International Seminar on Timeliness, Methodology and Comparability of Rapid Estimates of Economic Trends The availability, timeliness and quality of rapid estimates Michel Girard – Statistics Canada May 27, 2009

17/01/2016 Statistics Canada Statistique Canada 2 Overview  Indicators  Consultation with stakeholders  Flash estimates  Quality  Framework for indicators  Qualitative statistics  Databases and data management

17/01/2016 Statistics Canada Statistique Canada 3 Indicators  Business registry  Indicators Industry Prices Employment (lagging) Financial Administrative data  Qualitative statistics  Opinion surveys or sentiment indicators (leading)  National accounts statistics  Leading indicators

17/01/2016 Statistics Canada Statistique Canada 4 Indicators – Multidimensional needs  Infra-annual and seasonal adjustment  Administrative data to fill data gaps  Turnover and prices (survey)  Sales and financial statistics - Private sector data e.g. credit card sales, Financial Reuters and Bloomberg  GDP  Opinion survey or sentiment indicators For example, about construction or new orders  Loans and public debt  Linking financial and business sectors data

17/01/2016 Statistics Canada Statistique Canada 5 Consultation with stakeholders  STC – Concerns about stakeholders’ needs Adequacy of data packages to analysts / policy makers  Large number of indicators with a lag of 42 to 60 days Preliminary actions - Highlighting the right data  Emphasis on financial data products  Ratios to facilitate analysis  Awareness of the financial accounts and balance sheet products –workshops and analytical paper

17/01/2016 Statistics Canada Statistique Canada 6 Consultation process  Formal consultation process Departments, B.o.C, academic, forecasters, advisory committees, business analysts Users are not comfortable with the STC making unilateral decisions on the product line NSO should not rush into short-term collection with testing Short term ad hoc measures will not be useful unless there is a time series continuity Continue to focus on long term investments in quality improvements and new data products

17/01/2016 Statistics Canada Statistique Canada 7 Consultation outcome  Short-term Investment survey Feasibility study: Monthly transactions in international securities Investigate capacity to advance some releases Development of a module (LFS) about labour market transitions Discussions about the potential effects of regulatory reform Long-term  Metadata  Workshops  Web site

17/01/2016 Statistics Canada Statistique Canada 8 Flash estimates  A flash estimate is an early estimate produced and published as soon as possible after the end of the reference period, using a more incomplete set of information than the set used for the traditional estimates – EUROSTAT  Flash estimates are to be released 30 days after reference period - Korea  Differences between “flash” and “traditional” estimates are defined according to 5 dimensions: timeliness, accuracy, coverage, sources and methods  EUROSTAT paper presents the estimation procedures behind the: Quarterly GDP Monthly Union Index of Consumer Prices  Paper deals with issues related to the lack of basic information: use movement of a smaller sample, historical and partial information as well as the use of regressions and other mathematical methods

17/01/2016 Statistics Canada Statistique Canada 9 Flash estimates  Revision analysis to assess the performance of flash estimates  New information do not add significantly to flash estimates; improvements to timeliness do not necessarily come at the expense of lower reliability  Working on a days schedule framework Compare to the current schedule that extend to 123 days. Flash GDP (30 days) Main expenditure, output and income components of GDP (60 days), Complete set of quarterly accounts, including financial and non- financial accounts for institutional sectors (90 days)

17/01/2016 Statistics Canada Statistique Canada 10 Flash estimates  Similar conclusion about the quarterly GDP in Korea  Using econometric techniques, administrative data, rapid survey indicators  Flash estimate released after 25 days is very close to the one released after 70 days  Would be interested to know if the GDP releases by EUROSTAT and Korea are accompanied by a text explaining which components of GDP are responsible for the fluctuations. BEA provide such detail with the “advance” GDP release.  Canada has a more integrated approach where complete set of accounts is available after 75 days after reference period, monthly and quarterly GDP are available 60 days after reference period.

17/01/2016 Statistics Canada Statistique Canada 11 Quality of signals  To what extent, when facing incomplete information, extrapolation techniques or other (assumptions) are capable of capturing the correct movement in a severe changing economic context  Issue well covered in the BIS paper when it refers to the extrapolation of previous months’ year-over-year changes in the CPI to gain timeliness  BIS mentioned the necessity to conduct research to understand the new reaction: The market reaction to bank rescue packages Given the severity of current crisis and synchronised economic downturn, historical models and data will prove to be poor reference for the future as future business cycles will certainly be different.  US paper about the advance estimates of GDP: Revisions must be judged against average growth and volatility in growth. Seasonal factors largest source of revisions Quality assessed on direction (98%), acceleration or deceleration (74%) above/near/below trend (60%) My interpretation is that larger revisions could be acceptable as long as long as the story does not change What is the quality of the signal in a rapid changing economic environment? Judgemental trend in the area of services – How to ensure consistency over time?

17/01/2016 Statistics Canada Statistique Canada 12 Incomplete information  Issue of low response or simply data source availability  Widespread approach is to prepare flash estimates using series that are representative of an overall; introduce new information gradually in the calculation  Use of extrapolation techniques or other mathematical techniques  Need for clear notes about the methodologies  Present statistics on the basis of reported data and at country group level and/or main players – UNCTAD  Flash estimates are generally for aggregates

17/01/2016 Statistics Canada Statistique Canada 13 Qualitative statistics  Early Warning System – Korea  To identify symptoms of an economic crisis in advance  EWI is compiled by transforming a composite index into a scale from 0 to 5 Normal: 0-1 Caution: 3-4 Danger: 4-5

17/01/2016 Statistics Canada Statistique Canada 14 Qualitative statistics  Similar approach exist in the Netherlands  Long-term trend and cycle-trend of a series of indicators are calculated  Examine the cycle to see if: Above or below long-term trend Increasing or decreasing

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17/01/2016 Statistics Canada Statistique Canada 16 Framework of indicators  Indicators should be given a context  Business Cycle Tracer – 15 macroeconomic indicators  Export Condition Monitor – 6 short-term indicators  10 additional indicators putting the BCT and ECM in a more general context 2 financial indicators (stock exchange and loans), 2 indicators of raw material prices, 2 indicators in the field of industry and construction, 2 indicators in the field of commercial services, 2 indicators for the real estate market

17/01/2016 Statistics Canada Statistique Canada 17 Databases  Paper from the World Bank reported on the GDDS and SDDS databases. To facilitate dissemination in standards formats of quarterly external debt data To support macroeconomic analysis and cross-country comparison. Public and publicly-guaranteed external debt  Interagency Group on Economic and Financial Statistics BIS, ECB, Eurostat, IMF, OECD, UN, World Bank Make data more accessible/timely via common Website New data needs

17/01/2016 Statistics Canada Statistique Canada 18 Data management  Common definitions, concepts  Harmonized classifications  Introduce new information gradually  Automated data exchange  Sharing methodologies - rapid estimates  Creating processing capacity – UNCTAD  Creating analytical capacity to confront statistics quickly before release, even if a flash estimate IT component Human resources component