An Experimental Index for the Business Outlook Survey: Some Preliminary Findings

The Philadelphia Fed’s Business Outlook Survey (BOS) receives considerable attention because it is viewed as both a regional and a national indicator of the manufacturing sector. The value of the survey as an important indicator is due, no doubt, to its unusual longevity (conducted monthly since 1968) and to the fact that manufacturing remains quite sensitive to shifts in overall economic activity. Several studies have shown that the survey’s indexes are useful in quantitatively estimating how the manufacturing sector is doing along a variety of dimensions. These studies have been reported in the Philadelphia Fed’s Business Review and other Research Rap Special Reports. This special report presents the preliminary results of a project in which we constructed a limited panel data set from survey responses to evaluate issues such as selecting the sample, monitoring reporting behavior, and evaluating alternative weighting schemes. Improving the survey’s usefulness by constructing experimental indexes was a byproduct of this ongoing effort to enhance the statistical sample and general utility of the survey. Those results are summarized here. The work involving the construction of an experimental index, which is not yet ready for public release, is also described.