Research Discussion Paper – RDP 9102 Indicators of Economic Activity: A Review


This paper reviews the performance of a selection of indicators that are in common use in analysing the business cycle. The analysis proceeds in two stages, looking first at relationships between major expenditure aggregates and GDP, and then looking at the extent to which partial indicators contain useful leading information about particular expenditure aggregates. Results on the first issue show a tendency for housing activity to lead the cycle, while construction and consumption expenditure probably lag. However, these relationships are not very reliable, in the sense that timing can vary significantly from cycle to cycle. On the second issue, the usefulness of a number of partial indicators is confirmed. The most significant in providing leading information are probably local government building approvals and the ANZ job vacancies series.

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