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With a view to providing a quick reference, with minimum time lag, for predicting the short-term future economic performance of the local economy, statistics on business prospects at sectoral and aggregate levels are compiled based on results of the Quarterly Business Tendency Survey.

The survey gathers views on short-term business performance from the senior management of about 500 to 600 prominent establishments in ten major sectors in Hong Kong, viz, the manufacturing; construction; import/export trade and wholesale; retail; accommodation and food services (mainly covering services rendered by hotels and restaurants); transportation, storage and courier services; information and communications; financing and insurance; real estate; and professional and business services sectors.

The economic activities undertaken by surveyed establishments are classified based on the Hong Kong Standard Industrial Classification (HSIC) Version 2.0.  The sampling frame of the survey is first stratified into a number of industry strata.  Prominent establishments are then selected from these strata for enumeration.

The survey solicits views from respondents regarding expected changes of a number of economic variables (including business situation, volume of business/output, number of persons engaged and selling price/service charge), situation regarding orders and inventories, as well as factors limiting increase in business activities.  Views collected refer only to those of respondents on their own establishments rather than those on the respective sectors they are engaged in; and are limited to the expected direction of quarter-to-quarter change (e.g. "up", "same" or "down") but not the magnitude of change.  In collecting views on the quarter-to-quarter changes, if the variable in question is subject to seasonal variations, respondents are asked to provide the expected changes after excluding the normal seasonal variations.

In compiling the survey results, the percentages of establishments choosing individual response categories within each stratum, which is mainly at industry grouping level, are first computed to arrive at stratum estimates.  These stratum estimates are then weighted and summed up to give the percentages of establishments choosing individual responses for the corresponding sectors.  Overall estimates are weighted averages of all sectoral estimates.  Weights for the variable on employment are "number of persons engaged" of various strata, while weights for all other variables are "value added".

Survey results are generally presented as "net balance", i.e. the difference between the percentage of respondents choosing "up" and that choosing "down".  The percentage distribution of respondents among various response categories (e.g. "up", "same" and "down") reflects how varied their business expectations are.  The "net balance", with its appropriate sign, indicates the direction of expected change in the variable concerned.  A positive sign indicates a likely upward trend while a negative sign, a likely downward trend.  However, the magnitude of the "net balance" reflects only the prevalence of optimism or pessimism, but not the magnitude of expected change, since information relating to such magnitude is not collected in the survey.

It has to be noted that in this type of survey on expectations, the views collected in the survey are affected by the events in the community occurring around the time of enumeration, and it is difficult to establish precisely the extent to which respondents’ perception of the future accords with the underlying trend.

Furthermore, owing to sample size constraint, care should be taken in interpreting survey results involving a small percentage (e.g. less than 10%) of respondents in individual sectors.