Business Cycle Indicators – Definition

Cite this article as:"Business Cycle Indicators – Definition," in The Business Professor, updated June 8, 2019, last accessed November 26, 2020,


Business Cycle Indicators (BCI) Definition

Business cycle indicators (BCI) refer to a series of measures (standards) that were created by the Conference Board. They present leading, lagging and concurrent indexes in an economy. These standards and indexes are effective metrics that predict changes in direction of an economy. Some economic analysts refer to BCI as indicators of peaks and troughs (peaks and valleys.)

BCIs are used and published for countries like , France, the U.K., Japan, Australia, South Korea, the U.S, Mexico, Germany and Spain. Business cycle indicators (BCI) are also used in the business sector to forecast dynamic patterns that securities exhibit when it comes to pricing.

A Little More on What are Business Cycle Indicators (BCI)

Business cycle indicators are statistically outline and can be interpreted from the graphs displayed. However, interpreting BCI is a daunting and complex task because it is essential to understand that the fluctuations of economic activities are summarized in BCIs. Fluctuations in production, employment and other activities can be a decline or increase. Peak describes the situation when economic activity booms and is at a high level while trough describes a significant decline in economic activities. BCIs reflect changes in direction of the overall economy of a country which are ordinarily difficult to predict.

In the business sector, leading indicators reflect shifts in the business cycle or the onset of a business cycle. Examples of leading indicators include consumer expectations, average weekly work hours in manufacturing, factory orders for goods, and stock prices. The Conference Board maintains that leading indicators are essential to the understanding of the nature of an economic activity.

Fluctuation in an economy are reflected by lagging indicators, this includes labor cost per unit, the average level of unemployment, consumer price index and others. Coincident indicators are however aggregate measures of an economic activity, examples of coincident indicators are industrial production, unemployment rate and personal income.

References for Cycle Indicators

Academic Research on Business Cycle Indicators

Do EMU members share the same business cycle?, Altavilla, C. (2004). JCMS: Journal of Common Market Studies, 42(5), 869-896.

The business cycle and the incidence of workplace injuries: Evidence from the USA, Asfaw, A., Pana-Cryan, R., & Rosa, R. (2011). Journal of safety research, 42(1), 1-8.

Forecast evaluation of European Commission survey indicators. Journal of Business Cycle Measurement and Analysis, 2005(2), 157-183.

Using a neural network to forecast inflation, Aiken, M. (1999). Industrial Management & Data Systems, 99(7), 296-301.

Macroeconomic forecasting using diffusion indexes, Stock, J. H., & Watson, M. W. (2002). Journal of Business & Economic Statistics, 20(2), 147-162.

International business cycle indicators, measurement and forecasting, Den Reijer, A. H. J. (2002). DNB research memorandum WO, 689.

Business Cycle Indexes, Inklaar, R., Jacobs, J., & Romp, W. (2005). Journal of Business Cycle Measurement and Analysis, 2004(3), 309-336.

Firm size and monetary policy transmissionā€”evidence from German business survey data, Ehrmann, M. (2005). In Ifo Survey Data in Business Cycle and Monetary Policy Analysis (pp. 145-172). Physica-Verlag HD.

Macro-economic leading indicators of construction contract prices, Akintoye, A., Bowen, P., & Hardcastle, C. (1998). Construction Management & Economics, 16(2), 159-175.

Indicator approach to business cycle analysis, MEŞTER, I. T. (2007).

Expected stock returns and volatility in a two-regime market, Shawky, H. A., & Marathe, A. (1995). Journal of Economics and Business, 47(5), 409-421.


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