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Extracting Information from the Business Outlook Survey: A Principal-Component Approach

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This article reviews recent work that uses principal-component analysis to extract information common to indicators from the Bank of Canada’s Business Outlook Survey (BOS). The authors use correlation analysis and an out-of-sample forecasting exercise to assess and compare the information content of the principal component with that of responses to key individual survey questions on growth in real gross domestic product and in real business investment. Results suggest that summarizing the common movements among BOS indicators may provide useful information for forecasting near-term growth in business investment. For growth in real gross domestic product, however, the survey’s balance of opinion on future sales growth appears to be more informative.

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  • Lise Pichette & Lori Rennison, 2011. "Extracting Information from the Business Outlook Survey: A Principal-Component Approach," Bank of Canada Review, Bank of Canada, vol. 2011(Autumn), pages 21-28.
    • Handle: RePEc:bca:bcarev:v:2011:y:2011:i:autumn11:p:21-28
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    Cited by:

    1. Lise Pichette, 2012. "Extracting Information from the Business Outlook Survey Using Statistical Approaches," Discussion Papers 12-8, Bank of Canada.
    2. Calista Cheung & Luke Frymire & Lise Pichette, 2020. "Can the Business Outlook Survey Help Improve Estimates of the Canadian Output Gap?," Discussion Papers 2020-14, Bank of Canada.
    3. David Amirault & Naveen Rai & Laurent Martin, 2020. "A Reference Guide for the Business Outlook Survey," Discussion Papers 2020-15, Bank of Canada.
    4. Tony Chernis & Rodrigo Sekkel, 2017. "A dynamic factor model for nowcasting Canadian GDP growth," Empirical Economics, Springer, vol. 53(1), pages 217-234, August.
    5. Matthieu Verstraete & Lena Suchanek, 2017. "Understanding Monetary Policy and its Effects: Evidence from Canadian Firms Using the Business Outlook Survey," Staff Working Papers 17-24, Bank of Canada.
    6. Justin-Damien Guénette & Nicholas Labelle & Martin Leduc & Lori Rennison, 2016. "The Case of Serial Disappointment," Staff Analytical Notes 16-10, Bank of Canada.
    7. Lise Pichette & Marie-Noëlle Robitaille, 2017. "Assessing the Business Outlook Survey Indicator Using Real-Time Data," Discussion Papers 17-5, Bank of Canada.
    8. Tony Chernis & Rodrigo Sekkel, 2018. "Nowcasting Canadian Economic Activity in an Uncertain Environment," Discussion Papers 18-9, Bank of Canada.

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