Cyclical features of the ISAE business services series

The paper presents some first analysis on the ISAE Market Service Survey Series, focusing on the subset referring to Business Services (BS). The aim of the work is to identify the cyclical characteristics of BS series in order to build a confidence indicator that, in our plan, would improve the forecasts on economic fluctuations. To this end, ISAE BS series are rebuilt by merging the quarterly information collected from 1992 Q1 to 2002 Q4, with those collected on a monthly basis since January 2003. The series are analysed in order to check whether the data arising from entrepreneurs’ opinions about their current and future economic situation are subject to business cycle fluctuations. For this purpose, we compare the BS series chronology, detected using the Bry-Boschan routine, to the ISAE official chronology based on the ISAE – Bank of Italy methodology (Altissimo et al., 2000); however, since the official chronology indicates December 2000 as the last valid peak, we add some more recent turning points on the basis of the preliminary analysis recently presented by ISAE. Furthermore, we check whether the BS series are correlated with the GDP annual rate of growth and if they improve the forecast of GDP cyclical fluctuations. Thus, on the basis of the results of the analysis of both turning point synchronization and forecast properties, we appropriately selected some BS series to built alternative confidence indicators and compare them to the current ISAE Confidence Climate. Finally, our analysis indicates that the predictive capacity of the ISAE Business Services Confidence Indicator could be improved replacing assessments and forecasts on order books with those on turnover. However, being the time series short and highly variable, our results are not conclusive.