About the Valve Barometer
The Valve Barometer (VB) survey, established in Q2 2021, gauges manufacturers’ expectations concerning various key measures of business dynamics in the upcoming month and medium term compared to the current month. Full survey results are reported in the Valve Barometer Report, which is published in the beginning of each month.
The primary objective of the VB is to provide valve and actuator manufacturers with a simple yet effective means of benchmarking their business confidence against that of the wider valve industry. Potential beneficiaries of this forward-looking statistical tool include all other members of the valve and actuator supply chain as well as investment managers and stock traders.
Methodology
In the last full week of each month, a standardized questionnaire is sent to a survey panel composed of representatives of valve and actuator manufacturers from around the world. The companies participating in the survey include public and private firms of all sizes, ranging from SMEs to multinational corporations. Their answers are weighted equally, regardless of company ownership type, size, or country of operation. The core of the questionnaire consists of 12 fixed-choice questions concerning manufacturers’ expectations for the future. Survey participants are asked to indicate whether they expect an increase (“higher”), decrease (“lower”) or no change (“unchanged”) within each of the twelve categories indicated in Table 1. Once the survey is closed at the end of the month, individual company responses are aggregated into a diffusion index for each category, resulting in 12 individual indices. Five of these indices (New Orders Next Month, Output, Employment, Stock of Purchases, Suppliers’ Deliveries Times) are then equally weighted and combined to form the composite VB index.
| New Orders – Next Month |
Output |
Quantity of Purchases |
Input Prices |
| New Orders – In 3 Months |
Employment |
Stock of Purchases |
Output Prices |
| New Orders – In 12 Months |
Backlog of Orders |
Stock of Finished Goods |
Suppliers’ Delivery Times |
Table 1. List of 12 Valve Barometer Survey indices. The fi ve indices set in bold are used to calculate the composite Valve Barometer index. It should be noted that the Suppliers’ Delivery Times index is inverted when included in the composite Valve Barometer index.
Data calculation
VB data is presented in the form of a diffusion index which measures the degree to which a change is dispersed or diffused in a group. Respondents to the VB survey indicate each month whether they expect an increase, decrease or no change within each of the 12 survey categories, compared to the current month. All VB indices are calculated by taking the percentage of respondents indicating that they expect an increase (“higher”) and adding it to one half of the percentage of respondents indicating that they expect no change (“unchanged”). For example, if 35% of respondents responded “higher”, 45% “unchanged”, and 20% “lower”, the diffusion index would be 57.5 (35% + [0.50 x 45%] + [0 x 20%]).
Interpreting the data
An index reading of 50 is neutral, indicating expectations of no change compared to the current month. A reading higher than 50 indicates positive expectations, while a reading lower than 50 indicates negative expectations. The distance from the 50 no-change mark signals the rate of change, as illustrated by graph 1.