Production and Turnover Indices: Usage, Concepts and Methods

1. Production and Turnover Indices:Usage, Concepts and Methods Expert Group Meeting on Short-Term Statistics 16-18 February 2016 Amman, Jordan

2. Production and Turnover IndicesOverview • What they are - Definitions • Main uses • International standards • Basic concepts: National v. International • Availability in pilot countries • Discussion issues – barriers (underlying issues)

3. 1. What are they: Production indices Measure changes over time in the price-adjusted output of “industries”. • Normally cover ISIC Rev. 4: • Mining and quarrying • Manufacturing • Electricity, gas, steam, etc • Water collection, sewerage, etc Ideal construct is to measure short-term developments in value added of in-scope industries • Measure volume changes: • Changes in physical quantities • Changes in values of a particular period calculated in the prices of another period • Required monthly • Poses problems obtaining ideal VA measure • Therefore need to accept less than ideal target variables • Coverage extended to compile indices for other “industries”: • Construction (buildings / civil engineering) • Output • Production • Sales • Turnover Require deflation of current values by a suitable price index

4. 1. What are they: Turnover indices Measure changes over time in the activity of “industries”. • Normally cover ISIC Rev. 4: • Mining and quarrying • Manufacturing • Electricity, gas, steam, etc • Water collection, sewerage, etc • Retail trade Ideal construct is to measure short-term developments in turnover of in-scope industries Industry turnover indices measure changes in values Services turnover indices measure changes in both values and volume Required monthly • Coverage extended to compile indices for other “industries”: • Wide range of other services activities Services turnover indices require deflation of current values by a suitable price index

5. 2. Main uses Production indices Turnover indices Are both key indices Widely produced monthly – differences in activity coverage, data sources, compilation methods Compilation of QNAs Input series Input series Short-term economic indicator in its own right. 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

6. 3. International standards Production indices Turnover indices • International Recommendations for the Index of Industrial Production (IIP), 2010,United Nations • International Recommendations for Industrial Statistics (IRIS), 2008, United Nations [AR] • 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, 2008, United Nations [AR] • 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), 2008, United Nations [AR] • Industrial Statistics: Guidelines and Methodology, 2010, UNIDO • International Recommendations for Distributive Trade Statistics, 2008, United Nations [AR] • Compilation Manual for an Index of Service Production, 2007, OECD • International Standard Industrial Classification of All Economic Activities (ISIC), Revision 4, 2008, United Nations [AR] • Central Product Classification (CPC), Version 2, 2008, United Nations [AR] • Producer Price Index Manual: Theory and 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 • Scope / coverage (classifications) • Target variables (definitions) • Data sources • Compilation • Dissemination Guidelines and recommendations on:

7. 3. International standards • International Recommendations for the Index of Industrial Production (IIP), 2010,United Nations • International Recommendations for Industrial Statistics (IRIS), 2008, United Nations [AR] • 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, 2008, United Nations [AR] • 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), 2008, United Nations [AR] • Industrial Statistics: Guidelines and Methodology, 2010, UNIDO • International Recommendations for Distributive Trade Statistics, 2008, United Nations [AR] • Compilation Manual for an Index of Service Production, 2007, OECD • International Standard Industrial Classification of All Economic Activities (ISIC), Revision 4, 2008, United Nations [AR] • Central Product Classification (CPC), Version 2, 2008, United Nations [AR] • Focus on the really important issues • Register frames - coverage • Classifications • Key target variables • Questionnaire design • Admin data quality • International recommendations • Scope / coverage (classifications) • Target variables (definitions) • Data sources • Compilation • Dissemination 100’s of pages

8. 3. International standards – Production indices

9. 3. International standards – Turnover indices

10. 3. International standards v. national concepts & data sources Production and Turnover indices Ideal environment 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 framework Reference metadata on: Scope / coverage; key variables and concepts; data sources; compilation Metadata standards & recommended practices • Descriptive metadata • Quality declarations

11. 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. Ideal environment • International recommendations • Value added • Output / production • Turnover / sales National accounts integration framework

12. 4. Basic concepts: Key concepts Reality 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. • National concepts and variables • Production indices • Value added (no intermediate consumption) • Output / production • Turnover / sales • Turnover indices • Turnover / sales National accounts integration framework Metadata Essential to describe what you do and how it departs from international concepts

13. 5. Compilation methods: Availability

14. 5. Compilation methods: Frequency; Timeliness Frequency Timeliness

15. 6. Discussion issues - Barriers • 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 Review questionnaire responses

16. Thank you Questions? Denis Ward teedward@gmail.com