THE BUSINESS PERFORMANCE SENTIMENT INDEX (PSI) OVERVIEW
The McCrindle developed Business Performance Sentiment Index (Business PSI) is an ongoing measure of business performance, conditions, and sentiment,
developed from the input of several instruments.
It delivers a snapshot of how businesses in the region are tracking, thus capturing the current pulse of local businesses.
TheBusinessPSImeasuresbusinessperformancesentimentandconditions,fromaccelerating on the extreme positive to collapsing on the extreme negative.
Each of the three business measures (Conditions, Performance, and Sentiment) are comprised of three measures which themselves are comprised
of several questions.
Overall,the Business PSI is calculated through a metric involving 21questions. Each of these questions involve a 7 point Likert scale. An example
of one such question (2015 results) is provided below:
The mean of each score-card is derived to produce the individual metric score. There is a theoretical maximum score of 300 and a theoretical minimum
score of -300. The above graph, for example, after calculating its mean, derives a score of 52.
The overall results of all 21 questions across the three Conditions measures, three Performance measures, and three Sentiment measures indicate
whether business conditions, performance, and sentiment are in the positive zone (improving, rising, advancing, accelerating) or the negative
zone (slowing, falling, deteriorating, collapsing).
The average of the three main measures (CPS) gives an overall Business PSI score.
PURPOSE AND USE
The Business PSI is robust not only because its measures are derived directly from a survey of business proprietors and managers, but also because
it measures current performance, with metrics derived from their actual earnings, expenses, staffing numbers, as well as sentiment – their
economic cost and growth forecast and expectations of the six months ahead.
Rather than being a national measure, the Business PSI is designed to be deployed in local and regional geographies as it measures economic conditions,
regulatory settings, and infrastructure in a local context. This allows for a more nuanced understanding of business performance and conditions.
It gives a good measure of local economies and allows for comparison of business performance by region, across a city, within a state, and
Additionally, the Business PSI is designed as a longitudinal instrument, and so business performance can be compared by region over time to get
real-time analysis of local economic conditions, and so see the impact of local policies, investment, and infrastructure development, as well
as measuring the impact of state and national issues and economic conditions.
The Business PSI is a tested and easy-to-deploy 21 question survey which can allow business chambers and local governments to survey their business
stakeholders at any point in time, and compare these results to previous measures or benchmarks across other areas.
It also allows industry groups and peak bodies to measure their members and so gain a PSI of specific business categories (such as hair-dressers,
real estate agents, etc.) or broader business categories (i.e. retailers, B2B service providers, etc.). The Business PSI results can be compared
longitudinally, city by city, or state by state.
As the Business PSI quantitatively measures business performance yet incorporates attitudes, sentiment, and forecast, it provides a comprehensive
measure of actual and attitudinal measures and an index that incorporates recent performance and current forecasts.