1. Possible complements to improve EU/EA estimation techniques
TF Employment flash estimates Vienna, 5-6 October 2017 Item 8

2. Contents Background Possible proxies for non-responding countries
Possible models for non-responding countries
Availability of proxies
LFS source
OECD source
IHS & Trading Economics sources
GDP
First assessment of a proxy: GDP(-1)
Next steps
TF EMP-FL - 5/ Item 8

3. 1. Background
7 missing countries for t+45 data (= 16% of total employment)
10 missing countries for t+30 data (23% of total employment)
3 options :
Default estimation : average of the reporting countries
Estimation of each country
Estimation of the total
TF EMP-FL - 5/ Item 8

4. 2. Possible proxies LFS data OECD forecasts
IHS forecast (private company)
Trading Economic (free access website)
GDP
Monthly Economic Sentiment Indicator
Employmentt-1 …?
TF EMP-FL - 5/ Item 8

5. 3. Possible models Same methodology as GDP one's
Explanatory variables : lagged Employment, GDP, ESI, forecast for the reporting countries…
Econometric models: OLS( ordinary least squares), ARIMA, ARIMAX…
Comparison with indicators (R² ,MSE)
TF EMP-FL - 5/ Item 8

6. 4. Availability of proxies
First focus on QoQ data
TF EMP-FL - 5/ Item 8

7. 5. LFS QoQ data (1)
The LFS employment concept differs from national accounts domestic employment, as the latter sets no limit on age or type of household, and also includes the non-resident population contributing to GDP and conscripts in military or community service.
Tests performed on seasonally adjusted series, from 2012Q2 to 2017Q1, quarterly data calculated from monthly data
At t+45, LFS source used for 2 countries : Sweden and Romania
TF EMP-FL - 5/ Item 8

8. QoQ = quarterly growth rates on seasonally-adjusted series
5. LFS QoQ data (2)
TF EMP-FL - 5/ Item 8

9. 6. OECD QoQ forecast (1) Main features:
Same scope as NA Employment
2-year forecasts
Updated twice a year : June and November
Need of forecast series and not actual data to perform tests
TF EMP-FL - 5/ Item 8

10. 6. OECD QoQ forecast (2) First comparison with actual data
Max absolute error to measure quality
MSE will be calculated when OECD back estimates available
TF EMP-FL - 5/ Item 8

11. 7. IHS and Trading Economics (1)
Employed persons (to be confirmed)
Available only for France
Need of forecast series instead of actual series for the past quarters
Trading Economics
Employed persons
Available for all missing countries
TF EMP-FL - 5/ Item 8

12. 7. IHS and Trading Economics (2)
IHS forecast vs actual data QoQ data
employed persons
Trading Economics forecasts vs actual data
TF EMP-FL - 5/ Item 8

13. 8. GDP (1)
GDP has higher changes than Employment for several countries : Finland, France, Sweden and Malta  Rather use GDP in a model
TF EMP-FL - 5/ Item 8

14. 8. GDP (2) Correlation matrix with GDPt and GDPt-1
Stronger correlations with a lag (GDPt-1)
TF EMP-FL - 5/ Item 8

15. 9. First assessment of a proxy: GDP(-1)
1st step: Growth rates for each country
GDP(-1) as a proxy for 10 non-reporting countries
Actual data sent by MS for 18 reporting countries
2nd step: weighted average to estimate aggregates (EU28 / EA19)
3rd step: Comparison with actual data of aggregates
(period 1995Q2-2017Q1)
TF EMP-FL - 5/ Item 8

16. A second assessment will be perfomed when
MSE = 1,41e-06
A second assessment will be perfomed when
back estimates for reporting countries are available
TF EMP-FL - 5/ Item 8

17. 10. Next steps Test ESI as a proxy
Collect back estimates for OECD and for IHS
Calculate estimates of EU / EA aggregates for all proxies
Calculate MSE on a similar period for all proxies
Perform models
Test individual estimates by country vs global estimate
Compare with the default estimate (average of reporting countries) ….
TF EMP-FL - 5/ Item 8

18. Thanks for your attention
TF Employment flash estimates Vienna, 5-6 October 2017 Item 8