Possible complements to improve EU/EA estimation techniques TF Employment flash estimates Vienna, 5-6 October 2017 Item 8

Contents Background Possible proxies for non-responding countries Possible models for non-responding countries Availability of proxies LFS source OECD source IHS & Trading Economics sources GDP First assessment of a proxy: GDP(-1) Next steps TF EMP-FL - 5/6.10.17 - Item 8

1. Background 7 missing countries for t+45 data (= 16% of total employment) 10 missing countries for t+30 data (23% of total employment) 3 options : Default estimation : average of the reporting countries Estimation of each country Estimation of the total TF EMP-FL - 5/6.10.17 - Item 8

2. Possible proxies LFS data OECD forecasts IHS forecast (private company) Trading Economic (free access website) GDP Monthly Economic Sentiment Indicator Employmentt-1 …? TF EMP-FL - 5/6.10.17 - Item 8

3. Possible models Same methodology as GDP one's Explanatory variables : lagged Employment, GDP, ESI, forecast for the reporting countries… Econometric models: OLS( ordinary least squares), ARIMA, ARIMAX… Comparison with indicators (R² ,MSE) TF EMP-FL - 5/6.10.17 - Item 8

4. Availability of proxies First focus on QoQ data TF EMP-FL - 5/6.10.17 - Item 8

5. LFS QoQ data (1) The LFS employment concept differs from national accounts domestic employment, as the latter sets no limit on age or type of household, and also includes the non-resident population contributing to GDP and conscripts in military or community service. Tests performed on seasonally adjusted series, from 2012Q2 to 2017Q1, quarterly data calculated from monthly data At t+45, LFS source used for 2 countries : Sweden and Romania TF EMP-FL - 5/6.10.17 - Item 8

QoQ = quarterly growth rates on seasonally-adjusted series 5. LFS QoQ data (2) TF EMP-FL - 5/6.10.17 - Item 8

6. OECD QoQ forecast (1) Main features: Same scope as NA Employment 2-year forecasts Updated twice a year : June and November Need of forecast series and not actual data to perform tests TF EMP-FL - 5/6.10.17 - Item 8

6. OECD QoQ forecast (2) First comparison with actual data Max absolute error to measure quality MSE will be calculated when OECD back estimates available TF EMP-FL - 5/6.10.17 - Item 8

7. IHS and Trading Economics (1) Employed persons (to be confirmed) Available only for France Need of forecast series instead of actual series for the past quarters Trading Economics Employed persons Available for all missing countries TF EMP-FL - 5/6.10.17 - Item 8

7. IHS and Trading Economics (2) IHS forecast vs actual data QoQ data employed persons Trading Economics forecasts vs actual data TF EMP-FL - 5/6.10.17 - Item 8

8. GDP (1) GDP has higher changes than Employment for several countries : Finland, France, Sweden and Malta  Rather use GDP in a model TF EMP-FL - 5/6.10.17 - Item 8

8. GDP (2) Correlation matrix with GDPt and GDPt-1 Stronger correlations with a lag (GDPt-1) TF EMP-FL - 5/6.10.17 - Item 8

9. First assessment of a proxy: GDP(-1) 1st step: Growth rates for each country GDP(-1) as a proxy for 10 non-reporting countries Actual data sent by MS for 18 reporting countries 2nd step: weighted average to estimate aggregates (EU28 / EA19) 3rd step: Comparison with actual data of aggregates (period 1995Q2-2017Q1) TF EMP-FL - 5/6.10.17 - Item 8

A second assessment will be perfomed when MSE = 1,41e-06 A second assessment will be perfomed when back estimates for reporting countries are available TF EMP-FL - 5/6.10.17 - Item 8

10. Next steps Test ESI as a proxy Collect back estimates for OECD and for IHS Calculate estimates of EU / EA aggregates for all proxies Calculate MSE on a similar period for all proxies Perform models Test individual estimates by country vs global estimate Compare with the default estimate (average of reporting countries) …. TF EMP-FL - 5/6.10.17 - Item 8

Thanks for your attention TF Employment flash estimates Vienna, 5-6 October 2017 Item 8