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SPANISH CONSUMER CONFIDENCE INDICATOR
ICC-ICO
METHODOLOGY
WHAT FOR AND WHY
The Consumer Confidence Indicator prepared by Instituto de Crédito Oficial
(ICC-ICO) aims to foresee any changes (upward or downward) in private
consumer demand on the part of the general public. ICC-ICO assesses
consumer intentions from their appraisal of recent economic performance and
their expectations for coming months.
The behaviour of private consumption in Spain is a key variable from the point
of view of the economy’s overall performance as consumption accounts for
almost 60% of Spain’s GDP. For this reason, ICC-ICO has been designed to act
as a useful tool in economic forecasting.
OTHER INDICATORS
There are already a number of consumer confidence indicators both at the
international level and in some of Spain’s autonomous communities. Instances
include the pioneer indicator published by the University of Michigan1 and the
Conference Board Indicator2, both relating to the US economy; and the
European Commission Indicator covering all EU member countries3. In Spain,
some of the autonomous communities have implemented similar ideas for their
own geographical scopes4, as is the case of Madrid, Galicia and the Basque
Country.
While introducing its own variations, ICC-ICO draws in the main on the
methodologies used in the indicators prepared by the University of Michigan
and the Conference Board in the United States.
1
Http:// www.sca.isr.umich.edu
2
http://www.conference-board.org/economics/consumerConfidence.cfm
3
http://www.europa.eu.int/comm/economy_finance/indicators/businessandconsumersurveys_en.htm
4
http://www.camaramadrid.es
http://www.ige.xunta.es/es/sociais/benestar/confianza/index_confianza.htm
http://www.fcavn.es/FCAVN/Castellano/Web/Publicaciones/Coyuntura_economica_del_consumidor/Coyuntura_eco
nomica_del_consumidor.htm
Economic Research Department
1
SURVEY AND CHARACTERISTICS OF THE SAMPLE
Temporal and geographical scope
Since September 2004, ICC-ICO has been prepared from a yardstick of opinion
taken monthly by Instituto OPINA from a representative sample of Spain’s
population, consisting of 1,000 people aged over 16.
Questions used in the preparation and interpretation of ICC-ICO
In addition to questions necessary to arrange the survey’s results by sex,
age, place of residence and so on, the questionnaire contains 10 questions
classified into two groups: six questions whose answers are used in the
calculation of ICC-ICO and four additional questions used to flesh out and
interpret the ICC-ICO calculated.
• In the six questions used to prepare the indicator, consumers are asked to
give their appraisal of: a) the current situation of the Spanish economy,
household economy and employment as compared with the state of
affairs six months previous; and b) their expectations for the following six
months. The questions are as follows:
1. Do you believe that the current situation of the Spanish economy is
better or worse than it was six months ago?
2. Do you believe that the current economic situation of your household
is better or worse than it was six months ago?
3. Do you believe that the chances of finding a job or moving to a better
one are better or worse than they were six months ago?
4. Do you believe that the situation of the Spanish economy six months
from now will be better or worse than at present?
5. Do you believe that the economic situation of your household six
months from now will be better or worse than at present?
6. Do you believe that the chances in Spain of finding a job or moving to
a better one will be better or worse in six months’ time than they are
at present?
• The four additional questions concern survey participants’ expectations for
the coming year as regards price behaviour, interest rates, saving and the
purchase of durables. The answers obtained are not considered in the
calculation of ICC-ICO but are used to flesh out and interpret the indicator’s
results. The questions are as follows:
7. In the course of this year, price rises (i.e., inflation) in Spain have
reached x%5. Do you think that next year prices will rise more or less
than in this last year or will the increases be the same?
8. At the present time, the reference interest rate in Spain is x%6. Do
you think that next year interest rates will rise, fall or remain the
same?
9. Do you think that next year your saving capacity will be higher or
lower than this year or do you think it will remain the same?
5
Latest figure for the CPI year-on-year variation rate.
6
European Central Bank intervention rate in force on the day of the survey.
Economic Research Department
2
10. Do you think that your capacity to acquire durables next year will be
higher or lower than this year or do you think it will remain the same?
Sample characteristics and survey method
The design of the sample is proportional and the information used in its
preparation is taken from the 2001 Census. As censuses are updated, the
sample’s distribution will be adapted to the changing complexion of Spanish
society.
The margin of error for the entire sample is ± 3.10 % for a margin of
confidence of 95 %.
Information is gathered by computer-assisted telephone interviews
(Bellview CATI) between the 17th y 22nd of each month. Whenever possible,
calls are made in the evening (from 17.00h to 22.00h) and fieldwork is never
carried out at weekends. This is to ensure that all profiles making up Spanish
society are covered by the survey.
Sampling procedure runs through different stages and 60% of participants
are new each month, while the rest are interviewed again at six-month
intervals. This means that 40% of the sample interviewed in September will be
called again in March and that, after two interviews, they will be withdrawn from
the database so as to preclude their participation in subsequent fieldwork. This
makes it possible to check the consistency or otherwise of participants’ answers.
Thus data collection is structured into the following stages:
- The first 400 surveys are carried out at random on people who have
been interviewed six months before and have given their consent to
being contacted again.
- The remaining 600 interviews are carried out in such a way that they
complete the design of the attached theoretical sample of 1,000
interviews. In this second stage, the sampling procedure is as follows:
• Primary sampling units: municipal districts. Selected at random in
proportion to Spain’s 52 provinces.
• Secondary units: households. By random selection of telephone
numbers.
• Final units: individuals. According to cross-sections of sex and
age.
Economic Research Department
3
CALCULATION OF ICC-ICO AND ITS COMPONENTS
ICC-ICO is made up of two Partial Indicators: the Partial Indicator of Current
Economic Conditions and the Partial Indicator of Consumer Expectations.
• The Indicator of Current Economic Conditions reflects Spanish
consumers’ appraisals of the current economic situation as compared with
their views on the matter six months before. It is worked out from the
answers to Questions 1, 2 and 3 above.
• The Indicator of Consumer Expectations refers to the economic
situation expected by consumers six months on. It is worked out from the
answers to Questions 4, 5 and 6.
Calculation of Partial Indicators (current economic conditions and
consumer expectations)
1. Calculation of the total obtained as the difference between the
percentage of answers indicating an improvement and the percentage
indicating a worsening in each of the answers. The other possible
answers: “the same”, “don’t know” and “no answer” do not score for
the purposes of calculating these totals.
Options Appraisal
Better +1
The same 0
Worse -1
Don’t know/No answer 0
A: % of positive answers
B: % of neutral answers
C: % of negative answers
D: % of don’t know/no answer
Where A+B+C+D =100
balance = A − C
2. To the total obtained for each question in the previous step, 100 is
added.
questionresult = questiontotal + 100
3. Each Partial Indicator is calculated as the arithmetical average of
the results of the three questions by which it is formed.
Economic Research Department
4
Calculation of ICC-ICO
Lastly, ICC-ICO is constructed as the arithmetical average of the two above-
mentioned Partial Indicators (Current Economic Conditions and Consumer
Expectations); or, to put it another way, ICC-ICO is the arithmetical average
of the results obtained (balance + 100) from the six questions considered in
the indicator’s preparation.
ICC − ICO = ( Indicator of CurrentEconomicConditions + Indicator of Consumer Expectations)/2
Interpretation
ICC-ICO reflects the way Spain’s general public see the current economic
situation (better or worse than six months ago) and their expectations for the
next six months (Will the situation be better or worse than now?)
The range of values covered by ICC-ICO and its Partial Indicators goes from
0, when all participants have chosen “worse” as their answer, to +200, when all
participants have chosen “better” as their answer.
Interpretation of the values covered by ICC-ICO is as follows:
- From 100 to 200. A favourable appraisal of economic activity.
- Equal to 100. A neutral appraisal of economic activity.
- From 0 to 100. An unfavourable appraisal of economic activity.
Interpretation of the monthly variation of ICC-ICO is as follows:
- ICCt – ICCt-1 > 0 The appraisal of economic activity improves, which
could point to a growth rate for household consumption higher than
foreseen the previous month.
- ICCt – ICCt-1 = 0 The appraisal of economic activity remains
unchanged, which could point to a growth rate for household
consumption similar to the forecast made the previous month.
- ICCt – ICCt-1 < 0 The appraisal of economic activity worsens, which
could point to a growth rate for household consumption lower than
forecast the previous month.
Economic Research Department
5
ANNEX
PROVINCIAL GROUPS
Once the survey has been carried out in accordance with the characteristics
described in this explanation, the results obtained in terms of provinces are
divided into three provincial groups as follows: Spain’s provinces are
arranged in order of GDP per capita (high to low) in the year 2002 (data
taken from Regional Accounting) and each provincial group considered
comprises one third of Spain’s population.
Accordingly, the three provincial groups considered are:
• Group 1: provinces with the highest GDP per capita whose overall
population represents one third of Spain’s population are those whose
GDP per capita is above 116% of Spanish average GDP per capita. This
group includes:
Álava, Barcelona, Gerona, Guipúzcoa, Madrid, Navarra, Tarragona and
Vizcaya.
• Group 2: provinces whose overall population represents one third of
Spain’s population and whose GDP per capita ranges from 84% to 116%
of average GDP per capita. This group includes:
Almería, Asturias, Ávila, the Balearic Islands, Burgos, Cantabria, Castellón,
Ceuta, Ciudad Real, Coruña, Guadalajara, Huesca, La Rioja, Las Palmas,
León, Lérida, Melilla, Palencia, Santa Cruz de Tenerife, Segovia, Soria,
Teruel, Valencia, Valladolid and Zaragoza.
• Group 3: provinces whose overall population represents the remaining
third of Spain’s population have GDP per capita below 84% of the
Spanish average. This group includes:
Albacete, Alicante, Badajoz, Cáceres, Cádiz, Córdoba, Cuenca, Granada,
Huelva, Jaén, Lugo, Málaga, Murcia, Orense, Pontevedra, Salamanca,
Sevilla, Toledo and Zamora.
Economic Research Department
6
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