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Engineering Orders: Their Use in Forecasting

Published online by Cambridge University Press:  26 March 2020

E. A. Shirley
E. A. Shirley*
Affiliation:
National Institute of Economic and Social Research
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Extract

For the past four years estimates of home and foreign orders have been published which, by and large, cover the capital goods sector of the engineering industry. (This is the sector which produces to order.) Home deliveries from this sector make up a large part of industry's investment in plant and machinery; export deliveries have usually been more buoyant than total exports. If these orders figures could be used to predict turning-points in home and export deliveries of engineering products, this would be a helpful additional forecasting tool.

Type
Articles
Information
National Institute Economic Review , Volume 21 , August 1962 , pp. 37 - 48
Copyright
Copyright © 1962 National Institute of Economic and Social Research

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References

(1) The relationship between new orders and deliveries is discussed in Victor Zarnovitz, ‘The Timing of Manufacturers' Orders during Business Cycles’, in Business Cycle Indicators, Volume I (Ed. G. H. Moore), National Bureau of Economic Research, 1961; also in the National Bureau of Economic Research, Annual Reports for 1960, 1961 and 1962.

(2) Orders on hand did not need smoothing.

(3) For the German series, it is only possible to give the change in orders on hand. See Appendix, page 48.

(1) However, orders on hand figures, since they are not smoothed, are available two quarters before the four-quarter moving averages for the other series.

(1) We are here referring to the Board of Trade ‘broad’ orders series (see Appendix, page 47), including engineering and electrical goods, locomotives and railway track equip ment, railway carriages and wagons, heavy commercial vehicles and wheeled tractors.

(1) Although these moving averages appear to be out of date, they do give some weight—and probably about the appropriate weight—to the latest available figures.

(2) The lag between the date of the turning-point in the charts and tables and the date when figures establishing it became available is explained by one quarter's publication delay, and two quarters for calculating the moving average.

(3) There was some mention of a weakening in the invest ment boom in the National Institute Economic Review, May 1961; it was referred to more definitely in July 1961.

(4) The export figures are less reliable than the home figures, because the sample is designed to provide figures of total orders and deliveries, and the composition of export deliveries is different from that of the total.

(5) D, 15, 16 and 17 in the Trade and Navigation Accounts.

(1) The figures used were the average ratios of orders on hand to deliveries between 1958 and 1960.

(2) This is for the sum of the sixteen branches of the engineering and electrical industry total in table 2. This sum excludes industries such as machine-tools, scientific instruments and heavy vehicles, which are included in the engineering orders series with the broad coverage (see Appendix, table 4, page 47).