Role of macroeconomic variables on firms’ performance: Evidence from the UK

Figures & data

Figure 1. Profit performance model.

Source: (Constructed by authors, 2017).

Table 1. Industry sector category

Categories	Sectors
1	Primary sector, chemicals, non-metallic products, textiles
2	Machinery, equipment, furniture, recycling, construction
3	Wholesale & retail trade
4	Hotels, restaurants, Real estate activities, telecommunications
5	Education, Health, Computing, IT Services
6	Other Services

Table 2. Total variance explained

Component	Initial Eigen values			Extraction sums of squared loadings			Rotation sums of squared loadings
	Total	% of variance	Cumulative %	Total	% of variance	Cumulative %	Total	% of variance	Cumulative %
1	35.439	62.174	62.174	35.439	62.174	62.174	31.202	54.741	54.741
2	12.795	22.448	84.622	12.795	22.448	84.622	8.220	14.421	69.162
3	2.772	4.864	89.485	2.772	4.864	89.485	7.962	13.969	83.131
4	2.610	4.578	94.063	2.610	4.578	94.063	4.664	8.182	91.313
5	1.041	1.827	95.890	1.041	1.827	95.890	2.609	4.578	95.890
6	0.835	1.465	97.356
7	0.724	1.270	98.626

Note: Extraction method: Principal component analysis.

Table 3. Rotated component matrix^a

	Component
	1	2	3	4	5
GDPR	0.981
URNAA		0.851
OTPT			0.845
ULCTOTAPNMEI				0.893
FXUS					0.563

Notes: Extraction method: Principal component analysis. Rotation method: Varimax with Kaiser Normalization.

^a Rotation converged in 10 iterations.

Table 4. Correlation coefficients

		ROA	Lagged ROA	URNAA	ULCTOTAPNMEI	GDPR	OTPT	FXUS
Pearson correlation	ROA	1.000	0.547	0.433	−0.223	0.344	−0.123	0.544
	Lagged ROA		1.000	0.058	−0.355	0.297	−0.132	0.182
	URNAA			1.000	0.413	0.118	−0.776	−0.310
	ULCTOTAPNMEI				1.000	−0.105	−0.528	−0.322
	GDPR					1.000	−0.174	0.575
	OTPT						1.000	0.416
	FXUS						.	1.000

Table 5. Model summary^b

Model	R	R^2	Adjusted R^2	Std. error of the estimate	Durbin-Watson
1	0.976^a	0.953	0.919	1.25526	2.117

^a Predictors: (Constant), FXUS, Lagged ROA, URNAA, ULCTOTAPNMEI, GDPR.

^b Dependent variable: ROA.

Table 6. F–Test

ANOVA^a
Model		Sum of squares	df	Mean square	F	Sig.
1	Regression	222.094	5	44.419	28.190	0.000^b
	Residual	11.030	7	1.576
	Total	233.123	12

^a Dependent variable: ROA.

^b Predictors: (Constant), FXUS, Lagged ROA, URNAA, ULCTOTAPNMEI, GDPR.

Table 7. Classification results

Coefficients^a
Model	Unstandardized coefficients		Standardized coefficients	t	Sig.	95.0% Confidence Interval for B		Correlations			Collinearity statistics
	B	Std. error	β			Lower bound	Upper bound	Zero-order	Partial	Part	Tolerance	VIF
(Constant)	218.513	72.628		3.009	0.020	46.775	390.25
Lagged ROA	0.389	0.092	0.397	4.243	0.004	0.172	0.606	0.547	0.849	0.349	0.772	1.295
URNAA	3.553	0.445	0.804	7.981	0.000	2.500	4.605	0.433	0.949	0.656	0.665	1.503
ULCTOTAPNMEI	−0.671	0.406	−0.166	−1.653	0.142	−1.630	0.289	−0.223	−0.530	−0.136	0.668	1.498
GDPR	−19.059	5.259	−0.403	−3.624	0.008	−31.493	−6.624	0.344	−0.808	−0.298	0.546	1.832
FXUS	0.345	0.044	0.899	7.827	0.000	0.241	0.449	0.544	0.947	0.643	0.512	1.953

^a Dependent variable: ROA.

Table 8. Model summary and coefficients

Industry	R	R^2	Adjusted R^2	F	Sig.
1	0.960	0.921	0.865	16.312	0.01
2	0.729	0.531	0.196	1.583	0.280
3	0.909	0.827	0.703	6.675	0.014
4	0.897	0.805	0.665	5.764	0.20
5	0.944	0.892	0.814	11.537	0.003
6	0.889	0.790	0.640	5.272	0.025

Table 9. Classification results

	Industry 1		Industry 2		Industry 3		Industry 4		Industry 5		Industry 6
	B	Sig.	B	Sig.	B	Sig.	B	Sig.	B	Sig.	B	Sig.
(Constant)	−439.013	0.007	438.230	0.272	654.666	0.007	103.123	0.856	670.629	0.007	31.648	0.907
Lagged ROA	0.479	0.004	0.562	0.074	0.531	0.014	0.581	0.005	0.132	0.442	0.492	0.017
URNAA	2.075	0.030	0.897	0.736	0.009	0.994	7.922	0.052	7.019	0.001	5.525	0.011
ULCTOTAPNMEI	−0.396	0.653	0.793	0.743	−0.466	0.641	−1.827	0.540	−1.913	0.108	−0.081	0.955
GDPR	28.720	0.012	−30.936	0.285	−47.804	0.007	−17.858	0.668	−53.034	0.004	−6.662	0.734
FXUS	0.060	0.435	0.048	0.843	0.431	0.006	0.992	0.022	0.560	0.002	0.248	0.171

Note: B = Unstandardized coefficients.

Sig = p-value at 5.0%.

Table 10. Summarize prediction results

Sample	Significant variables
Full sample	Lagged ROA,URNAA, GDPR and FXUS
Industry-specific
Industry 1	Lagged ROA, URNAA and GDPR
Industry 2	None
Industry 3	Lagged ROA, GDPR and FXUS
Industry 4	Lagged ROA and FXUS
Industry 5	URNAA, GDPR and FXUS
Industry 6	Lagged ROA and URNAA

Table

Code	Variables	Definition	Measurement units
X1	INTGSTB	Interest Rates, Government Securities, Treasury Bills	Percent per Annum
X2	INTGSB	Interest Rates, Government Securities, Government Bonds	Percent per Annum
X3	INTDSR	Interest Rates, Discount Rate	Percent per Annum
X4	WFPMNA	Working-age Population for Men	Thousands of Persons
X5	POPL	Population	Millions of Persons
X6	URYNAA	Adjusted Unemployment Rate for Youth	PERCENT
X7	URTOTADSMEI	Unemployment Level: Survey-Based (All Persons)	Thousands of Persons
X8	URNAA	Adjusted Unemployment Rate	PERCENT
X9	URHARMADSMEI	Harmonized Unemployment Rate: All Persons	PERCENT
X10	ULCTTCAPNMEI	Benchmarked Unit Labor Costs–Trade, Transport and Communication	Percentage change
X11	ULCTOTAPNMEI	Benchmarked Unit Labor Costs–Total	Percentage change
X12	ULCMSAPNMEI	Benchmarked Unit Labor Costs–Market Services	Percentage change
X13	ULCMN	Unit Labor Costs in Manufacturing, National Currency Basis,	Index 2002 = 100
X14	ULCMANAPNMEI	Benchmarked Unit Labor Costs–Manufacturing	Percentage change
X15	ULCINDAPNMEI	Benchmarked Unit Labor Costs–Industry	Percentage change
X16	ULCFBSAPNMEI	Benchmarked Unit Labor Costs–Financial and Business Services	Percentage change
X17	ULCCONAPNMEI	Benchmarked Unit Labor Costs–Construction	Percentage change
X18	ULCBXAAPNMEI	Benchmarked Unit Labor Costs–Business Sector (Excluding Agriculture)	Percentage change
X19	TLHRS	Total hours in manufacturing	Index 2002 = 100
X20	TLCMF	Total labor compensation in manufacturing	Index 2002 = 100
X21	GDPR	Real GDP	Millions of 2010 US Dollars
X22	GDPH	Real GDP per Hour Worked	2010 US Dollars
X23	GDPE	Real GDP per Employed Person	2011 US Dollars
X24	GDPC	Real GDP per Capita	2012 US Dollars
X25	GDPRAPSMEI	Constant Price Gross Domestic Product	Percent Change from Year Ago
X26	GDPNADSMEI	Current Price Gross Domestic Product	Billions of British Pounds
X27	GDPDEFAISMEI	GDP Implicit Price Deflator	Index 2005 = 100
X28	PROMANAISMEI	Production in Total Manufacturing	Index 2005 = 100
X29	PROINDAISMEI	Production of Total Industry	Index 2005 = 100
X30	PROCONAISMEI	Production of Total Construction	Index 2005 = 100
X31	LFPRNA	Labor Force Participation Rate	Percent
X32	OTPT	Output in Manufacturing	Percent
X33	IMPORTADSMEI	Imports of Goods and Services	Billions of British Pounds
X34	EXPORTADSMEI	Exports of Goods and Services	Billions of British Pounds
X35	GFCEADSMEI	Government Final Consumption Expenditure	Billions of British Pounds
X36	PFCEADSMEI	Private Final Consumption Expenditure	Billions of British Pounds
X37	PESANA	Percent of Employment in Services	Percent
X38	PEMANA	Percent of Employment in Agriculture	Percent
X39	PEFANA	Percent of Employment in Manufacturing	Percent
X40	PEDANA	Percent of Employment in Industry	Percent
X41	EPP	Employment as Percentage of Population	PERCENT
X42	EMPTOTQPSMEI	Employment	Millions of Persons
X43	AHWEP	Average Annual Hours Worked per Employed Person	HOURS
X44	CPIALLAINMEI	Consumer Price Index: All Items	Index 2005 = 100
X45	PPDMAINMEI	Domestic Producer Prices Index: Manufacturing	Index 2005 = 100
X46	CPISXHAINMEI	Consumer Price Index: Services Less Housing	Index 2005 = 100
X47	CPIFODAINMEI	Consumer Price Index: Food	Index 2005 = 100
X48	CPIENGAINMEI	Consumer Price Index: Energy	Index 2005 = 100
X49	CPICORAINMEI	Consumer Price Index: All Items Excluding Food and Energy	Index 2005 = 100
X50	CINSADSMEI	Change in Stocks	Billions of British Pounds
X51	FAEEFNGBA	Financial Account (Excl. Exceptional Financing and Use of Fund Resources), Net	DOLLARS
X52	CUAEEFGBA	Current Account (Excludes Exceptional Financing), Net	DOLLARS
X53	CANEEFGBA	Capital Account, Net (Excludes Exceptional Financing)	DOLLARS
X54	DEBTTLGBA	Central government debt, total (% of GDP)	Percent of GDP
X55	CASHBLGBA	Cash surplus/deficit (% of GDP)	Percent of GDP
X56	TRESEGGBM	Total Reserves excluding Gold	DOLLARS
X57	GFCFADSMEI	Gross Fixed Capital Formation	Billions of British Pounds
X58	FXUS	Exchange Rates (Value of Foreign Currency Relative to US Dollar)	Index 2002 = 100
X59	SARTAISMEI	Total Retail Trade	Index 2005 = 100

Table

	Test value = 0
	t	Df	Sig. (2-tailed)
INTGSTB	8.210	12	0.000
INTGSB	28.864	12	0.000
INTDSR	8.219	12	0.000
WFPMNA	1055.392	12	0.000
POPL	177.004	12	0.000
URYNAA	19.577	12	0.000
URTOTADSMEI	152.546	12	0.000
URNAA	20.847	12	0.000
URHARMADSMEI	20.694	12	0.000
ULCTTCAPNMEI	3.870	12	0.002
ULCTOTAPNMEI	9.459	12	0.000
ULCMSAPNMEI	5.977	12	0.000
ULCMN	105.129	12	0.000
ULCMANAPNMEI	2.871	12	0.014
ULCINDAPNMEI	3.439	12	0.005
ULCFBSAPNMEI	5.013	12	0.000
ULCCONAPNMEI	5.013	12	0.000
ULCBXAAPNMEI	6.554	12	0.000
TLHRS	20.662	12	0.000
TLCMF	159.717	12	0.000
GDPR	561.736	12	0.000
GDPH	48.386	12	0.000
GDPE	637.139	12	0.000
GDPC	497.832	12	0.000
GDPRAPSMEI	3.538	12	0.004
GDPNADSMEI	143.492	12	0.000
GDPDEFAISMEI	40.828	12	0.000
PROMANAISMEI	103.948	12	0.000
PROINDAISMEI	84.642	12	0.000
PROCONAISMEI	48.662	12	0.000
LFPRNA	662.888	12	0.000
OTPT	104.298	12	0.000
IMPORTADSMEI	16.312	12	0.000
EXPORTADSMEI	16.515	12	0.000
GFCEADSMEI	14.497	12	0.000
PFCEADSMEI	22.057	12	0.000
PESANA	145.002	12	0.000
PEMANA	29.826	12	0.000
PEFANA	20.463	12	0.000
PEDANA	40.136	12	0.000
EPP	250.828	12	0.000
EMPTOTQPSMEI	120.404	12	0.000
AHWEP	1907.345	12	0.000
CPIALLAINMEI	47.877	12	0.000
PPDMAINMEI	35.642	12	0.000
CPISXHAINMEI	24.496	12	0.000
CPIFODAINMEI	31.595	12	0.000
CPIENGAINMEI	14.094	12	0.000
CPICORAINMEI	67.477	12	0.000
CINSADSMEI	3.125	12	0.009
FAEEFNGBA	212.974	12	0.000
CUAEEFGBA	−7.376	12	0.000
CANEEFGBA	121.588	12	0.000
DEBTTLGBA	14.372	12	0.000
CASHBLGBA	−2.473	12	0.029
TRESEGGBM	419.383	12	0.000
GFCFADSMEI	23.362	12	0.000
FXUS	35.058	12	0.000
SARTAISMEI	27.581	12	0.000