Country indices that determine the business climate or evaluate business activity are empirical indicators based on direct surveys of senior personnel from representatives of all sectors of the economy to obtain a picture of future expectations based on this assessment of economic trends.

Calculations and compilation of indicators are usually carried out by non-profit organizations or research institutes.

In addition to the subjective moods of management, these indicators take into account real changes in the volume of output, the expansion or collapse of the size of the business, the dynamics of growth or increase in wages, orders for products or services from customers.

TANKAN Economic forecast-Japan business Climate Index

TANKAN is a system for assessing the state of the economy based on surveys of 8000 managers of large enterprises in Japan The central Bank of the country (Bank of Japan-BoJ).

The BoJ approximates the answers received to 7 questions asked: assessment of business conditions; the level of production and sales volumes relative to the base, previous period; assessment of the current market situation – supply and demand, profit; how much investment was attracted and invested; employment; assessment of the state's fiscal policy.

TANKAN originated in 1951 as a short-term forecast of the economy, an abbreviation of this phrase formed the basis of the index's name. At the initial stage, the Bank of Japan borrowed the methodology for determining the business climate from the Research Institute of the Federal Republic of Germany( IFO), significantly redesigning the algorithm in 1957.

The time of the TANKAN release is the beginning of each quarter at 2-00 Moscow time, the assessment of the country's business climate is divided into a production and non-production index. The data are interpreted as leading, allowing to predict the growth or fall of the level of production and producer prices, possible numbers of orders of industrial enterprises, to assume the level of demand for workers.

The indicators on TANKAN as a whole are poorly reflected in the foreign exchange market due to the peculiarities of the exit time-on Asian session traditionally there is low activity of traders. They are calculated in negative and positive values. The increase or fall of the indicator predicts the subsequent export activity well – values above zero indicate growth, below it indicates a fall.

German Business Sentiment Index (IFO)

The indicator of the German business mood is a diffusion calculation based on surveys of supply managers of 7000 enterprises with questions related to the semi-annual and current economic prospects. The obtained data are compiled and compared with reports of real indicators of enterprises by employment, inventory volume, orders, capital investments, and salary level. Statistics publishes a "geometric average" indicator between the real, current state of the economy and expectations.

The beginning of the methodology for calculating business sentiment was laid in 1949, when NAPA-the national association of purchasing agents of the United States began expansion into Europe, in the wake of the implementation of the Marshall Plan. This program of post-war reconstruction of Europe used many American indicators to assess its effectiveness.

The Munich Research Institute, which is carrying out the adaptation of the calculation, used the acronym "Information und Vorschung" - information and research for the name of the index.

In the short term, the indicator's readings affect the EUR exchange rate when it differs from the predicted values, strengthening the European currency when it exceeds it, causing a fall in the exchange rate when it decreases. Investors use IFO as a leading indicator as an additional filter for holding a position or making a decision on partial profit-taking.

Today, the IFO Institute evaluates the manufacturing and non-manufacturing sector, examining national enterprises of any size in order to reliably identify macroeconomic trends and current expectations. Indicators are published in economic calendar with the prefix IFO and define:

euro and Swiss franc, while a three-digit number leads to purchases of European and Swiss currencies. The data is published in the middle of each new month.

  • IFO SME is an index that determines the mood of medium and small businesses.

In the XXI century, the Munich Research Institute transferred the methodology for calculating the IFO business climate to the EU countries and the world economy. Such publications are of some interest, but they are not used much in trading on the foreign exchange market Forex.

ZEW Indicator of Economic Sentiment

This is a balance indicator of negative and positive views of the financial circles of Germany, compiled according to the questionnaires of the ZEW Institute.

Zentrum fur Eigorische Wirtschaftsforshung has been questioning financiers since 1990. The sample contains data on the views of 350 analysts of the national banking sector, which is not covered by the IFO reviews.

The respondents ' answers reflect their views on inflation, monetary policy, stock indices, oil prices, and predict the profits of multinational companies in the format of the Big Seven economies. The ZEW index is compiled based on 9 responses by the diffusion method (better/worse-addition/subtraction).

The index is released monthly, Forex traders trading the euro and the Swiss franc take it into account as an early forecast of positive economic trends, investors pay attention to trends – several values of the same type in a row. Exceeding zero values implies GDP growth, below zero-a fall.

On a national scale, the ZEW indicator is calculated not only for Germany, but also for the Eurozone and Switzerland.

Business activity indices PMI (Purchasing Managers Index) in the statistics of various states

The expansion of the ISM supply management activities in the territory of post-war Europe and partly Asia predetermined the copying of PMI index calculation systems. The methods of calculation of the American Institute formed the basis for the processing of statistics in most states.

In different countries, PMI indicators have common features and almost similar calculation and compilation methods:

  • They are calculated by the method of a survey of leading managers of enterprises about current and future confidence, relative to the previous period with an assessment of better/worse
  • They are divided into production and non-production branches
  • They are linked to real indicators of employment, inventory, production and orders, etc.
  • Non-profit organizations and research institutes are engaged in collecting and processing statistics

In the European Union, Markit Economics is engaged in this, in China – Caixin, in Canada – Ivey. The indicators are published regularly, every month, separately by industry, large and small enterprises, and are of a leading nature.

Forex traders highlight the following PMI publications:

  • UK-indicators have been calculated since 1991, classically receiving data directly from"suppliers". Initially, research and surveys were conducted by the Royal Institute of Procurement and Supply, but later this activity passed into the hands of the financial and statistical agency IHS Markit Ltd
  • China – despite the fact that the PMI is calculated by official government statistics, Asian investors attach the greatest importance to a similar indicator from Caixin, a business and financial media company news, which has its own analytical department. The discrepancy between official and non-commercial statistics can cause strong movements in the market.
  • In Canada, the Ivley Institute of Statistics is engaged in calculating business sentiment, using a method similar to the United States.