Monthly Business Turnover Index: June 2020

The Monthly Business Turnover Index gives an early indicator of business activity in Scotland, based on some of the survey data used by the Scottish Government for GDP statistics.

The index is similar to the IHS Markit PMI indicators. It reports the net balance of firms reporting increasing or decreasing turnover, in real terms, compared to 12 months ago. Values below 50 indicate that more companies are showing decreased turnover than increased turnover.
 

Latest Results

• In June 2020, the provisional business turnover index for all included sectors is 24.6, and has risen from a revised value of 23.3 in May. The index remains far outside the normal range of around 45 to 55 seen since 2011.
• These results show that most companies continue to report that turnover is down over the year. This reflects the impact of the ongoing restrictions on activity throughout the month, with Phase 2 changes for many of the industries in the Index not applying until 29 June.
• Although the index has increased by only a small amount since May, this is not a direct indicator of the size on any increase in total output. The index only signifies that turnover is lower than 12 months ago, but not by how much. Estimates of total output will be published in Monthly GDP on 19 August 2020.
• For most industries the index has continued to remain below 50 in June, with the exception of Food Retail. The industry with the lowest result is Accommodation and Food Services (3.8), where nearly all businesses in the sample are still reporting lower turnover than last year.

About This Release

The Monthly Business Turnover Index is based on data from the ONS Monthly Business Survey and Retail Sales Inquiry. These are the largest data sources used for quarterly GDP statistics. For included industries, the surveys include all large businesses and a representative sample of smaller companies operating in Scotland. There is a sample of around 2,500 companies for the final results each month, including more than 400 manufacturing firms. The sample sizes fall to around 1,800-1,900 in the provisional estimate each month.

The Monthly Business Survey does not include turnover data for Agriculture, Energy, Construction, Financial Services or Government. There is some data for industries such as real estate, mining, and private sector health and education, but sample sizes are small and the results are not included in the index. Results are adjusted for inflation using the Consumer Price Index as a broad indicator of price change, and seasonally adjusted. Turnover is taken to be increasing(decreasing) in real terms when it is higher(lower) than 12 months previously by at least 0.5 percentage points above(below) the CPI inflation rate. Turnover is taken to be unchanged when it does not meet either of these conditions.

The MBTI is a diffusion index calculated using the standard formula for such measures. Every company is given equal weight, meaning that a large firm which reports a large increase in turnover could be offset by a small firm reporting a small fall in turnover. For this reason, the index does not give a direct indication of the likely growth rate for total turnover or GDP in each month or quarter. Instead, it is designed to give a broad indication of general trading conditions, including the extend to which falling turnover is widespread within an industry.

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