Usage, Concepts and Methods
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1 Productionand Turnover Indices: Usage, Concepts and Methods Expert Group Meeting on Short Term Statistics February 2016 Amman, Jordan Production and Turnover Indices Overview 1. What they are Definitions 2. Main uses 3. International standards 4. Basic concepts: National v. International 5. Availability in pilot countries 6. Discussion issues barriers (underlying issues) 1
2 1. What are they: Production indices Measure changes over time in the price adjusted output of industries. Measure volume changes: Changes in physical quantities Changes in values of a particular period calculated l in the prices of another period Normally cover ISIC Rev. 4: Mining and quarrying Manufacturing Electricity, gas, steam, etc Water collection, sewerage, etc Coverage extended to compile indices for other industries : Construction (buildings / civil engineering) Ideal construct is to measure short term developments in value added of in scope industries Required monthly Poses problems obtaining ideal VA measure Therefore need to accept less than ideal target variables Require deflation of current values by a suitable price index Output Production Sales Turnover 1. What are they: Turnover indices Measure changes over time in the activity of industries. Measure changes in both values and volume Require deflation of current values by a suitable price index Normally cover ISIC Rev. 4: Mining and quarrying Manufacturing Electricity, gas, steam, etc Water collection, sewerage, etc Retail trade Coverage etededto extended to compile indices for other industries : Construction (buildings / civil engineering) Wide range of other services activities Ideal construct is to measure short term developments in turnover of in scope industries Required monthly 2
3 2. Main uses Production indices Turnover indices Are both key indices Widely produced monthly differences in activity coverage, data sources, compilation methods Input series Short term economic indicator in its own right. iht Compilation of QNAs Input series Short term economic indicator in its own right. Used to assess current trends in production and thus supply Used to assess current trends in sales and thus demand Production indices 3. International standards Turnover indices International Recommendations for the Index of Industrial Production (IIP), 2010, United Nations International Recommendations for Industrial Statistics (IRIS), Country Practices for the Collection and Calculation of the Index of Industrial Production, 2008, United Nations Industrial Statistics: Guidelines and Methodology, 2010, UNIDO International Standard Industrial Classification of All Economic Activities (ISIC), Revision 4, Central Product Classification (CPC), Version 2, 2008, United Nations [AR] Guidelines for Compiling the Monthly Index of Production in Construction, 2011, Eurostat Compilation Manual for an Index of Service Production, 2007, OECD ProducerPriceIndex Price Manual: Theoryand Practice, 2004, IMF et al [AR] Consumer Price Index Manual: Theory and Practice, 2004, ILO et al [AR] Methodological Guide for Developing Producer Price Indices for Services, 2014, OECD & Eurostat Handbook on Industrial Producer Price Indices, 2012, Eurostat National accounts integration framework System of National Accounts, 2008, UNSD et al Handbook on Quarterly National Accounts, 2013, Eurostat International Recommendations for Industrial Statistics (IRIS), Industrial Statistics: Guidelines and Methodology, 2010, UNIDO International Recommendations for Distributive Trade Statistics, Compilation Manual for an Index of Service Production, 2007, OECD International Standard Industrial Classification of All Economic Activities (ISIC), Revision 4, Central Product Classification (CPC), Version 2, 2008, United Nations [AR] Guidelines and recommendations on: Scope / coverage (classifications) Target variables (definitions) Data sources Compilation Dissemination 3
4 3. International standards International Recommendations for the Index of Industrial Production (IIP), 2010, United Nations International Recommendations for Industrial Statistics (IRIS), Country Practices for the Collection and Calculation of the Index of Industrial Production, 2008, United Nations Industrial Statistics: Guidelines and Methodology, 2010, UNIDO Focus on the really International recommendations important issues International Standard Industrial Classification of All Economic Activities (ISIC), Revision 4, Central Product Classification (CPC), Version 2, 2008, United Nations [AR] Guidelines for Compiling the Monthly Index of Production in Construction, 2011, Eurostat Compilation Manual for an Index of Service Production, 2007, OECD International Recommendations for Industrial Statistics (IRIS), Industrial Statistics: Guidelines and Methodology, 2010, UNIDO International Recommendations for Distributive Trade Statistics, Compilation Manual for an Index of Service Production,, 2007, OECD International Standard Industrial Classification of All Economic Activities (ISIC), Revision 4, Central Product Classification (CPC), Version 2, 2008, United Nations [AR] Scope / coverage (classifications) Target variables (definitions) Data sources Compilation Dissemination 100 s of pages Register frames coverage Classifications Key target variables Questionnaire design Admin data quality 3. International standards Production indices Issues Recommendation Classifications ISIC Rev. 4; CPC Ver. 2 [or EU equivalent NACE Rev. 2; CPA 2008] Scope Coverage Frequency Timeliness Key target variables Mining and quarrying; Manufacturing; Electricity, gas, steam, etc; Water collection, sewerage, etc; Construction 80% 90% of total output or value added Monthly 6 12 weeks [GDDS]; 6 weeks, 1 month encouraged [SDDS] Value added [ideal]; Production [collect components to derive] Price indices for deflation Suitable PPIs at required level lof activity it classification [l [class] Weights Value added [updated annually] 4
5 3. International standards Turnover indices Issues Recommendation Classifications ISIC Rev. 4; CPC Ver. 2 [or EU equivalent NACE Rev. 2; CPA 2008] Scope Coverage Frequency Timeliness Key target variables Mining and quarrying; Manufacturing; Electricity, gas, steam, etc; Water collection, sewerage, etc; Retail trade; Construction; other Services [market] 70% 90% of total turnover Monthly 1 month [SDDS] Value added [ideal]; Turnover [collect components to derive] Price indices for deflation Suitable CPIs and PPIs at required level lof activity it classification [l [class] Weights Value added [updated annually] 3. International standards v. national concepts & data sources Ideal environment Production and Turnover indices Reality International recommendations on: Scope / coverage (classifications) Target variables (definitions) Data sources Compilation Dissemination National environment Data sources (register infrastructure) National classifications National concepts and definitions Skill capacity Funding National accounts integration i framework Reference metadata on: Scope / coverage; key variables and concepts; data sources; compilation Metadata standards & recommended practices Descriptive metadata Quality declarations 5
6 4. Basic concepts: Key concepts Ideal environment International recommendations Value added Output / production Turnover / sales National accounts integration framework Value of shipments/turnover/sales of goods or services produced by the establishment + Vl Value of sale/turnover/shipments l/t /hi tof all goods and services purchased for resale in the same condition as received Purchases of goods and services for resale in the same condition as received + Receipts for industrial work done or industrial services rendered to others + Other revenues + Value of own account fixed assets + Change in work in progress + Change in inventories of finished goods + Change in inventories of goods purchased for resale in the same condition as received. National accounts integration framework 4. Basic concepts: Key concepts Value of shipments/turnover/sales of goods or services produced by the establishment + Value of sale/turnover/shipments of all goods and services purchased for resale in the same condition as received Purchases of goods and services for resale in the same condition as received + Receipts for industrial work done or industrial services rendered to others + Other revenues + Value of own account fixed assets + Change in work in progress + Change in inventories of finished goods + Change in inventories of goods purchased for resale in the same condition as received. Reality National concepts and variables Production indices 1. Value added (no intermediate consumption) 2. Output / production 3. Turnover / sales 1. Turnover / sales Turnover indices Metadata Essential to describe what you do and how it departs from international concepts 6
7 5. Compilation methods: Availability Indicator (by major Division) i i Egypt Tunisia i Qatar Pl Palestine Jordan Oman Lebanon Production index industry Y Y Y Y Y N N Production index construction N N N N N N N Turnover index retail trade N N N N N N N Turnover index industry Y Y N N N N N Turnover index other services N N N N N N N Frequency 5. Compilation methods: Frequency; Timeliness Indicator (by major Division) Recommendation Egypt Tunisia Qatar Palestine Jordan Oman Leban on Production index industry M M M? Q M Production index construction M Turnover index retail trade M Turnover index industry M M M Turnover index other services M Timeliness Indicator (by major Division) Recommendation Egypt Tunisia Qatar Palestine Jordan Oman Leban on 6 12W (GDDS) Production index industry 6W, 1M encouraged (SDDS) 6W 45D? 35D 6W Production index construction Turnover index retail trade 6 12W (GDDS) 6W, 1M encouraged (SDDS) 1M (SDDS) Turnover index industry 1M (SDDS) 6W? Turnover index other services 1M (SDDS) 7
8 6. Discussion issues Barriers re Review questionnair responses Delay in receiving data from some sources. Requires data to be estimated (Egypt: Production index, industry) Require IPads for collection of data and more powerful technology to reduce production time (Tunisia: Turnover index, industry) Lack of training on international standards (Palestine) Knowledge on necessary coordination with other sources (Palestine) Funding (Palestine) Capacity building required to compile index (Jordan) Resource issues (Jordan) Need to identify underlying barriers to development of production / turnover indices Thank you Questions? Denis Ward teedward@gmail.com 8
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