Information content of Russian services surveys

Journal of Business Cycle Research. 2020. Vol. 16. No. 1. P. 59–74.

Kitrar Liudmila, Lipkind Tamara, Ostapkovich Georgy

This paper explores the information content of a business tendency survey on the service sector in Russia from 2012 to 2018. Two alternative survey-based indices were developed: a traditional confidence indicator as a simple arithmetic mean of the balance statistics of three respondents’ replies and a business climate indicator (BCI) as the first component of five balances. The latter indicator is expected to perform better in terms of tracking a reference quantitative variable (GDP growth). The survey results reveal a six-year negative trend in two composite indicators and the other balances of the respondents’ opinions. Despite a slight improvement in 2017 and 2018, the business climate in the service sector remains unfavourable. The dynamics of confidence and business climate indicators have a lagging nature relative to GDP growth; however, BCI performs slightly better in terms of a synchronous correlation. The shock in BCI in the framework of the bivariate VAR model produces a statistically significant positive response of GDP, which reaches a peak in the second quarter after the shock. The insufficient time series of survey results limits the cyclical analysis of BCI; however, BCI can be used as a main composite indicator for analysing the development of the service sector.

Keywords: Russia, service sector, business tendency surveys, confidence indicator, business climate indicator

Publication based on the results of: Conjuncture monitoring and development of indicators of business tendencies, entrepreneurial sentiment and digital climate in Russia (2020)