Joint Harmonised EU Programme of Business and Consumer Surveys
Date: 2006-10-12
Institutions: European Commission
Subjects: economic analysis, economic forecasting, economic indicator, economic statistics, economic survey, short-term economic prospects, statistical method

12.10.2006

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Official Journal of the European Union

C 245/5

Joint Harmonised EU Programme of Business and Consumer Surveys

(2006/C 245/03)

1. Introduction

The Ecofin Council report to the European Council on 11 and
12 December 1999 in Helsinki on ‘Economic policy co-ordina-
tion’ (13123/1/99 Rev 1) called for an effective monitoring of
economic policies in stage three of Economic and Monetary
Union (EMU). For this purpose, the Council considered the
improved understanding of economic developments an essen-
tial prerequisite.

According to the Treaty, the Commission has an important
role in informing the EU authorities, the Member States and
the various economic agents on the economic situation and
prospects, both at national and at Community level. One of the
instruments to obtain timely information on economic devel-
opments are business and consumer surveys. For this reason,
the Commission, through its Directorate General for Economic
and Financial Affairs, co-ordinates regular and harmonised
business and consumer surveys in different economic sectors in
the EU Member States and the candidate countries.

2. The Need for a Joint Harmonised EU Programme

economic

are qualitative

The regular business and consumer surveys of the joint harmo-
nised EU Programme
surveys,
intended for short-term economic analysis. The surveys are
mainly used for qualitative economic analysis but increasingly
also for quantitative economic research. Particularly, in recent
years a variety of economic short-term forecasting methods
have been developed that make use of
the information
provided in business and consumer surveys. Very often these
models outperform traditional econometric models in fore-
casting macro-economic developments. More specifically, busi-
ness and consumer
survey data are increasingly used in
predicting turning points in the economic cycle. Besides the
surveys of the joint harmonised EU Programme, various other
surveys of Commission services exist, such as from the Directo-
rates-General
for Enterprise and Industry, Employment and
Communication. The approach of these surveys is different
from those of the joint harmonised EU Programme since they
are intended for long-term economic analysis and thus enquire
about
structural determinants of growth and
employment.

the various

The attractiveness of the survey data for qualitative and quanti-
tative analysis stems from the fact that the survey data are
normally available ahead of the quantitative information from
sources, which they are correlated with. The high
other
frequency and continuous harmonisation of the surveys are
some of their other main qualities. For this reason, business
an indispensable
and

surveys have

consumer

become

complement of quantitative statistical surveys, from which they
differ in methods and use. As noted by the recent report of an
external evaluation of the Joint Harmonised EU Programme of
Business and Consumer Surveys (BCS) (1), the surveys can be
considered a highly effective instrument
the
economic situation in the EU, the euro area and the Member
States.

to monitor

3. Implementation of the Programme

The harmonised business and consumer surveys in the Euro-
pean Union were initialised in 1961 by the Commission. The
first survey was the harmonised business survey in industry
conducted in 1962. Since then, both the scope and the sectors
covered by the surveys have expanded considerably. Particu-
larly, the sector for private services, which accounts for an
increasing share in the overall economy, has been included in
the programme. In 2006, a pilot survey in the financial services
sector was
sector
launched. The high sensitivity of
regarding confidentiality and the sector's idiosyncraticies in
term of cyclical behaviour have been the motives behind the
separation of this survey from the general service sector survey.

this

Over the past years, the surveys have been extended to cover
all (post-enlargement) Members States as well as the candidate
countries (2). The integration of the candidate countries into the
programme at an early stage is necessary in order to provide
reliable and comparable data to follow their economic evolu-
tion at present, and for the elaboration of correct EU aggregates
once these countries become members of the EU. Due to an
early integration of the countries involved, the recent enlarge-
ment of the EU was reflected in the Programme by a smooth
and timely transition to new aggregate indicators.

statistical

The surveys are carried out at national level by collaborating
institutions such as ministries,
institutes, central
banks, economic research institutes, business associations and
private companies. These institutions work with harmonised
survey questionnaires elaborated in co-operation with the
Commission services. The surveys feature also a number of
other common elements in the area of sample design, field
work and data transmission.

in particular a harmonised questionnaire,

Conducting the surveys in accordance with a common metho-
dology,
leads to a
better comparability of
the data between different Member
States and allows the construction of meaningful aggregated
business cycle indicators for the euro area and the EU. Since
this positive externality of harmonisation occurs mainly at EU
and euro area level rather than at the level of the national

(1) The European Evaluation Consortium, Evaluation of Business and

Consumer Surveys, Final Report, 22 April 2005

(2) The BCS are part of the annual work programme of the Directorate
General Economic and Financial Affairs and are authorised by
means of a financing decision adopted by the Commission

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Official Journal of the European Union

12.10.2006

survey-conducting institutions, the Commission decided from
the outset to support the activity of the collaborating institu-
tions with action grants (COM (61) PV 165 final, 15 November
1961). These grants, which are limited to a maximum of 50 %
of the costs of the action, also intend to cover the incremental
costs that arise initially from the inclusion of additional harmo-
nised questions or the addition of new sectors and branches in
the surveys and/or the change of certain questions from a non-
harmonised type to a harmonised one. In contrast, where the
national survey conducting institutions have no clear interest
or vocation in conducting a particular type of survey,
the
Commission concludes a service contract with the selected
survey conducting entity. In such cases the Commission covers
the full cost of the survey.

The continuous development of the Joint Harmonised BCS
Programme gave significant impulses to the advance of busi-
ness and consumer surveys outside the EU. As mentioned in
the above-cited evaluation report, the harmonised scheme of
the European Union has been increasingly adopted as the inter-
national standard. Business and consumer surveys following the
harmonised methodology are not only carried out in the 25 EU
Member States and all candidate countries but also in a number
of other countries, particularly in Central and Eastern Europe
(e.g. Russia and Albania). In this regard, the EU harmonised
surveys continue to serve as a benchmark for future co-opera-
tion. In particular, future applicant countries will be integrated
in the programme as soon as membership negotiations with
the European Union start.

The business surveys are addressed to managers in industry,
construction, retail trade and services. The consumer surveys
are addressed to private households. With the exception of the
investment survey in industry all surveys are carried out on a
monthly basis with some questions added every quarter. The
investment survey is conducted twice a year. The number of
questions varies between areas and lies between 6 and 15.

The data is normally collected in the first half of the month
and transmitted to the Commission services around one week
before the end of the month. More than 100 000 firms and
over 30 000 consumers are surveyed each month in the EU,
the samples varying in accordance with the size of the country.
The industry survey covers 56 sectors whereas the other
surveys include 5 to 9 different sectors. The consumers are
split into 25 socio-economic categories.

A quarterly survey addressed to economic experts around the
world, the World Economic Survey,
is also included in the
Programme and gives information about economic develop-
ments on a global scale.

In addition, ‘ad hoc’ surveys are conducted on issues of particu-
lar interest. As an example, ad hoc surveys concerning the
labour market have been carried out with a periodicity of
around five years. The results of the most recent survey of June
2004, which focused on labour market
flexibility and the
impact of new technologies on the performance of the EU
labour market, has been published in 2005.

All questionnaires are constantly updated to meet the require-
ments of economic analysts. The Commission services organise

regularly (once or twice a year) meetings with business survey
experts in order to update the questionnaires, discuss issues of
harmonisation and data presentation, and evaluate the results
of the surveys. Occasionally, workshops and working groups
are organised, which are addressed to a wider set of interested
parties (including, e.g., user groups) with the purpose of devel-
oping certain aspects of the programme or discussing issues of
common interest between EU and non-EU countries. Such
workshops are sometimes organised in co-operation with other
international bodies such as the OECD.

in which the data of

The maintenance and development of the database available at
the Commission services,
the BCS
Programme is stored, requires specialised software and the
maintenance and development of appropriate tools to handle
and analyse statistically and econometrically large quantities of
time series data. Such tools include, for instance, procedures
for assuring data consistency, the pre-adjustment and seasonal
adjustment of the data or the construction and development of
appropriate composite indicators. While most of these tasks are
covered by the staff of the Commission services,
in certain
specific areas external expertise by specialised companies is
sought after. Such technical assistance is limited to highly tech-
nical parts of the process at the end of the production chain
and provides
the
Programme.

efficient management of

for a more

4. Publication

The results of the surveys are used as such or summarised in
composite indicators (economic sentiment and confidence indi-
cators). The purpose of these composite indicators is to synthe-
sise the information contained in the survey data and make the
presentation of survey results more easily accessible. As timeli-
ness is a key advantage of the survey data, the period between
the transmission of the data from the national institutes and
publication of the results by the Commission services has been
shortened in successive steps over the past years. The results
are now published on the last working day of the month
during which the data was collected. The release of the data is
accompanied by a press release. Monthly updated survey
results, containing the data over the whole survey period, can
be downloaded from the Internet at:

http://europa.eu.int/comm/economy_finance/indicators/busines-
sandconsumersurveys_en.htm

More detailed results, e.g. broken down by sectors, can be
obtained from the Commission services on request. While
previously such data was provided only against a fee, in accord-
ance with the new policy these data are now provided free of
charge.

5. Use of the Information

The fact that the business and consumer survey results are
available rapidly and that
they contain information about
economic agents' expectations makes them valuable for fore-
casting purposes.

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Official Journal of the European Union

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The results of the surveys are intensively used by the Commis-
sion services as an indispensable tool for economic surveillance.
This includes their use in the semi-annual macroeconomic fore-
casts and in the analysis of business cycle developments (e.g.
determination of turning points). Some of the structural infor-
mation contained (e.g. opinions on employment perspectives)
are also used by various Commission services.

The surveys have become a fundamental source of information
for monitoring the evolution of EMU. For instance, the Euro-
pean Central Bank uses these results as significant input for the
assessment of the economic situation in the euro area.

Apart from the main actors in the field of economic policy at
European level, the business and consumer survey results are
also used by various international organisations, such as the
OECD, and national public and private bodies for the construc-
tion of concurrent and leading economic indicators and, more
generally, for forecasting purposes.

6. Evaluation

For the economic sentiment indicator and other sector indica-
tors to be useful, they must possess a series of properties such
as consistency, timeliness, comparability, etc. Moreover,
the
quality of the indicators needs to be continuously examined by
looking at their performance of tracking the macro-economic
aggregates they represent. At the most aggregate level, the indi-
cators should be able to track sufficiently well the development
of GDP growth. A good tracking performance is also necessary
for confidence indicators at sector level
(industry, services,
consumption etc.) in relation to their macro-economic refer-
industrial production, gross value
ence variables (e.g. GDP,
added of
the private services sector, private consumption
expenditure). The tracking record of the indicators needs to be
continuously evaluated and modifications and improvements
are to be made in line with the outcome of these evaluations.
Various research projects and studies are being undertaken on
a regular basis to develop new sector indicators or improve the
existing ones in order to better follow the economic evolution.

While the utility of the programme for the work of various EU
in the domain of
bodies and international organisations
economic policy has been demonstrated without doubt there is
also a need to evaluate its usefulness, efficiency and effective-
ness from an outside perspective. For this reason, a specialised
consortium was engaged to carry out an evaluation of the
existing programme as a whole. This evaluation addressed,
amongst others, the following issues:

— Survey quality and survey programme effectiveness

— Efficiency and alternative contractual arrangements

— Likely consequence of discontinuing EU co-financing

— Users' future needs

report

The
(ECFIN/196/2004/385636, 22 April 2005)
concludes that, while progress needs to be made on a contin-
uous basis, the survey programme has largely met the quality
requirements of the users in all respects, with the surveys
considered to be a highly reliable and relevant instrument to
monitor macroeconomic developments. The grant-based survey
programme can be considered as cost-effective and any change
in contractual arrangements such as a move to service contracts
or to a centralised survey scenario would carry the risk of a
substantial loss of important economic information. Likewise, a
discontinuation of co-financing the surveys by the European
Commission is likely to lead to the loss of harmonised Euro-
pean data. Users' future information needs include, inter alia, a
further detailing of the services survey, more information on
the financial situation of households and firms and more
detailed data on the labour market.

7. Reporting

The Commission will present every three years, starting in
2008, a report on the implementation of the Programme in
2006-2008, giving an overview regarding methodological
developments and the use of the information provided by the
programme.

8. Conclusion

The results of the harmonised business and consumer surveys
in the EU have become an important source of information for
all those concerned with economic trends: public institutions,
business management, researchers and, above all, economic
decision-makers both at national and EU/euro area level. The
survey data has become an indispensable tool for economic
surveillance in the EU and for monitoring the economic
prospects of the Economic and Monetary Union as well as the
development of
the candidate countries' economies. The
Commission will assure that the programme will also fulfil this
role in the future by constantly enhancing and improving its
features thereby allowing it to continue to provide essential
information for the purpose of economic decision making in
the European Union.

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GRAPH: ECONOMIC SENTIMENT, SECTORAL CONFIDENCE AND GDP IN THE EURO AREA

ANNEX