please note that on the actual form data is collected for the item Price of goods sold and/or services provided).

State Information State information has been derived for businesses in the survey which operate in more than one State. This has been achieved by:applying a weight (the proportion of a business' economic activity undertaken in each State) to the benchmarks for that business to arrive at potentially eight different benchmarks for each business performance indicator; andapplying the overall percentage change in the business performance indicators obtained from the survey to each of the State benchmarks for each business performance indicator.

Total operating expenses This is a derived estimate from the weighted response for the total of wage, non-wage labour and all other expenses.

Total wage expenses The expected change in the total amount of direct wage and salaries paid to employees.

GEOGRAPHIC DETAIL

Australia

New South Wales

Victoria

Queensland

South Australia

Western Australia

Tasmania

Northern Territory

ACTComments and/or Other Regions

Most data is published at the Australian total level. Some data is published at a State level.

COLLECTION FREQUENCY

QuarterlyFrequency comments

The collection provides both short and medium term business expectations. The short term expectation compares the current quarter with the following quarter, while the medium term expectation compares the current quarter with the corresponding quarter of the following year.

For example, if the current quarter is the Quarter ending December 2002, then the short term expectation measures the expected change between the three months ending 31 December 2002 and the three months ending 31 March 2003. The medium term expectation measures the change between the three months ending 31 December 2002 and the three months ending 31 December 2003.

COLLECTION HISTORY

11/1991 At an ASAC meeting, representatives of Treasury highlighted a demand for expectations data to Mr McLennan in discussions. A week later, Treasury wrote to the ABS proposing an investigation into the feasibility of the ABS conducting a business expectations survey that is more 'statistically sound' than the private expectations surveys available at the time.

8/1992 The funding of a survey of the expectations of Australian businesses was announced in the 1992-93 Federal Budget.

2/1993-3/1993 Pilot study of approx. 350 businesses was conducted.

5/1993-7/1993 Second pilot study (full dress-rehearsal) was conducted.

8/1993-9/1993 First official BES conducted in respect of the December quarter 1993 - September quarter 1994.

25/11/1993 Results of the first BES released as experimental estimates.

1995 BES nominated for evaluation under the Treasury Portfolio Evaluation Plan.

9/1996 Evaluation Final Report completed.

9/1996 Paper on BES presented by Alan Mackay at the Conference of Economists.

10-11/1996 95 businesses visited to discuss BES incorporating a PES.

1997 New form design incorporating current quarter data tested and accepted by providers.

8/1998 A pilot test was conducted in which a question on Current Quarter Expectations was included on the usual BES form. This was a mail-based pilot test of around 500 businesses, with information on current quarter expectations being asked for the 3 months ending 30/9/98.

2/1999 The proposal to collect current quarter expectations data was rejected.

7/2000 PES conducted involving 175 businesses.

9/2001 BES PES re Evaluation of changes resulting from 2000 PES.

3/2002 BES PES on Profit question on BES form.

12/2002 The Collection conducted during October and November 2002 and released in December 2002 (March quarter 2003 and December quarter 2003 expectations) will be the final quarter that BES will be conducted after a decision to discontinue the survey. This decision was made after a review of forward work program priorities for Economic Statistics.

DATA AVAILABILITY

YesData availability comments

Data is currently published each quarter in Australian Business Expectations - ABS Catalogue No 5250.0. The amount of data collected from the Survey of Business Expectations is much greater than the data contained in the publication. Subject to the ABS provisions for maintaining the confidentiality of respondents and the information they provide, more detailed information by industry and size of business may be made available on request as a special data service.

DATE OF LAST UPDATE FOR THIS DOCUMENT

13/04/2003 12:18 PM

Document Selection

3a8082e126