The utility of expectational data: Firm-level evidence using matched qualitative-quantitative UK surveys∗

This paper assesses the utility of qualitative expectational survey data at the firm-level in terms of both their ability to anticipate firms’ subsequent retrospective, but qualitative, reports of their performance but also these same firms’ quantitative answers. The assessment requires access to a unique panel dataset which matches firms’ responses to a leading qualitative tendency survey conducted by the Confederation of British Industry with these same firms’ quantitative replies to a different survey carried out by the Office for National Statistics. We employ nonparametric tests of the so-called “best-case scenario” and introduce a weaker test for the coherence between these two surveys and test whether the qualitative data contain a(ny) signal about the quantitative data. We find that while firms’ qualitative expectations are “best-case” predictions of their qualitative assessment of their output growth they do not contain a signal about the quantitative data. But we can reject the null hypothesis of noise for the retrospective qualitative data. We discuss this apparent paradox and suggest that qualitative business survey data are more useful for nowcasting than forecasting.