With so many people interested in the state of the economy, Alaric Fairbanks this week takes a look at some of the more unusual indicators which may tell us whether prospects are looking up.
Even – perhaps especially – here in Beijing, as elsewhere, not a day goes by without mention of the economy and how quickly it will recover or not. Supplementary to this are the business confidence or climate surveys and their subsequent reports of optimism and pessimism.
These are all very well, and may be a good source of column inches or publicity for a research company. This is all OK with me but, even if reflective of whatever business community or industry sector’s level of confidence, it is perhaps worth thinking about which sources of information are behind, say, agreement with a statement expecting an increase in profit, revenue, headcount, etc.
From examples I have seen, including, I confess, a climate survey we conducted, there is little attention paid to the sources of information upon which these feelings are based. When it does appear, it is usually a choice of ‘respectable’ sources, such as newspapers, journals, or official statistics. Less expected or rational influences are often overlooked and, even if included in the question set, a respondent may not admit to having been influenced by an alternative or informal source.
Of course, it would be great for our business if businesspeople took tailored market research as their main source of guidance for decisions and even opinions, but as this is not always the case, I was curious as to what observations people were making to inform their levels of confidence.
To this end we spoke informally to contacts in the Western business community about any indicators used to reflect on their business prospects. A common theme emerged around indicators being derived from the physical environment, especially through observation. A simple example of an informal indicator was counting or estimating the number of new building sites passed on the way to work – the more new sites, the stronger the economic prospects.
These conversations suggested that observations were aimed at levels of activity. They tended be a mixture of fairly Beijing-specific and the more general. Observed indicators from work and life in Beijing with a perceived positive correlation included:
- The number of properties marked with the character “chai”, indicating ready for demolition.
- Visibility of yellow construction helmets seen at lunchtime
- Levels of air pollution, sometimes with reference to the official air pollution index
- Time taken to get to work
And with a perceived negative correlation:
- Number of unsolicited job applications
- Number of cold visits by salespeople
- Ease of purchasing train tickets.
Interestingly, although not all of these are anecdotally based, they all appear to have some underlying rationale. It would be interesting, at least to me, to look into how effective these indicators really are… but things are fairly hectic here at the moment, what with projects, proposals, etc – another way of showing how things are going right now!