The Business Cycle
Clock (BCC) of Eurostat is a new graphical interface for
displaying developments of economic key indicators for
In April 2009 Eurostat has introduced a new version of the BCC comprising new advanced functionalities as compared to the former BCC.
The BCC covers a wide field of economic indicators, such as GDP, consumption, investment, exports and imports, (un-)employment, Economic Sentiment, industrial production, industrial new orders, inflation, labour costs, producers prices, production in construction, deflated retail sales. Each of these indicators has been re-calculated in order to reveal more clearly their multi-yearly cyclical development. Short-term increases and decreases due to, for instance, seasonality have been removed from the series. The various steps of calculation are described in more detail in section 5.1.
The cyclical behaviour displayed by the graph (see figure 1) distinguishes four phases: (1) the indicator is above its long-term trend and is increasing, (2) it is still above the long-term trend, but after having reached a peak it is now gradually moving downwards, (3) after subsequent decreases it reaches levels below the long-term trend and is heading into a trough, and (4) gradually picks up again by pulling itself out of this trough with positive numbers even though still under the long-term trend. Each of these phases are coloured correspondingly. In general the indicators move in time like the arrows, evolving from one phase into the other. Sometimes a full cycle takes around 4 years, other times it could be more or it could be less; there is no rule of thumb for forecasting cyclical time span.
Figure 1. Four basic phases of cyclical development
Besides the graph, users have an overview of the most recent (growth) rates of the indicators and the countries which have been selected (see figure 2).
Figure 2. Selection pane of countries and indicators, and their latest values
Here the users can select the indicators and countries they want to include in the graph, and define the colour scheme.
The BCC combines both graph (figure 1) and selection pane (figure 2) into a one page interface including an animation control below the graph for watching economic evolution in a dynamic fashion. As can be seen from figure 3 each indicator is represented by its own graphical symbol, and by mouse-over the symbol the title of the indicator is highlighted within the graph.
Figure 3. Business Cycle Clock for EU27
In December 2008 the graph shows that the majority of EU27 indicators are cyclically decreasing and below the long-term trend. The animation panel below the graph enables the user to move backwards and forwards in time, watching the business cycle in a dynamic animated fashion. In general the time series start from 1990 onwards. For some series data is only available as from 1995. The animation shows that in some of the indicators are leading the business cycle – such as Economic Sentiment and Deflated Retail Sales – and some are lagging behind, for example employment.
With the tabs on top of the graph (numbererd 1 to 6 and all) the user can immediately switch between selected countries, and by clicking on the ”all”tab also watch these countries simultaneously in one graph.
Users can also print the graph or bookmark their selection for immediate access later on or for e-mail purposes. By downloading the web page, users are able to run the BCC off-line, i.e. without Internet connection.
More detailed information on each indicator can be activated through the four buttons to the right of each title, opening: a short description; a table with more data, and customizable graphs and maps. An example (GDP) of these tables, graphs and maps can be found in the annex.
When clicking the link Switch indicators/countries the BCC page reverses indicators and countries in both the graph as well as the right part of the web page (see figure 4).
Figure 4. Business Cycle Clock for GDP for all European countries
In this graph the indicators are switched with the countries, such that the graph now displays all (selected) countries for a single indiactor. Here, GDP has been selected. The graph reveals a strong interdependency/similarity in the cyclical movement across countries. This interdependency is even stronger for some of the leading indiactors such as Economic Sentiment (see figure 5, blue icons).
Figure 5. Business Cycle Clock for GDP (red) and Economic Sentiment (blue)
Eurostat is developing its new web interfaces such as the BCC in an incremental way, starting with basic functions – i.e. the current BCC- gradually adding new functions and improving the look and feel.
In April 2009 Eurostat has released the second version of the BCC, with several new functionalities and an enhanced usability (see section 2 for more details).
In the near future the BCC will include
Figure 6 below highlights
the fact that the cyclical stage of Gross Domestic Product (GDP) is somewhere
in-between the cyclical stages of its building blocks Consumption, Investment,
Imports and Exports. In an open economy such as the
Figure 6. Dutch GDP and its components
An animated comparison
between EU27 (red icons) and the
Figure 7.a. EU27 and the
Figure 7.c. EU27 and the
Mid of 2001, EU27 was
in a similar phase of the business cycle as the
The graphical data is based on a re-calculation of seasonally adjusted statistical time series. Except for prices which are as usual practice not seasonally adjusted. All the series are either expressed as an absolute index or as an absolute number, i.e. not as a growth rate. As a first step in the calculation each of the series is de-trended. As a second step the cyclical component is extracted by the Christiano-Fitzgerald (CF) band-pass filter. In order to make the cyclical series mutually comparable in terms of magnitude, each of the series is normalized so that each has an average of zero and a unit standard deviation. With this last step of calculation all series fit within the same graphical frame, without affecting the direction of cyclical development of the indicator.
Because of these
various steps of re-calculation, the resulting values are only valuable within
the graphical framework of the BCC. These cyclical values do not have their own
meaning like the original statistics do. Real
statistical data, i.e. the original counterpart of the graphical values, are
displayed on the right of the graph. As such the main purpose of the BCC graph
is to help users in a visual way, to create interest, and to offer a doorway to
economic key statistics of
The BCC is built on open sources, client-based and runs entirely within the Internet browser with just a few calls to Eurostat's server. The graphical display is Flash based. For the data input holding the time series of the indicators, an XML format is used. The back-end of the BCC system is also compatible with SDMX.
Twice a day (11:00 am and pm) the BCC checks for new data and recalculates its internal cyclical values accordingly.
In the medium-term Eurostat intends to make the BCC application generally available to other (statistical) organisations within the framework of the EU-PL rules of the European Commission. To a large extent the BCC settings and language(s) can be modified by changing the configuration files.
ANNEX: Information behind the table, graph and map buttons of the BCC
The information which is opened when the users clicks on one of the buttons on the right of the indicators is shown in the screenshots presented below. The following screenshots are taken from the GDP indicator. Figure 8 opens with the simple default table of GDP, which the user can download, print, save, etc, or by simple clicking create graphs or maps (see figures 8.b. and 8.c.). These self-created graphs and maps can be printed and saved or bookmarked for later instant re-use. Here the user can also find a more elaborate methodological description of the indicator.
Figure 8.a. Table view on GDP for the latest 12 periods for all countries.
Figure 8.b. Customizable graphs of GDP Figure 8.b. Customizable maps of GDP
 Acknowledgements go to Statistics Netherlands for sharing their visual concept of tracing business cycles.
 The CF filter is used as a default, with 2-10 years as lower and upper boundaries. These boundaries tend to yield rather smooth cyclical patterns, and implicitly relatively stable long term trends. Alternative methods, such as the Hodrick-Prescott filter, the Henderson filter, the Phase Average Trend method and others have been/will be under investigation, and some of them are/will be built into the back-end of the BCC application (as plug-in) for analytical purposes and fine-tuning of BCC filter settings. A methodological explanation of these filter methods can be found in Eurostat's working paper "Statistical Methods for Potential Output Estimation and Cycle Extraction"
 In real time earlier cyclical outcomes, i.e. their magnitude and relative position compared to the long term trend may change as new data streams into the series. These revisions, however, are expected to be limited for the chosen CF filter settings. Furthermore the graphical display concentrates on the direction of cycle evolution, instead of the magnitude of single cycle "observations". Fine-tuning of the BCC settings (see footnote 2) will aim at further reduction of these revisions.
 SDMX is an XML type of standard for international exchange of statistics, supported by OECD, IMF, ECB, Eurostat and others.