European Commission Directorate General Economic and Financial Affairs Harmonisation of BCS: Aggregation methods (business surveys) and Quality checking (consumer survey) Roberta Friz Business and consumer surveys and short-term forecast (ECFIN A4.2) Joint EU/OECD workshop on recent developments in business and consumers surveys Brussels,14-15 November 2013
Outline Business surveys Introduction/Background Aggregation methods Results for "factors limiting production" Results for "structure" of Investment Conclusions Consumer survey Introduction/Background Quality checking Results from quality checking Conclusions 2
Introduction Survey among partner institutes carried out in 2010 highlighted possible harmonisation problems in aggregation methods used for (1) the quarterly questions on factors limiting production in the industry, services and construction surveys and (2) the question on the structure of investment in the Oct/Nov Investment survey 3
Introduction (2) In 2011 a Task Force was created with the aim to make recommendations on the best aggregation method of the replies at country level in order (1) to calculate meaningful EU and euro area results that will be easy to interpret and (2) to allow comparison between countries 4
Introduction (3) The conclusions were: For quarterly questions on factors limiting production/business/building activity: the institutes should send the results without adjusting: i.e. the factors can add up to more than 100%. For the investment survey in the manufacturing sector: when managers can tick more than one category, each "tick" is divided by the number of "ticks" that firm gave (NB Institutes asking directly for the percentages are in line with that method) 5
Introduction (4) Institutes were asked to send the results aggregated with the agreed methods from April 2013 for the quarterly questions and from Oct/Nov 2013 for the "structure" of investment Institutes were also asked to recalculate the series as far back as possible 6
Results 7
Quarterly questions: new files for 13 countries Investment survey: new files for 6 countries 8
Quarterly question on factors limiting production What main factors are currently limiting your production (business in the service survey, building activity in the construction survey): None Insufficient demand Shortage of labour force Shortage of material (space) and/or equipment Financial constraints Weather conditions Other factors 9
How series have changed 60 55 50 45 EU - Industry survey 40 35 30 New - "None" old_rebased 25 20 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 12 10 8 EU - Industry survey New - Financial constraints old - rebased 6 4 2 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 10
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 90 80 70 60 50 40 30 20 10 0 Country 1 - Industry survey New - Insufficient demand old 14 12 10 8 6 4 2 Country 2 - Industry survey New - Financial constraints old 0 11
EU - Service survey 50 45 40 35 30 25 New - "None" 20 Old - rebased 15 10 5 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 EU - Service survey 20 18 16 14 12 10 8 6 New - Financial constraints 4 Old - rebased 2 Old 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 12
Question on the structure of investment in the Oct/Nov Investment survey Investment carried out this year and planned investment for next year is, or will be, of the following kind (choose appropriate category or categories): Replacement of worn-out plant or equipment Extension of production capacity Investment designed to streamline production Other investment objectives (pollution control, safety, etc.) 13
Country 1 - Survey 2012 - Structure of Investment This year - New data Next year - New data 25 13 36 Replacement Extention Streamline production Others 9 24 Replacement Extention Streamline production 47 13 Others 19 This year - Old data Next year - Old data 19 33 Replacement Extention 13 27 Replacement Streamline production Others Extention Streamline production 27 46 14 Others 21 14
Country 2 - Survey 2012 - Structure of Investment Survey 2012 - This year - new Survey 2012 - Next year - new 15 14 17 42 Replacement Extention Streamline production 19 41 Replacement Extention Streamline production Others Others 25 Survey 2012 - This year - old 26 Survey 2012 - Next year - old 17 17 37 Replacement 36 Replacement 20 Extention Streamline production Others 21 Extention Streamline production Others 26 26 15
Country 3 - Structure of Investment 40 Replacement 70 Extention 35 60 30 25 20 15 10 5 New Old 50 40 30 20 10 New Old 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 30 Streamline production 18 Others 25 16 14 New 20 12 Old 15 10 8 10 6 5 New Old 4 2 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 16
Conclusions 17
The aggregation methods for both factors limiting production and structure of investment are now harmonised Improvement in the quality of the data: Consistent EU and euro-area aggregates Comparability across countries Also thanks to corrections to some incorrect swaps between "other factors" and "financial constraints" 18
Industry survey Q8 Construction survey Q2 F1 F2 F3 F4 F6 F5 F1 F2 F3 F4 F5 F7 F6 None Insufficient demand Shortage of labour force Shortage of material/equipment Financial constraints Other factors None Insufficient demand Weather conditions Shortage of labour force Shortage of material/equipment financial constraints Other factors Industry survey F1: None F2: Insufficient demand F3: Shortage of labour force Q8 F4: Shortage of material/ equipment F6: Financial constraints F5: Other factors Construction survey F1: None F2: Insufficient demand F3: Weather conditions Q2 F4: Shortage of labour force F5: Shortage of material/ equipment F7: Financial constraints F6: Other factors 19
Consumer survey Quality checking 20
Introduction "Financial distress" indicator based on question No. 12 (current financial situation of households) of the consumer survey some counterintuitive and in some cases obviously wrongly encoded data at the level of income groupings DG ECFIN decided to embark on a more general checking of its consumer database 21
Introduction (2) In March 2013: DG ECFIN sent to each institute the respective national data asking to check if these data corresponded to what institutes had in their own data records With some examples of which kind of errors institutes should look for 22
Introduction (3) The most common problems incurred were: Data were missing in some specific periods/months Results were switched between categories of income in some specific months Results were switched between categories of replies in some specific months Data quality problems (for example, too volatile results in some specific questions) Breaks in the series 23
janv-85 nov-85 sept-86 juil-87 mai-88 mars-89 janv-90 nov-90 sept-91 juil-92 mai-93 mars-94 janv-95 nov-95 sept-96 juil-97 mai-98 mars-99 janv-00 nov-00 sept-01 juil-02 mai-03 mars-04 janv-05 nov-05 sept-06 juil-07 mai-08 mars-09 janv-10 nov-10 sept-11 juil-12 Example of break in the series 80 60 40 20 0 B PP P M MM -20-40 -60 24
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Example of possible swaps between categories of replies for R4 in Feb 2006 and between end-2007 and beginning-2008 100 90 80 70 60 50 40 30 MM M E P PP 20 10 0 25
Results Several institutes (11) sent us back files with corrected data. Some institute could explain some possible breaks in the series, due for example to: changes in the questionnaire (for harmonisation purposes), for example FR sampling design changes, for example PT In some other cases, the institute had not been conducting the survey in the contested periods (changes in partner institutes) and therefore it was not possible to verify or correct the data 26
27 Example of correction Question 12-30 -20-10 0 10 20 30 40 50 60 70 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 TOT RE1 RE2 RE3 RE4-10 0 10 20 30 40 50 60 70 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 TOT RE1 RE2 RE3 RE4
Conclusions 28
Useful exercise even if there are still some suspicious data in our database Further actions: We will continue to do regular checks of the data Institutes are invited to continuously check the consistency of the data sent to DG ECFIN (in time and across breakdowns) Obvious errors in 'historical' data in DG ECFIN's database will be corrected by us Institutes that have not yet replied to our request are invited to verify their data and come back to us in good time On the business surveys: carefully check that there is no confusion between "other factors" and "financial constrains"! 29
Thank you! 30