Task Force on Seasonal Adjustment of Quarterly National Accounts Item 3.2 Summary of ECB paper presented to the CMFB in June 2006 Martin Eiglsperger Luxembourg, 15 February 2007

2 Motivation Governing Council Action point, February 2006: “Analyse the implications of seasonal and working-day adjustment on GDP growth rates in EU countries” Recently special impact of calendar effects: 2004 and 2005 Q4: Christmas fell on weekend days 2005 Q1: Easter was in Q1 and not in Q2

Case study: Euro area GDP 3 Case study: Euro area GDP Quarterly volume growth of euro area GDP, unadjusted and adjusted statistics (both quarter-on-quarter, in %)  Adjustment is key to short-term analysis

GDP by countries: Seasonal effects (I) 4 GDP by countries: Seasonal effects (I) Euro area countries with similar patterns → GDP: “N-shaped” seasonal factors (values >100 = positive impact)  up to 7-8 p.p. adjustment of quarter-on- quarter growth

GDP by countries: Seasonal effects (II) 5 GDP by countries: Seasonal effects (II) Euro area countries with heterogeneous patterns → DE: lowest seasonal component → Euro area: average of country patterns

GDP by countries: Seasonal effects (III) 6 GDP by countries: Seasonal effects (III) Why do seasonal patterns differ across countries? A first fact-finding … Different GDP composition, e.g. seasonal pattern of manufacturing, construction and services differs Different climate and habits, e.g. different impact of tourism and summer holiday habits (spreading holidays and continuing with absent staff, or e.g. concentrating holidays and closing business) Different administrative practices, e.g. payment of holiday allowances and end-year bonuses

GDP components: Seasonal/calendar effects 7 GDP components: Seasonal/calendar effects Seasonal pattern of euro area GDP components* * Includes calendar effects.

GDP: Calendar effects (I) 8 GDP: Calendar effects (I) Calendar factors in the GDP of BE, DE, IT and NL

GDP: Calendar effects (II) 9 GDP: Calendar effects (II) Average impact of one additional working day on annual volume growth of quarterly GDP (in percentage points) Country BE DE FR IT NL Euro area Average impact of one additional working day in perc. points 0.2 0.4 0.2 – 0.3 → Differences across countries partly due to different practices for public holidays falling on weekend days (BE, UK)

10 Summary Seasonal and calendar effects have a significant impact on quarterly GDP growth (up to 7 – 8 p.p. q-on-q); the former is much larger than the latter Adjusted euro area GDP and its components are compiled by aggregating adjusted country data; impact of cross-country differences dampened Calculation of adjusted data by euro area NSIs broadly follows international (CMFB) standards Further harmonisation of national practices is of utmost importance and ongoing