Use of the qualitative business and consumers survey for analysis and economic modelling

In 1961, the European Commission launched a harmonized qualitative survey program to the consumers and the heads of companies (industry, services, construction, retail trade, investments) that covers more than 40 countries today. These qualitative surveys are aimed at understanding the economic situation of these companies. Results are available a few days after the end of the reference period, well before the results of the quantitative surveys.

Although qualitative, these surveys have quickly become an essential tool of the cyclical diagnosis and of the short-term economic forecast. This product shows how these surveys are used by the European Commission, in particular by the Directorate-General for economic and financial Affairs (DG ECFIN) and the Statistical Office of the European Communities (EUROSTAT), to evaluate the economic situation of the Euro zone.

The first part of this product briefly presents the harmonized European business and consumer survey program. In the second part, we look at how DG ECFIN calculates a coincident indicator of the economic activity, using a dynamic factorial analysis of the questions of the survey in industry. This type of indicator makes it possible, in addition, to study the convergence of the economic cycles of the member states. The quantitative short-term indicators for the Euro zone are often criticized for the delay with which they are published. In the third part, we look at how EUROSTAT plans to publish flash estimates of the industrial product price index (IPPI) resulting from econometric models integrating the business survey series. Lastly, we show how these surveys can be used to forecast the gross domestic product (GDP) and to define proxies for some non-available key indicators (new orders in industry, etc.).