Development and Analysis of a Sales-Based Leading Indicator for Economic Developments

Abstract

As official statistics concerning macroeconomic changes are often presented with delay, economic barometers with the ability to forecast developments have a high relevance for managerial and political decision makers. Despite the sales function being frequently named as one central source of information for business forecasts, it is often neglected in this context. The aim of this paper is the development of a sales-based leading indicator using a first empirical validation with a sample of 3,584 respondents over a period of 15 quarters (2017-2020). Through an explorative study, the authors demonstrate that this indicator has the capacity make predictions about GDP developments. The paper provides first results showing specific circumstances under which the forecast is stronger. This paper offers an alternative perspective for the development of a leading indicator, therefore provides an important addition to this research field. It shows that sales executives are important to be considered in this context.