Statistics Explained

Archive:Industry and construction statistics - short-term indicators

Revision as of 09:16, 27 May 2010 by 127.0.0.1 (talk) (Updates)
Data from September 2008, most recent data: Further Eurostat information, Main tables and Database.
Graph 1: Breakdown of industrial and construction value added and employment, EU-27, 2006 (1) (% of industrial and construction value added and employment)
Graph 2: Wage adjusted labour productivity within industry and construction, EU-27, 2006 (1) (%)
Graph 3: Gross operating rate within industry and construction, EU-27, 2006 (1) (%)
Graph 4: Industrial and construction value added by enterprise size-class, EU-27, 2006 (1) (% of sectoral total)
Table 1: Production sold in value terms, selected products, EU-27, 2008 (1)
Table 2: Production sold in volume terms, selected products, EU-27, 2008 (1)
Graph 5: Production and domestic output price indices for industry (excluding construction), EU-27, 1999-2009 (2005=100)
Table 3: Annual growth rates for industry (excluding construction), 2004-2008 (%)
Graph 6: Average annual growth rate for the industrial index of production, EU-27, 2003-2008 (1) (%)
Table 4: Annual growth rates for construction, 2004-2008 (%)
Graph 7: Index of production, construction, EU-27 (1), 1999-2009 (2005=100)

This article examines recent statistics on the performance of both industry and construction in the European Union. In its mid-term review of industrial policy (COM-2007, 374), the European Commission identified globalization and technological change as key challenges for European industry. Ultimately, whether a business succeeds or not depends on the vitality and strength of the business itself, although the environment in which it operates - increasingly globalized and competitive - can help or harm its prospects.

Main statistical findings

In 2006, the EU-27 construction sector generated about one fifth (20.3 %) of the combined industrial and construction sectors’ value added, more than two and a half times the contribution (7.7 %) of the machinery and equipment n.e.c. sector, which was the largest manufacturing sector (at the NACE division level) in these terms. The construction sector’s share of employment was even higher, more than one quarter (27.7 %) of the total. A few sectors recorded a notably lower share of employment than of value added, and these were concentrated in energy-related activities and chemicals manufacturing.

The average value added generated per person within each of the EU-27 industrial sectors as well as construction more than covered respective average personnel costs in 2006. However, there were considerable differences between the various sectors; the wage adjusted labour productivity ratio was high for many of the energy-related activities, particularly for the extraction of crude petroleum and natural gas sector (900 % in 2005) and the coke, refined petroleum products and nuclear fuel sector (357 % in 2005), but less than 150 % for the clear majority of industrial sectors as well as the construction sector.

As Table 1 shows, in 2008 in the EU (based on PRODCOM data), transport equipment products dominated the list of the most sold manufacturing products in value terms in the EU-27 in 2008, occupying the first two places, with a number of further products among the top 20.

The indices of industrial production and industrial output prices (based on the NACE Rev. 2 classification) for the EU-27 followed broadly similar developments during the ten-year period through until July 2009; growth through until the start of 2001 then a period of stability until mid-2003, followed by a period of sustained and relatively strong growth until an abrupt downturn during the first half of 2008. The decline in the index of industrial production for the EU-27 from the relative peak in February 2008 was particularly steep, the index level of July 2009 being lower than that of July 1999. By contrast, although the index of industrial output prices for July 2009 fell from the relative peak of July 2008, it was similar to the pre-peak level of October 2007. In part this continued to reflect the relatively high price of oil and associated energy-related and intermediate products. In this respect, it should be noted that the domestic industrial output price index was about 5 % or more higher in 2008 than in 2007 in all Member States, and between 10 % and 18 % higher in 11 of them, the highest rates of increase being in Malta and the United Kingdom.

The downturn in activity was also noted for construction. The index of production for construction declined by about 14 % between the relative peak in February 2008 and the figure for June 2009. However, there was a distinct difference between the indices for buildings and civil engineering works in this same period; the index for buildings declined by 16.1 %, whereas that for civil engineering works remained relatively unchanged (-0.7 %).

Data sources and availability

For background information relating to structural business statistics (SBS), including definitions of value added and people employed, additional variables presented in this section are defined as follows:

(value added at factor cost/personnel costs) multiplied by (number of employees/number of people employed); expressed as a percentage.
the surplus generated by operating activities after the labour factor input has been recompensed (it can be calculated from value added at factor cost less personnel costs).
sales (capital-intensive activities will tend to have higher shares of the gross operating surplus in turnover);
the size of the gross operating surplus relative to turnover (which is one measure of profitability).

Aside from SBS and PRODCOM, a large proportion of the statistics presented in this section are derived from short-term business statistics. Among these, some of the most important indicators are a set of principal European economic indicators that are essential to the European Central Bank for reviewing monetary policy within the euro area. These short-term statistics give information on a wide range of economic activities according to the NACE Rev. 1.1 classification; they are based on surveys and administrative sources. The Member States are encouraged to transmit seasonally-adjusted data and trend-cycle indices. If they do not, Eurostat calculates the seasonal adjustment for them. In accordance with EC Regulations, the Member States' national statistical institutes are responsible for data collection, and the calculation of national indices. Eurostat is responsible for the euro area and EU aggregations.

The presentation of short-term statistics may take a variety of different forms:

  • working-day adjustment takes into account the calendar nature of a given month in order to adjust the index. The adjustment of working days is intended to adjust for calendar effects, whatever their nature. The number of working days for a given month depends on:
    • the timing of certain public holidays (Easter can fall in March or in April depending on the year).
    • the possible overlap of certain public holidays and non-working days (1 May can fall on a Sunday).
    • whether or not a year is a leap year, and other reasons.
  • seasonal adjustment, or the adjustment of seasonal variations aims, after adjusting for calendar effects, to take into account the impact of known seasonal factors that have been observed in the past. For example, in the case of the production index, annual summer holidays have a negative impact on industrial production. Where necessary, Eurostat calculates the seasonal adjustment using two methods:
  1. TRAMO (time-series regression with ARIMA noise, missing observations, and outliers).
  2. SEATS (signal extraction in ARIMA time series), referred to as TRAMO/SEATS.
  • the trend is a slow variation over a long period of years, generally associated with the structural causes of the phenomenon in question. The cycle is a quasi-periodic oscillation. It is characterized by alternating periods of higher and lower rates of change possibly, but not always, involving expansion and contraction. Generally, if this irregular component of the time-series is relatively important, the trend-cycle series is a better series for the analysis of longer-term past developments. However, this advantage is less clear when analyzing very recent developments. This is because trend-cycle values for recent periods may have greater revisions than the equivalent seasonally adjusted values. Hence, the latter may be more appropriate for the analysis of very recent developments; this is particularly true around turning points.

Short-term business statistics are collected within the scope of the STS regulation, (Council Regulation (EC) 1165/98 of 19 May 1998 concerning short-term statistics). Despite major changes brought in by the STS regulation, and improvements in the availability and timeliness of indicators which followed its implementation, strong demands for further development were voiced, even as the STS regulation was being adopted. The emergence of the ECB fundamentally changed expectations as regards STS. As a result, the STS regulation was amended by Regulation (EC) 1737/2005 on 6 July 2005. Among the main changes introduced were:

  • new indicators for the purpose of analysis, namely, the introduction of industrial import prices, the services output prices, and the division of non-domestic turnover, new orders and industrial output prices between the euro-area and non-euro-area markets;
  • more timely data, by shortening deadlines for the delivery of the industrial and construction production indices, the retail trade and services turnover (and sales volume) indices, and employment indices for all activities;
  • more frequent data, increasing the frequency of the production index for construction to monthly from quarterly.

Context

In its mid-term review of industrial policy (COM-2007, 374, the European Commission identified globalization and technological change as key challenges for European industry. Industrial policy within the European Union is designed to complement measures taken by the Member States. Whether or not a business succeeds depends ultimately on the vitality and strength of the business itself, although the environment in which it operates can help or harm its prospects, in particular when faced with the challenges of globalization and intense international competition.

A 2005 Communication on industrial policy was based for the first time on an integrated approach, addressing sector-specific as well as common issues. Since then, the overall performance of European industry has continued to develop favourably, against a background of an increasingly integrated world and the accelerating pace of technological change. The Commission’s new industrial policy includes seven new initiatives on competitiveness:

  • energy and the environment
  • intellectual property rights
  • better regulation
  • industrial research and innovation
  • market access
  • skills
  • managing structural change.

Seven additional initiatives are targeted at key strategic sectors, including:

  • pharmaceuticals
  • defence-related industries
  • information and communication technologies.

Further Eurostat information

Publications

Main tables

(New activity classification NACE Rev 2)
Industry - Domestic output prices (NACE Rev. 2).. (teiis_dop)
Industry - Industrial production (NACE Rev. 2) (teiis_prod)
Industry - Turnover (NACE Rev. 2) (teiis_turn)
Industry - Industrial new orders (NACE Rev. 2) (teiis_nord)
Industry - Wages and salaries (NACE Rev. 2) (teiis_wage)
Trade and services - Services (teirs_serv)
Trade and services - Retail (NACE Rev. 2) (teirs_ret)
Construction (teico_buil)

Database

(New activity classification NACE Rev 2)
Industry (NACE Rev.2) (sts_ind)
Construction, building and civil engineering (NACE F) (sts_cons)

Other information

External links

See also

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