Opinion of the European Monetary Institute at a request of the Council of the European Union under Article 109 f (6) of the Treaty establishing the European Community (“the Treaty”) and Article 5.3 of the Statute of the EMI on a Draft Proposal for a Council Regulation concerning Short-Term Statistics (COM(97) 313 final) (“the Draft Regulation”) (CON/97/19)
Date: 1997-09-11
Institutions: European Monetary Institute
Subjects: data collection, economic statistics, single monetary policy, statistical method

OPINION OF THE EUROPEAN MONETARY INSTITUTE

at a request of the Council of the European Union under Article 109 f (6) of the Treaty establishing the

European Community (“the Treaty”) and Article 5.3 of the Statute of the EMI

on  a  Draft  Proposal 

for  a  Council  Regulation  concerning  Short-Term  Statistics

(COM(97) 313 final) (“the Draft Regulation”).

CON/97/19

1.  The present opinion was requested in a letter dated 30 July  1997  from  the  Council  of  the  European

Union which, for this purpose, transmitted to the EMI document “COM(97) 313 final” containing the

Draft  Regulation  and  its  explanatory  memorandum.  The  EMI  is  competent  for  this  consultation,  by

virtue of Articles 109f (6) of the Treaty and Article  5.3 of the Statute of the EMI.

2.  The  objective  of  the  Draft  Regulation  is  to  establish  a  framework  for  the  production  of  short-term

business statistics. The EMI as the forerunner of the ECB has a keen interest in this initiative, since

the indicators covered under the Draft Regulation are of vital interest for the future single monetary

policy.  They  will  provide  the  necessary  economic  background  information  and  contribute  to  the

statistical basis on which monetary policy decisions will be taken.

3. 

In  July  1996  the  EMI  set  out  the  statistical  requirements  for  Monetary  Union  and  specified  the
prospective  requirements  in  the  field  of  short-term  statistics.1  In  general,  the  ECB  will  need
sufficiently comparable, comprehensive and timely data from the start of Monetary Union in January

1999. Whilst the analysis of economic developments in individual Member States will continue to be

important, the focus of the single monetary policy will move to aggregated results for the Monetary

Union area as a whole. An important implication of this is that a common standard for  all  Member

States  is  essential  and  that  exceptions  from  this  standard  must  be  avoided  or  minimised  if  they

challenge the compilation and quality of Monetary Union-wide statistics.

4.  The  current  provision  of  short-term  business  statistics  at  a  European  level  does  not  meet  the

requirements of the future single monetary policy. Therefore the EMI strongly supports this initiative.

The EMI is conscious of the  costs  which  the  required  changes  may  entail.  These  costs  have  to  be

1 Implementation Package (Statistical Requirements for Stage Three of Monetary Union), EMI, July 1996.

 
 
 
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viewed against the opportunity to define and conduct policy with the benefit of better information. The

following comments are divided into general and more specific comments.

 A. General remarks

5.  With  a  view  to  the  start  of  Stage  Three  of  Economic  and  Monetary  Union  in  January  1999,  the

EMI  regards  it  as  necessary  that  the  Draft  Regulation  is  adopted  as  soon  as  possible  and  that

further delays in the implementation of the Regulation are limited to the unavoidable minimum. The

information  provided  by  the  statistics  covered  under  the  Draft  Regulation  will  play  an  important

role in the monetary policy decision-making process.

6.  Most important for the EMI and the future ECB are timely short-term statistics with a sufficiently

broad coverage of the economy which should be available for all Member States in a comparable

fashion.  From  the  point  of  view  of  the  EMI,  the  following  paragraphs  7.  To  11.  of  this

Opinion would therefore have highest priority.

7.  According to the Draft Regulation, the first data to be supplied are due in January 1998. However,

the  Draft  Regulation  provides  for  a  general  transition  period  of  up  to  five  years  and,  for  a  small

group  of  indicators,  for  a  transition  period  of  two  years  (Article  12(1)  and  Annex  A  to  C(j)).

Complete EU-wide data may not therefore be available before the year 2003 or 2000 respectively.

Although  the  EMI  acknowledges  that  the  introduction  of  new  statistics  or  the  change  to  existing

collection systems may require significant efforts in the Member States concerned, the provision of

long  transition  periods  is  a  serious  shortcoming  of  the  Draft  and  is  not  in  line  with  the  start  of  a

single  monetary  policy  in  January  1999.  The  EMI  therefore  proposes  that  the  general

transition period of five years should be reduced to a period of three years and the two-

year transition period to a period of one year.

8. 

In the context of the length of the transition periods and the timeliness of the data produced under

the Regulation, it is also emphasised that, for the purposes of macroeconomic and monetary policy

analysis, timely aggregated indicators are more important than detailed breakdowns.

9.  The  EMI  welcomes  the  provision  in  Article  8(3)  for  timely  transmission  of  the  results  from  the

Member  States  to  the  Statistical  Office  of  the  European  Communities,  enabling  the  Statistical

Office of the European Communities to release these data in a timely fashion. The upper limit of

six months for the transmission of statistics as provided for in Article 8(2) is regarded as

much too long for the purposes of short-term statistics.

10.  The  Draft  Regulation  provides  for  only  a  few  legally  binding  measures  for  enhancing  the

conceptual  comparability  of  short-term  statistics  (Articles  7  and  11).  The  EMI  underlines  the

 
 
 
 
 
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importance  of  a  sufficient  comparability  of  national  data  for  the  purpose  of  aggregation.  The

introduction of more comparable statistical methods should therefore be a priority after

the implementation of the Regulation.

11.  The  EMI  welcomes  the  broad  scope  of  the  Draft  Regulation.  However,  given  the  increasing

importance of the services sector in the economy, the EMI regrets the low priority which has been

given to “other services” (Annex D).  The  EMI  accepts  that  studies  may  need  to  precede

the introduction of new statistics, in particular in order to identify the most relevant and

cyclical  sub-sectors,  but  proposes  that  the  envisaged  timetable  for  the  decision  on  and

introduction of quarterly statistics relating to the service sector should be shorter.

12.  The scope of the Regulation includes all market activities in the financial intermediation sector as

defined  in  the  NACE  Rev.1.  Given  the  responsibilities  of  the  future  ECB  in  the  field  of

financial  statistics,  the  EMI  proposes  that  the  first  sentence  of  Article  16  of  the  Draft

Regulation is amended by the following addition after “...laid down in Article 17”:

“... and, for all implementation measures concerning Section  J  of  NACE Rev.1,

after  consultation  of  the  European  Central  Bank  and  the  Committee  on

Monetary, Financial and Balance of Payments Statistics,...”

13.  With  reference  to  the  scope  of  the  Draft  Regulation  the  EMI  also  notes  that  the  production  of

import price statistics is not covered by the Regulation. Considering the importance of such data

for  the  purposes  of  inflation  analysis,  the  EMI  suggests  that  this  variable  should  be  added  to  the

catalogue of indicators covered by the Draft Regulation.

14.  Concerning  Article  10  of  the  Draft  Regulation  the  EMI  suggests  that  the  regular  weight

adjustments of the indicators should be carried out in a co-ordinated manner as far as possible in

order to avoid frequent weight changes in the derived EU- and MU-aggregates as a consequence

of adjustments of national weighting schemes.

 B. Specific remarks

 Annex A (Industry module)

15.  The EMI welcomes the inclusion of industrial order statistics in the Draft Regulation, deeming

these essential for detecting trends and turning points in the economy in a timely fashion. For the

 
 
 
 
 
 
 
 
 
 
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ECB it will be important to know the geographical origin of orders or, more specifically, to be able

to separate orders originating from the single currency area from orders originating from

other countries. The traditional split into national and foreign orders will not suffice for this, since

total export orders will cover orders from other Monetary Union countries as well as orders from

third countries. Moreover, for the ECB this breakdown will be more relevant than the breakdown

into  intra-EC  and  extra-EC  export  market  variables  for  which  the  Draft  Regulation  foresees  in

Annex A(h) the launch of a voluntary pilot study. The EMI considers that a legal initiative, which

will start producing statistical results at broadly the same time as the start of the single monetary

policy, should make provision for this important variable.

A corresponding modification of the Draft Regulation is  proposed  for  industrial  output  prices.

The  current  Draft  does  not  allow  for  the  compilation  of  output  prices  for  Monetary  Union  area-

wide sales, although this is likely to be the most important producer price indicator for the ECB.

16.  The EMI supports the proposed calculation frequencies and  deadlines for data transmission.

They provide a good basis for the purposes of short-term economic analysis. Given the importance

of order statistics for conjunctural analysis, however, a shorter transmission delay for this variable

would be desirable.

 Annex B (Construction module)

17.  The EMI welcomes the comprehensive list of indicators envisaged for the construction sector. The

planned statistics on  output prices and  construction costs are important indicators for inflation

analysis.

18.  Concerning the variable  new  orders  received,  the  EMI  proposes  that  a  breakdown  should  be

added between residential, industrial and public construction orders. Such a breakdown can provide

valuable information for cyclical analysis.

19.  The EMI notes that the limitation of construction output prices and construction costs to new

residential  buildings  significantly  reduces  the  information  provided  by  these  variables.  A  wider

coverage of these indicators would be preferable.

20.  Moreover, the EMI notes that the envisaged transmission delays  for construction statistics are in

several cases too long. This concerns in particular the variables for new orders, output prices and

construction  costs,  for  which  the  EMI  proposes  that  the  envisaged  timeliness  should  be  about  60

calendar days instead of 90 calendar days.

 
 
 
 
 
 
 
 
 
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 Annex C (Retail trade module)

21.  Given that retail trade turnover data is the most important short-term information on household

demand, the timely provision of sufficiently reliable results is essential. The foreseen transmission

delays  of  three  to  six  months  appear  unduly  long.  Moreover,  the  nature  and  the  quality  of  the

“special estimated advance variables”, which are to be transmitted on the highest aggregation level

within  two  months,  are  not  sufficiently  clear.  It  is  therefore  proposed  that  the  delay  for  all

preliminary results should be reduced from three to two months.

22.  Corresponding  to  what  is  envisaged  for  the  industry  and  construction  module,  the  EMI  would

suggest the addition of a variable for gross wages and  salaries which is an important indicator for

monetary policy analysis.

 Annex D (Other services module)

23.  According to the Draft Regulation, pilot studies are to be carried out by the end of 2002 before any

decision  is  taken  regarding  the  introduction  of  short-term  services  sector  statistics.  Against  this

background, the EMI regards it as premature to propose a transmission delay of six months after

the  end  of  the  reference  period.  This  specification  should  await  the  outcome  of  the  planned  pilot

studies.  In  any  case,  transmission  delays  of  six  months  are  not  compatible  with  the  objectives  of

short-term statistics.

24.  The EMI would suggest the addition of a variable for gross wages and salaries and, if practicable,

also output prices to the two variables (turnover and persons employed) which are planned to be

subject of a pilot study.

25.  This opinion will be published in the Official Journal of the European Communities.

11 September 1997