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NZIER's capacity utilisation index

Bernard Hodgetts

The Institute of Economic Research (NZIER) produces an index of capacity utilisation from its Quarterly Survey of Business Opinion (QSBO) known as CUBO (standing for Capacity Utilisation, Business Opinion). CUBO is a useful indicator of the business cycle and inflation pressures, but its behaviour has changed over its 43-year history. The average level of CUBO fell sharply between 1974 and 1991 but has since increased again. Although that shift may be explained by economic factors, changes to the QSBO sampling framework could also be relevant. This article summarises a joint project led by the NZIER to investigate this issue. Reassuringly, it found that changes to the sampling framework do not appear to have had a significant impact on CUBO. Moreover, alternative calculations of CUBO produce a series which also shows a sharp fall over the 1974 to 1991 period.