Markets promptly react to flash releases of economic indicators and large sums of money are lost or made based on zero-point-something percentage points of GDP growth. But, in the excitement of new economic data, it is worth remembering how data is subject to frequent and quite substantial revisions.
Notoriously, in 2010 Japan’s most watched economic indicator was drastically revised downwards, slicing off a full 3.5 percentage points from the annualised growth rate first reported for the third quarter of 2009, prompting soul searching about the quality of Japanese economic data. But revisions occur across many countries and not only after the flash releases.
An OECD database of the various edition of the monthly publication of the Main Economic Indicators (MEI) shows how widespread the issue is. Read more
By Paul Hodges
Chemical prices might not be the first forecasting indicator that springs to mind, but over the recent economic crisis benzene in particular has highlighted economic shifts well before more traditional metrics.
Benzene’s 40 million tonnes of global sales are a key raw material for a very diverse group of end-products, including polystyrene cups, nylon clothing and carpets, pesticides and dyes. Equally, as it is produced from crude oil, benzene provides a highly-sensitive barometer of consumer reactions to changing energy prices.
A key metric is its price premium to naphtha (its oil-based feedstock). The chart above shows this metric since the crisis began in (using ICIS pricing data).
• Typically, the premium has found a floor at $150/tonne
• But it collapsed during October 2008, remaining very weak until February 2009
• The depth of the downturn was also demonstrated by the premium becoming a discount
• It then staged a sharp recovery, which took it back above the $150/t level
Therefore, benzene highlighted, well ahead of other indicators, both the downturn in the wider economy and the equally sudden upturn. Its recent performance therefore merits close attention. Read more
Find out how your living standard compares.
Select the range of years that contains your date of birth and watch as the graphic draws the spread of UK household incomes for people of your generation.
The popular and oft-quoted definition of a recession is two successive quarters or more of falling output, usually referred to as the ‘technical’ definition.
It is of course not really very ‘technical’ – and surprisingly is entirely unofficial. It is an easily measurable and easily understood rule of thumb that suits headlines rather than analysis. Read more