The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Sunday, January 22, 2012

Hmmm, I thought so: one of the problems with "business surveys"

Last year I commented to some of my economist buddies that I was concerned about the weighting methodology in the various business surveys (eg, NAB) during a time in which growth was very narrowly based amongst a handful of companies. In a thorough study of business surveys, Anna Park at the RBA comments:

Coverage differs across surveys: some cover just a few sectors, while others aim to cover the entire private sector, though the volatile farm and/or mining sectors are often excluded or under-represented. The surveys attempt to measure nationwide conditions, either using representative samples, or weighting firms’ responses according to their industry, with weights based on output or the number of businesses. For some sectors, notably the mining sector, this latter choice is very important; for example, matching the ABS count of Australian businesses would place a weight of less than 1 per cent on the mining sector, whereas mining accounted for around 9½ per cent of gross value added in 2010/11.