GDP TimescalesFlash Estimates

Richard Morrison

GDP Branch

Short Term Economic Indicators

Flash Estimates: "…the earliest picture of the economy according to national accounts concepts, which is produced and published as soon as possible after the end of the quarter, using a more incomplete set of information than that used for traditional quarterly accounts."

In Practice, UK produce three initial estimates

• M1: Preliminary Estimate: – t+25 days About 44% data

• M2: Output, Income and Expenditure: – t+55 days About 67% data

• M3: UK Quarterly National Accounts: – T+85 days About 80%

• Blue Book, IO tables etc. later…

Scottish GVA Series.

• Currently published at t+112 days – Index of Construction

• 2004 weight: 65 / 1000

– Index of Services• 2004 weight: 742 / 1000

– Index of Production• 2004 weight: 178 / 1000

– Agriculture, Forestry and Fishing • 2004 weight 15 / 1000

Construction

• Data source

“Output in the Construction Sector”

Published by ONS at t+2 Months

• Earlier estimates would require – alternative more timely sources; or – negotiated early access.

Services

• five components of source data: – the Retail Sales Index (RSI)– the Monthly Inquiry into the Distribution and

Services Sectors (MIDSS)– "Manual Series" – Other public sector series – Deflators

RSI

• Consistently delivered around t+25 days

• No significant processing burden

• Deflators delivered with Series

• Scottish Retail series would be an “easy” component of earlier estimates

• 5% weight in current GVA estimates

MIDSS

• Delivered monthly with a 2 month lag

• New months data incorporate revisions

• Could apply standard forecasting methods– Such as ARIMA

• Earlier estimates could incorporate 2/3 months + forecast data.

• 29% weight in current estimates

Public Sector Measures

• Typically stable annual series

• Already use forecasting in GVA indices

• Earlier estimates would be on same basis as current ones

• 22% weight in current GVA Indices

Deflators

• Most are relatively timely and not particularly volatile

• Transport deflator exhibits more volatility– Probably due to correlation with fuel prices– Possibly implying that triangulation possible

“Manual Series”

• These are volume series supplied directly from source– Such as passenger miles– Parcel volumes– Banking series

• Possibly the biggest challenge to a Scottish Flash Estimate– Not always particularly timely– Often volatile

Comparison of ARIMA forecasts for one of the Financial Services Data Sources

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1995

Q1

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Q3

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2009

Q3

Actual Data

ARIMAForecast at2007 Q4

ARIMAForecast at2008 Q1

ARIMAForecast at2008 Q2

ARIMAForecast at2008 Q3

ARIMAForecast at2008 Q4

Production

• four components of source data– The Monthly Production Inquiry (MPI)– The MPI top-up– "Manual Series"– Deflators

MPI and top up

• Similar picture to MIDSS• Monthly supply, with 2 month lag• Top up currently used to ensure panel

continuity – will change when we move to ratio estimation

to be more standard sample boost

• MPI has about 14% weight in current GVA index

Manual Series

• volume series direct from source– GW hours of electricity– Volume of slaughtered poultry

• Possibly the biggest challenge to a Scottish Flash Estimate– Not always particularly timely– Often volatile

• But perhaps not as hard as it looks?

Electricity Series - effect of forecasting data for one Electricity company

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2001

Q1

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Actual Electricity Series

forecast at 2007Q4

forecast at 2008Q1

forecast at 2008Q2

forecast at 2008Q3

Production Deflators

• Supplied by ONS at t + 10 weeks• Much more volatile than services deflators• Forecasting methods look ropey

• Negotiated earlier access to ONS deflators – Perhaps partial information to inform

forecasts

PotentialApproaches

Reweighting UK Flash Estimate

– Quick and straightforward– Almost immediate Scottish Headline Figure– Initial look suggests not that informative– Might improve with unrounded figures– Not a true Scottish estimate– Lacks detail

Analogous Methodology to UK Flash

• E.g. to produce estimate at t + 50-70 days

• Partial data + ARIMA – Holts Winters etc.

• Some sectors too volatile for robust series using this approach– But could work to identify better sources– Or supplier collaborated forecasts

Partial Early release

• For example of – growth estimates for some sectors

• e.g. – “index of services excluding finance” – Perhaps with a finance index carrying heavier

caveats

Bring forward existing series

• Evaluating the possibility in any case

• 2 weeks is “challenging buy feasible”

• Will still lag UK estimates– Still some obstacles if this approach would

maintain existing methodology

Discussion

• Focus of efforts has to be guided by user requirements

• Resource issues not necessarily trivial

• Briefing and National Statistics implications will be an issue