1 Calculation of Normalised Business and Consumer Confidence Indicators and Zone Aggregates Olivier Brunet OECD Statistics Directorate

2 Topics National indicators for zones Methodology Publication of results Alternative approaches for zones Comparison with World and Euro confidence indicators Conclusions and future work

3 National indicators for zones (Manufacturing) ZonesConfidence IndicatorBusiness Situation MonthlyQuarterlyMonthlyQuarterly Major 7 (7)5CanadaJapan Euro area (12)12 OECD Total (29)23Canada5 Major Asia Pacific (7)India Indonesia 5 Big 6 Non OECD (6)Russia3Brazil China World (35)2447

4 National indicators for zones (consumer) ZonesMonthlyQuarterlyNo indicator Major 7 (7)6Japan Euro area (12)12 OECD Total (29)24Japan New Zealand Switzerland Norway Turkey Major Asia Pacific (7) Australia, Korea, China Japan New Zealand India Indonesia Big 6 Non OECD (6)China Brazil South AfricaIndia Indonesia Russia World (35)264Norway, Turkey, India, Indonesia, Russia

5 Methodology Periodicity 1. Quarterly data refer to the first month of the quarter 2.Quarterly data refer to second month of the quarter 3.Quarterly data refer to second month of the quarter with 3rd last month extrapolated 4.Quarterly data refer to third month of the quarter

6 Methodology (following) Smoothing - MCD (Months for cyclical Dominance) - QCD (Quarter for Cyclical Dominance) Standardisation / Normalisation Substract the mean and then divide by the mean of the absolute values of the differences from the mean.

7 Methodology (following) Weighting (GDP-PPP) ManufacturingConsumers Germany India7.2- Japan China United States Euro area Non OECD Big (3) Major Asia Pacific OECD Major OECD Total

8 Methodology (final) Aggregation - 90 % of total weight for Major 7 countries - 60 % of total weight for other zones:. OECD total. Euro area. Big 6 Non OECD area. World proxy

9 Publication of results (manufacturing) Coverage of total components Frequency of components Share of quarterly components Starting date MQ Euro Area OECD Major OECD Total Major Asia Pacific Big 6 non OECD World

10 Publication of results (consumers) Coverage of total components Frequency of components Share of quarterly components Starting date MQ Euro Area OECD Major OECD Total Major Asia Pacific Big 6 non OECD World

11 Publication of results (manufacturing)

12 Publication of results (manufacturing)

13 Publication of results (manufacturing)

14 Publication of results (consumers)

15 Publication of results (consumers)

16 Publication of results Manufacturing and consumers

17 3 Alternative Approaches Series nameDe-trendingNormalisationWeigthing ECEuroAreaECNo Changing every year OECD 1EuroArea OECDRT Yes Fixed OECD 2EuroArea OECD NoYesFixed

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20 Comparison of World and Euro area confidence indicators IndicatorShare of GDP- PPP SectorDe- trending Normali sation Weighting World WES (90) 95.4EconomyNo Fixed trade weights Euro WES (12) 100EconomyNo Fixed trade weights Euro EC (12) 100MFGNo Changing yearly GDP-PPP weights World OECD (35) 83.1MFGNoYesFixed GDP-PPP weights OECD Total (29) 100MFGNoYesFixed GDP-PPP weights Euro OECD (12) 100MFGNoYesFixed GDP-PPP weights

21 World Business Confidence Indicators

22 Euro area Business Confidence Indicators

23 Conclusions Publication of results: –Business confidence indicators (manufacturing) (Euro Area, Major 7, OECD Total, OECD Asia Pacific, Big 6 Non EODC, World proxy) –Consumer confidence indicator (Euro Area, Major 7, OECD Total) Methodology: –Use of the option de-trending

24 Future work Calculation of country specific business confidence indicators for Non EU countries Incorporation of consumer confidence indicator (India, Indonesia, Russia) Extension of calculation of zone aggregates (NAFTA, Big 4 European, OECD Europe, EU15, OECD Asia,..) Calculate regional or zone confidence indicators for other sectors Use of alternative weights (ex: share of imports and exports)