The Predictive Ability of Business Survey Indices


  • The views expressed in this article are entirely those of the author. The author thanks Chris Lill for comments on an earlier draft.

Phillip Chindamo, Australian Industry Group, 20 Queens Road, Melbourne, VIC 3004, Australia. Email:


This article assesses the predictive ability of the survey-based business performance indices produced by the Australian Industry Group with respect to “official” Australian economic data. The index related to manufacturing sector performance is a useful predictor of official economic data for the manufacturing sector. This usefulness is both in terms of providing early information on current period economic conditions and providing information regarding future period economic conditions. The results for the services and construction sector indices are mixed, with limited evidence of Granger causality from the services sector index to the corresponding official economic data for the services sector. There is some value in the construction sector index as both a leading indicator as well as a timelier contemporary indicator of construction sector economic activity.