How is the direction of changes in components of business cycle indicators determined?


The compilation of business cycle indicators may be divided into two stages. In the first stage, the components undergo seasonal adjustment, de-trending, smoothing and normalization; in the second stage, the components processed in the first stage are composed using the same weighted average. Through amplitude adjustment, trend-adjusted index is obtained. Then through trend restoration, the composite index is obtained. The values of the processed components in the first stage shall serve as the basis for determination. If there is an increase (decrease) compared to the previous month, the component is said to have increased (decreased) compared to the previous month.

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