EUROPEAN COMMISSION Brussels, 18.3.2021 COM(2021) 126 final REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL concerning short-term statistics as required by Article 14(2) of Council Regulation (EC) No 1165/98



REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL concerning short-term statistics as required by Article 14(2) of Council Regulation (EC) No 1165/98 1.Introduction European short-term business statistics (STS) provide a comprehensive set of indicators that cover, among other things, production, turnover, output prices (often also referred to as producer prices), number of persons employed, hours worked and gross wages. These STS indicators fall within four major economic areas: industry, construction, retail trade and services (excluding financial and public services). Table 1 provides an overview of them. Table 1: Short-term statistics indicators Industry Construction Retail trade Other services Industrial production Production in construction - Building construction - Civil engineering - - Industrial turnover, domestic and non-domestic (euro area and non-euro area) - Turnover in retail trade Turnover in (other) services - Building permits - Number of dwellings - m2 of useful floor area - - Number of persons employed Number of persons employed Number of persons employed Number of persons employed Hours worked Hours worked Hours worked Hours worked Gross wages and salaries Gross wages and salaries Gross wages and salaries Gross wages and salaries Industrial output prices, domestic and non-domestic (euro area and non-euro area) Construction output prices / construction costs Volume of retail trade Output prices of (other) services Industrial import prices (euro area and non-euro area) - - - The legal basis for short‑term business statistics is Council Regulation (EC) No 1165/98 (the ‘STS Regulation’). In accordance with Article 14(2) of that Regulation, the Commission has to submit a report to the European Parliament and the Council on the statistics compiled pursuant to the Regulation and in particular on their relevance and quality and on the revision of indicators. The report also addresses the cost of the statistical system and the burden on business arising from the STS Regulation in relation to its benefits. The present report follows up on the reports submitted in January 2003, June 2008, June 2011, June 2014 and August 2017. Section 2 outlines the uses of short-term statistics and their relevance for key European policies and the steering of European monetary policy. It also indicates major developments in short-term statistics since the previous report in August 2017. Section 3 describes in greater detail the different quality aspects of short-term statistics. Section 4 presents some facts regarding the cost and burden of collecting and processing data for short-term statistics. The final section provides an outlook on future developments in short-term statistics, in particular in relation to Regulation (EU) 2019/2152 on European business statistics (EBS). 2.Overview of short-term statistics and most important developments Short-term statistics provide a large number of the principal European economic indicators (PEEIs) developed to monitor the economic development (business cycle) of the European Union and its Member States and in particular to conduct monetary policy in the euro area. These indicators are: industrial production, industrial output prices on the domestic market, industrial import prices, production in construction, and volume of retail trade, turnover in services (excluding retail trade services), building permits and services producer price indices (SPPIs). The most prominent users of short-term statistics are the European Central Bank and national central banks, but the data are also of high importance for the European Commission, national governments, research institutes, as well as for businesses and business organisations. Moreover, short-term statistics provide key input for other statistical areas such as national accounts. Short-term statistics are most commonly used for economic trend analysis, forecasting and modelling. They are also required for the preparation of policy decisions, research purposes, checking and validating data from other sources and as a basis for business decisions. Results from short-term statistics may also be used by businesses for various other purposes (e.g. output price indices are used to index contracts). In order to ensure the relevance of short-term statistics for their users and to further improve the quality of the data, Eurostat has undertaken a number of initiatives since the previous report on short-term statistics, which was adopted in August 2017. Restructuring operations and changes in business models in some multinational businesses lead to unexpected sizeable revisions in some short-term statistics indicators as well as in national accounts data. In collaboration with national statistical institutes, Eurostat established an ‘Early Warning System (EWS)’. The role of this mechanism is to ensure that Eurostat is informed in time about expected changes in business statistics and national accounts which result from such globalisation events in multinational businesses and that the adaptation in statistics is done in a coherent and coordinated way by the national statistical authorities concerned. The participation of statistical authorities in the EWS is voluntary, and the confidentiality of business data is ensured.

In order to improve the quality of the indicators on production in construction and building permits, Eurostat established an e-Task Force which met regularly to exchange good practices and improve the available methodological guidance on these indicators. Moreover, the improvements of construction data was supported by Eurostat grants to national statistical authorities. In response to the global financial crisis, the European Systemic Risk Board (ESRB) was established in 2010 to oversee the EU financial system and prevent systemic risks. In pursuit of its mandate, the ESRB issues warnings and recommendations. Based on recommendations ESRB/2016/14 and ESRB/2019/3, Eurostat worked on the development of commercial real estate indicators (CREI); in this context, short-term statistics focused on indicators for construction starts, works completions and vacancy rates. Task forces with experts from Member States and grants to support the methodological work are used to develop these new statistical indicators. Pursuant to Article 11 of Council Regulation (EC) No 1165/98, Eurostat and the national statistical authorities introduced new weights for the aggregation of short-term statistics indices in 2018 with the base year 2015. 3.Scope and compliance with the STS Regulation Eurostat monitors Member States’ compliance with the STS Regulation in terms of timeliness and completeness. Twice per year, a comprehensive compliance score covering all indicators is calculated for each country. Generally, the results of the monitoring show a high degree of compliance with the Regulation. As of 1 April 2020, the EU-27 average score was 9.7 (out of 10) with a large number of Member States fully compliant. The quality of the STS data is developed on the basis of the various quality aspects outlined in the European Statistics Code of Practice. 3.1.Accuracy, reliability, coherence and comparability With Commission Regulation (EC) No 1503/2006, common definitions for short-term statistics were introduced in order to ensure the coherence and comparability of data. Eurostat and the national statistical offices work closely together to maintain and improve high accuracy, reliability and coherence of the short-term statistics indicators. The methodological framework established by the STS Regulation is continuously improved through consultation with technical experts and special thematic task forces. Despite uniform definitions, approaches do not have to be identical across Member States for compiling statistical data. In keeping with the principle of subsidiarity and in order to take account of national differences, e.g. as regards size, economic structure and availability of administrative data, the STS Regulation leaves it to Member States to decide on the most efficient and effective ways of collecting and processing the data. Eurostat also works with other international organisations to increase the comparability of data and methodology beyond the European Union. 3.2.Timeliness and punctuality Short-term statistics are among the first official data to provide an indication of the most recent economic developments. The STS Regulation sets very short deadlines for the delivery of national data to Eurostat. Table 2 shows the deadlines for data transmission to Eurostat (third column) and the target dates set by the Economic and Financial Committee (EFC) in its report on information requirements in the European Monetary Union. The last column indicates the current deadlines for dissemination (e.g. via thematic news releases and online database releases). In general, the timeliness of short-term statistics can be considered very good. Delays usually only occur if the target delivery day falls on a weekend or on a public holiday. Users are informed about news release publication dates well in advance by means of the news release calendar on the Eurostat website. In past years, all dates announced in the calendar have been met. Table 2: Timeliness – days between end of reference period a) and delivery deadline, STS Regulation, EFC target and actual dissemination of EA aggregates (2020) Indicator Periodicity STS Regulation deadlines b) EFC targets for 2020 c) Dissemination of EA totals d) Industrial production Monthly 40 40 47 Industrial output prices of the domestic market Monthly 35 35 33 Industrial import prices Monthly 45 45 37 Production in construction Monthly 45 45 50 Building permits Quarterly 90 90 92 Turnover in retail trade Monthly 30 30 34 Turnover in (other) services Quarterly 60 60 64 Service output prices Quarterly 90 90 92 a) The reference period is the time period for which statistical results are collected or calculated and to which, as a result, these values refer. For the STS it is either the month or the quarter. b) Deadlines for the transmission of data to Eurostat under the short‑term statistics Regulation; for smaller countries, longer deadlines may apply. c) Targets set in the Economic and Financial Committee (EFC) 2020 Status Report on information requirements in EMU. d) Days between the end of reference period and dissemination (e.g. news release, data release). 3.3.Revisions of short-term statistics indicators

To meet the short publication deadlines the first results of short-term indicators have to be based on preliminary, estimated and incomplete data. Following the first data release, survey results are revised when late respondents’ input has been added. However data can also be revised for a whole range of other reasons, including seasonal adjustment, benchmarking, new and/or improved data sources, and corrections of errors or methodological changes. The revisions are generally rather limited in scale, especially at the aggregated EU level and for the euro area. In order to assess the quality of the first results of the four short-term statistics indicators published monthly in a news release, changes between first and second publications of monthly growth rates were analysed for 2017, 2018, and 2019. Table 3 shows, for the euro-area aggregates of the four STS indicators subject to a news release, the average scale of revisions of growth rates between the first and the second publication 1 month later (second column). This is zero or close to zero, which means that upwards and downwards revisions of the growth rates cancel each other out, i.e. there appears to be no significant systematic bias to over or underestimating results. In absolute terms (third column), the average revisions vary between 0.1 for industrial output prices and 0.4 percentage points for production in construction. The differences across indicators are explained by different compilation and revision methods. While industrial output prices are often not revised at all, production indicators might even be revised several years after their first publication. Average growth rates (in absolute terms at second publication) are indicated in column 4. The last column shows the relationship between the revision of the growth rate and the growth rate itself (at the time of the second publication). This number describes more accurately the magnitude of the revisions, since it makes a difference whether a revision of x percentage points is applied to a relatively high or a relatively low growth rate. Table 3: Scale of revision for the four principal short-term statistics indicators, 2017-19 a) 1 2 3 4 5 Average revision b) Average absolute revision c) Average absolute growth rate Relative average revision d) Industrial production 0.0 0.2 0.7 0.2 Industrial output prices (domestic market) 0.0 0.1 0.3 0.2 Production in construction 0.2 0.4 0.9 0.4 Volume of retail trade 0.1 0.2 0.6 0.4 a) Seasonally adjusted growth rates of indicators for the euro area. b) Differences between growth rates at second and first publication, 2017-2019 average. c) Absolute differences between growth rates at second and first publication, 2017-2019 average. d) Ratio between absolute revision (3rd column) and absolute growth rate at second publication (4th column), 2017-2019 average. Differences are due to rounding errors. In the first half of 2020, the COVID-19 pandemic posed severe challenges to short-term statistics. As a result of lockdown and other measures, businesses could often not be reached for collecting data. The unprecedented falls and rises in economic activities made estimations more difficult. Extension of tax reporting delays and similar measures to alleviate the burden on businesses reduced the availability of administrative data for statistics. In order to support national statistical authorities, Eurostat organised an online meeting to discuss problems and solutions and provide methodological guidance on issues such as estimations and dealing with missing data. Despite the difficulties, the publication of short-term data was not significantly disrupted and all publication deadlines were met. Table 4 gives an overview of the revisions of data for the data between March 2020 and June 2020. As can be seen, revisions increased in absolute terms, and a general bias – indicating conservative first estimates when the STS indicators went strongly downwards during the COVID-19 pandemic – can be observed in the first releases, compared to the second one. Relative to the increased absolute rates of changes in indicators, the revision performance even improved during this period. Table 4: Scale of revision for the four principal short-term statistics indicators March 2020 – June 2020 a) 1 2 3 4 5 Average revision b) Average absolute revision c) Average absolute growth rate Relative average revision d) Industrial production -0.4 0.4 10.6 0.0 Industrial output prices (domestic market) -0.2 0.2 1.2 0.1 Production in construction -1.4 2.4 16.0 0.1 Volume of retail trade -0.8 1.8 11.0 0.2 a) Seasonally adjusted growth rates of indicators for the euro area. b) Differences between growth rates at second and first publication, March 2020 – June 2020 average. c) Absolute differences between growth rates at second and first publication, March 2020 – June 2020 average. d) Ratio between absolute revision (3rd column) and absolute growth rate at second publication (4th column), March 2020 – June 2020 average. Differences are due to rounding errors. 3.4.Accessibility, clarity and availability of metadata