1. Revision Analysis for General Economic Statistics
Henning Ahnert
European Central Bank
OECD Short-term Economic Statistics Working Party June 2006, Paris

2. Motivation ECB discussion February 2006:
Revision of initial (low) GDP growth estimate for 2005Q4 cannot be excluded; volatility of short-term data
Recent press quotes :
Initial estimate may underestimate 2005Q4 GDP growth (JP Morgan)
Europe’s statisticians too gloomy (The Economist)
 ECB Revision analysis 2

3. Basic features of the analysis (I)3
Basic features of the analysis (I)
Selected key indicators:
GDP & expenditure components & compensation
Employment & Unemployment
HICP and Labour Cost Index
Industrial production & Retail trade turnover
Euro area, six largest euro area countries, UK, US, Japan
Data sources: Eurostat, ECB, OECD 3

4. Basic features of the analysis (II)4
Basic features of the analysis (II)
Revisions are necessary !
Low revisions do not prove accurate measurement
Revisions may incorporate new information, conceptual changes, changes in seasonal and working day adjustment factors etc.
Euro area statistics: harmonisation, improved timeliness, changes in country coverage have led to welcome changes and revisions 4

5. Timeliness and coverage5
Timeliness and coverage
Euro area: timeliness and country coverage rates
Indicator
Timeliness
Country coverage rate
Early-1999
End-2005
GDP 75 45 77 94
Industrial production
104 47 85 97
Retail trade turnover 90
33-36 70 5

6. Main results for euro area statistics6
Main results for euro area statistics
more stable than euro area country data
 main reason: revisions ‘cancel out’
but: small GDP revisions coincide with low growth
monthly indicators (e.g. retail trade) less reliable than quarterly indicators 6

7. Main results by country7
Main results by country
Six largest euro area countries:
revisions in 1999/2000 higher (new statistics)
revisions vary from relatively low (for GDP) to rather high (for retail sales)
UK: as largest euro area countries
US: higher revisions for GDP and employment, comparable revisions for other variables (but typically higher growth rates!)
JP: higher revisions for GDP and retail sales, employment and unemployment hardly revised 7

8. GDP Euro area GDP volume growth8
GDP
Euro area GDP volume growth
(seasonally adjusted; quarter-on-quarter growth rate)
 (Recently) stable results and no bias (t+45)
-0.5
-0.3
-0.1
0.1
0.3
0.5
0.7
0.9
1.1
1.3
99Q1
99Q3
00Q1
00Q3
01Q1
01Q3
02Q1
02Q3
03Q1
03Q3
04Q1
04Q3
05Q1
05Q3
Current data minus first release
First release
Current data 8

9. Euro area revisions smoother than country revisions9
Euro area and country GDP revisions
Euro area revisions smoother
than country revisions 9

10. HICP Euro area annual HICP  Very reliable flash estimate (t+0)10
HICP
Euro area annual HICP
(non-adjusted; annual growth rate)
 Very reliable flash estimate (t+0) 10

11. Euro area unemployment rate11
Unemployment
Euro area unemployment rate
(seasonally adjusted)
 Revisions due to conceptual changes (t+30) 11

12. Industrial production (I)12
Industrial production (I)
Euro area (s.a.; month-on-month growth)
 Relatively volatile on a monthly basis ... (t+35) 12

13. Industrial production (II)13
Industrial production (II)
Euro area (s. a. 3 months moving average; month-on-month growth)
 ...less volatile 3 months moving average 13

14. Euro area and selected countries14
Industrial production (III)
Euro area and selected countries
(current data minus first release; seasonally adjusted; month-on-month growth)
 Country data more volatile – cancels out at euro area level 14

15. Revision indicators - euro area and selected countries15
Industrial production (IV)
Revision indicators - euro area and selected countries
Percentage points 
Total revisions
(latest minus first release)
Successive revisions
Memo item:
Jan02 – Dec04
Average
Average absolute
Range of
Average cumulative
Average monthly
revision
revisions
absolute revision
growth rate
Euro area
0.10
0.32
-0.7 to 0.9
2.98
Belgium
0.40
1.28
-2.6 to 5.1
7.46
0.15
Germany
0.21
0.59
-1.2 to 1.9
2.36
0.16
Spain
-0.04
0.55
-1.6 to 1.3
1.60
0.13
France
0.00
0.77
-1.9 to 1.7
2.43
0.08
Italy
0.04
0.37
1.65
-0.07
Netherlands
0.26
1.66
-4.6 to 7.9
3.89
0.02
3 groups; broadly corresponding to country size ?
Significant successive revisions in euro area 15

16. Retail trade turnover (I)16
Retail trade turnover (I)
Euro area (s.a.; month-on-month growth) (t+35)
 No bias, but very unstable (improving in 2005?) 16

17. Revision indicators - euro area and selected countries17
Retail trade turnover (III)
Revision indicators - euro area and selected countries
Percentage points
Total revisions
(latest minus first release)
Successive revisions
Memo item:
Jan02 – Dec04
Average
Average absolute
Range of
Average cumulative
Average monthly
revision
revisions
absolute revision
growth rate
Euro area
-0.01
0.63
-2.4 to 2.1
9.63
0.05
Belgium
-0.10
1.03
-3.4 to 2.6
7.70
0.04
Germany
1.56
-6.5 to 3.6
8.75
Spain
-0.08
0.67
-2.3 to 1.6
2.57
0.30
France
-0.13
1.11
-3.5 to 2.4
1.83
0.09
Italy
-0.06
0.43
-1.0 to 1.0
3.50
-0.11
Netherlands
0.12
0.64
-1.8 to 1.7
7.87 17

18. 18
Final remarks
Favourable result for most euro area indicators - more stable than country data (revisions cancel out)
Experience too short for analysis of “cyclical” revisions, but can revisions be better anticipated?
Monthly data very valuable despite higher revisions (timeliness!)…
…but can we better understand the reasons for high revisions ?
Synchronised national release and revision policies may further stabilise euro area statistics 18