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Article

Information content of Russian services surveys

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

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.