USE OF SHORT-TERM

INDICATORS AND SURVEY

DATA FOR POLICYMAKING:

THE OECD EXPERIENCE

Martine Durand OECD Chief Statistician and Director of

Statistics

2nd IMF Statistical Forum Washington DC - November 18-19, 2014

Outline

1. PROVIDING SHORT-TERM ECONOMIC DATA TO INFORM POLICYMAKERS

• Survey data and short-term indicators

• Users within and outside the Organization

• Data Quality

2. OECD COMPOSITE LEADING INDICATORS (CLIs)

• Conceptual considerations

• Leading properties

3. PERFORMANCE of the OECD CLIs

• Before and during the crisis

• Communication strategy

4. CONCLUSIONS

DATA

Short-term economic data provided by

the OECD to inform policy makers

The Main Economic Indicators database (MEI) is an extensive collection of short-term economic indicators

-- including :

Survey data

»Business and Consumer tendency surveys

Short-Term Statistics

»Real indicators

» International trade

»Financial and monetary

»Employment

-- covering :

»OECD countries & key partners from 1960s Survey data and short-term statistics are used to construct the OECD

composite leading indicators

USERS

Users of OECD short-term economic

indicators

Within the OECD, the MEI is used to produce:

• OECD Economic Outlook

• Interim Assessments of the global economic situation

• Economic projections for G20 countries

• Composite Leading Indicators

Outside the OECD

• Economists; Economic and financial sector analysts

• Journalists; media

• Academic researchers

MEI dataset is one of the most visited on the OECD website

Strong demand for monthly Composite Leading Indicators from media and financial sector

DATA QUALITY

Reliability and soundness of OECD

short-term economic indicators

Internationally comparable

Coherent across datasets and over time

Consistent across countries

Compliant with relevant OECD and other international standards

Credible

Official sources

Face validity

Interpretability

Survey and financial indicators are the

most timely

Timeliness of indicators by subject areas Average days, OECD countries

Min Max Mode

(Frequency, %)

TENDENCY SURVEYS 0 30 0

(90.3)

FINANCIAL & MONETARY 0 0 0

(100)

REAL INDICATORS 30 120 90

(64.7)

INTERNATIONAL TRADE 60 90 60

(91.2)

EMPLOYMENT 15 90 75

(50)

Survey indicators generally outperform

other short-term statistics

Survey data

Financial & monetary

Int’l Trade Employment Real

indicators

NO TREND

FORWARD LOOKING

NO REVISION

TIMELINESS

STABILITY of the METHODOLOGY

INTERNATIONAL STANDARD

OECD COMPOSITE LEADING INDICATORS

The OECD System of CLIs

Based on a set of Survey Data and Short-Term Statistics (STS)

Covers a wide range of countries

33 OECD countries + key partners and several zones

Broad brush picture of the short-term economic outlook

Provides early signals of turning points in economic activity

Qualitative indicators

No information on the speed/ strength of the business cycle

PERFORMANCE OF THE OECD CLIS

The aggregate OECD CLI leads by 5

months on average the reference series

(GDP)

GDP above the long-term trend GDP below the long-term trend CLI

95

96

97

98

99

100

101

102

103

95

96

97

98

99

100

101

102

103

1981 1985 1989 1993 1997 2001 2005 2009 2013

Leading properties of the CLI components

Average leads since the 1960s

0

1

2

3

4

5

6

7

8

Financial and monetary

Business and consumer

tendency surveys

Trade statistics Real Indicators Employment

mo

nth

s

Peak Trough

STS subject areas

Source: MEI, OECD

CLI components for US started

signalling the crisis as early as…

Jan 06 Jan 07

Aug 07

94

96

98

100

102

104

2004

2005

2006

2007

2008

2009

2010

2011

Dwellings started Consumer sentiment indicator Share prices: NYSE composite

GDP peak Oct 07

Source: MEI, OECD

CLIs performance during the Great

Recession for the G7 countries

0

2

4

6

8

10

12

14

16

United States

OECD Total G7 France United Kingdom

Italy Canada Japan Germany

Lead (in months) with respect to the peak in GDP Lead (in months) with respect to the trough in GDP

Source: MEI, OECD

The CLIs provide stable results

85

90

95

100

105

Jan

-2005

Apr-

2005

Jul-

2005

Oct

-2005

Jan

-2006

Apr-

2006

Jul-

2006

Oct

-2006

Jan

-2007

Apr-

2007

Jul-

2007

Oct

-2007

Jan

-2008

Apr-

2008

Jul-

2008

Oct

-2008

Jan

-2009

Apr-

2009

Jul-

2009

Oct

-2009

Jan

-2010

Apr-

2010

Jul-

2010

Oct

-2010

Jan

-2011

Apr-

2011

Jul-

2011

Oct

-2011

Jan

-2012

Apr-

2012

Jul-

2012

Oct

-2012

Jan

-2013

Apr-

2013

Jul-

2013

Oct

-2013

Jan

-2014

Apr-

2014

Jul-

2014

Vintages

Turning points for the US during the Great Recession

Assessing the CLI performance

in real time

Although the CLIs lead turning points in GDP with good stability properties, a delay exits between: • the real date of occurrence of the turning point and

• the date at which it can be really statistically identified

The OECD, in its releases, tries to interpret cautiously the first signal in order to: • Avoid wrong messages (noise)

• Be sufficiently confident about the sort of momentum in growth

Cautious interpretation of the first signal

in real-time October 2007 Press release: “OECD CLIs signal a weakening outlook for most major global economies”

Conclusions

• The OECD produces one of the largest infra-annual economic data collection to inform policy-makers and other users

• Surveys generally outperform STS and thus are very useful in the short-term horizon

• OECD CLIs • Detect turning points in GDP early • Provide stable results • In real-time, the first signal is interpreted cautiously • Good performance for the G7 during the Great Recession

• The demand for such indicators is very high

Thank you !

More information at:

http://www.oecd.org/std/leading-indicators/