GDP Timescales Flash Estimates Richard Morrison GDP Branch Short Term Economic Indicators

Flash Estimates: "…the earliest picture of the economy according to national accounts concepts, which is produced and published as soon as possible after the end of the quarter, using a more incomplete set of information than that used for traditional quarterly accounts."

In Practice, UK produce three initial estimates M1: Preliminary Estimate: –t+25 days About 44% data M2: Output, Income and Expenditure: –t+55 days About 67% data M3: UK Quarterly National Accounts: –T+85 daysAbout 80% Blue Book, IO tables etc. later…

Scottish GVA Series. Currently published at t+112 days –Index of Construction 2004 weight: 65 / 1000 –Index of Services 2004 weight: 742 / 1000 –Index of Production 2004 weight: 178 / 1000 –Agriculture, Forestry and Fishing 2004 weight 15 / 1000

Construction Data source “Output in the Construction Sector” Published by ONS at t+2 Months Earlier estimates would require –alternative more timely sources; or –negotiated early access.

Services five components of source data: –the Retail Sales Index (RSI) –the Monthly Inquiry into the Distribution and Services Sectors (MIDSS) –"Manual Series" –Other public sector series –Deflators

RSI Consistently delivered around t+25 days No significant processing burden Deflators delivered with Series Scottish Retail series would be an “easy” component of earlier estimates 5% weight in current GVA estimates

MIDSS Delivered monthly with a 2 month lag New months data incorporate revisions Could apply standard forecasting methods –Such as ARIMA Earlier estimates could incorporate 2/3 months + forecast data. 29% weight in current estimates

Public Sector Measures Typically stable annual series Already use forecasting in GVA indices Earlier estimates would be on same basis as current ones 22% weight in current GVA Indices

Deflators Most are relatively timely and not particularly volatile Transport deflator exhibits more volatility –Probably due to correlation with fuel prices –Possibly implying that triangulation possible

“Manual Series” These are volume series supplied directly from source –Such as passenger miles –Parcel volumes –Banking series Possibly the biggest challenge to a Scottish Flash Estimate –Not always particularly timely –Often volatile

Production four components of source data –The Monthly Production Inquiry (MPI) –The MPI top-up –"Manual Series" –Deflators

MPI and top up Similar picture to MIDSS Monthly supply, with 2 month lag Top up currently used to ensure panel continuity –will change when we move to ratio estimation to be more standard sample boost MPI has about 14% weight in current GVA index

Manual Series volume series direct from source –GW hours of electricity –Volume of slaughtered poultry Possibly the biggest challenge to a Scottish Flash Estimate –Not always particularly timely –Often volatile But perhaps not as hard as it looks?

Production Deflators Supplied by ONS at t + 10 weeks Much more volatile than services deflators Forecasting methods look ropey Negotiated earlier access to ONS deflators –Perhaps partial information to inform forecasts

Potential Approaches

Reweighting UK Flash Estimate –Quick and straightforward –Almost immediate Scottish Headline Figure –Initial look suggests not that informative –Might improve with unrounded figures –Not a true Scottish estimate –Lacks detail

Analogous Methodology to UK Flash E.g. to produce estimate at t days Partial data + ARIMA – Holts Winters etc. Some sectors too volatile for robust series using this approach –But could work to identify better sources –Or supplier collaborated forecasts

Partial Early release For example of –growth estimates for some sectors e.g. –“index of services excluding finance” –Perhaps with a finance index carrying heavier caveats

Bring forward existing series Evaluating the possibility in any case 2 weeks is “challenging buy feasible” Will still lag UK estimates –Still some obstacles if this approach would maintain existing methodology

Discussion Focus of efforts has to be guided by user requirements Resource issues not necessarily trivial Briefing and National Statistics implications will be an issue