RE: Consoomer sediment

["Devine, James" <jdevine@xxxxxxx>]

below is a readable version:

 Surveys not accurate predictors of future: RBA
http://www.smh.com.au/news/0201/18/biztech/biztech9.html

 Business and consumer sentiment surveys are limited in what they could
convey about the future path of the economy, Reserve Bank of Australia
researchers have warned.

 RBA researchers Ivan Roberts and John Simon said indices of business and
consumer sentiment received widespread media coverage and were closely
watched by market economists despite their limited success as leading
indicators.

 "There is reason to suspect that surveyed respondents' forecasts offer
little more information about the future path of the economy than a weighted
average of lagged economic variables," the researchers said in a paper
published on the bank's Web site.

 Mr Roberts and Mr Simon found that lagged economic indicators (such as
changes in gross domestic product, job vacancies and the cash rate) could
explain a substantial proportion of the variation in a number of backward
and forward-looking sentiment indices.

 "This does not rule out the possibility that they may be useful for
forecasting," they said. However, the researchers found that when current
economic information was filtered from the sentiment indices, in most cases
their predictive ability was minimal.

 Mr Roberts and Mr Simon said a small contribution to forecasting employment
growth came from surveys such as the Roy Morgan consumer confidence rating,
the National Australia Bank's actual business conditions index and expected
employment outlook over the next three months, and the "second question" in
the Roy Morgan and Westpac/Melbourne Institute consumer surveys. The "second
question" in these surveys asks about anticipated personal financial
conditions over the coming year.

 "The second question of both consumer confidence surveys also appears to
have some ability to predict recessions," the researchers said. "Outside of
these results there is little evidence that the surveys tell us anything we
didn't already know."

Jim Devine