Presentation by Eurostat Item 5 Revised classifications in Short-term business statistics (STS): Backcasting and linking Presentation by Eurostat OECD Short-term Economic Statistics Working Party (STESWP) - Paris, 23 - 24 June 2008 16-June-2008

Short-term business statistics (STS)… …produce many of the key short-term indicators for economic analysis and the development of monetary and economic policy: most on a monthly basis, some quarterly industry, construction, retail trade and repair, other services with activities defined through NACE (currently Rev. 1.1) indicators include: index of industrial production, producer price indices, production in construction, turnover and employment in retail trade and other services, etc. 16-June-2008 OECD STESWP – Paris, 23 - 24 June 2008

Simultaneous implementation of NACE Rev. 2 and base year 2005… …biggest challenge facing STS in 2008 all EU Member States, Norway, Switzerland… and Eurostat are presently working on this subject activities include… methodological research and planning implementation exchange on practical experience Important milestones / key dates: Sep-08: provision of new STS 2005 weights Jan-09: starting date for the production of STS Feb/Mar-09: provision of new monthly STS data May/Jun-09: provision of new quarterly STS data …additional delay for smaller MS for most variables NACE Rev. 2 corresponding to ISIC ver. 4 16-June-2008 OECD STESWP – Paris, 23 - 24 June 2008

Backcasting requirements Availability of long historical time series is crucial… for seasonal adjustment for business cycle analysis Characteristics of the data to be provided: same form, same reference period, same level of detail as “current” (Jan-09 / 1Q2009…) STS data first reference period 2000 for most of the data some countries will go back beyond 2000 16-June-2008 OECD STESWP – Paris, 23 - 24 June 2008

Methodological approach to backcasting “Standard” approach to backcasting appears to be… micro approach for a limited number of (recent) observation periods dual-coded data for individual enterprises but micro data often no longer accessible for past years combined with macro approach for past years one set of conversion coefficients, usually for new base year 2005 less expensive, easier, quicker “Standard” time series will consist of two segments: micro segment (continuously growing): most recent observation periods macro segment: historical data of past observation periods 16-June-2008 OECD STESWP – Paris, 23 - 24 June 2008

Methodological approach (cont.) Link between micro and macro segments of a time series: level shifts may need to be smoothed out methodologies exist to distribute shift over several periods different seasonality patterns more difficult to tackle first solutions (in 2009) can only be provisional with each new observation period, the micro segment will gradually gain importance this will very likely make revisions of the whole time series necessary at a later stage Question: any experiences to share / any recommendation? 16-June-2008 OECD STESWP – Paris, 23 - 24 June 2008

Linking in a different context: Backcasting index series over several base years General STS recommendation: In the standard case of a rebasing every five years, the indices relative to a new weighting system have to be calculated retrospectively for several years, so that the point where the two series are spliced is between the two base years. For example when the new base year 2000 was introduced, the index with the new system of weights should have been calculated back to January 1998. As a result, the indices for the reference periods from 1993 to 1997 have 1995 weights; from 1998 to 2002 have 2000 weights and so on. STS methodological guidelines (2006), p. 24. For the calculation of new aggregate indices in NACE Rev. 2 (ISIC ver. 4): re-estimate the weight matrix at each base year… on the basis of the NACE 1.1 (ISIC ver. 3) weights for that year and the 2005 conversion matrix Question: any experiences to share / any recommendation? 16-June-2008 OECD STESWP – Paris, 23 - 24 June 2008

Next steps Eurostat workshop “backcasting” on 13 – 14 October 2008 will look at these and other questions will offer a forum for the exchange of practical experience STS WG in December 2008 final review of preparations January & February 2009 final preparatory work and testing the transmission environment 16-June-2008 OECD STESWP – Paris, 23 - 24 June 2008

Comments or questions ? Thank you! Do you have any suggestions / recommendations regarding: linking time series segments when a classification changes: level shifts different seasonal patterns linking different base years: re-estimation of previous base years’ weights according to a new classification Thank you! 16-June-2008 OECD STESWP – Paris, 23 - 24 June 2008