How useful are QSBO performance indices? - NZIER working paper 2011/6

Performance indices are used worldwide as indicators of activity in key sectors to assist analysts and decision-makers. An advantage of these indices is that, by pooling information from the series that make up the indices, idiosyncratic variation is smoothed out, and a stable and potentially more robust indicator of direction is constructed.

Our study shows that individual sector diffusion indices from the QSBO are both good coincidental and leading indicators of economic activity.