Conversion of STS Indicators for Industrial Activity According to NACE Rev. 2 in Statistical Office of Slovenia

1. Conversion of STS indicators' series for industrial activity according to NACE Rev. 2 and new base year in Slovenia Statistical Office of the Republic of Slovenia Iris Rošker and Laura Šuštar Kožuh

2. Requirements • NACE Rev. 2 introduced in 2008, • First data according to the new classification in 2009 • Simultaneously, introduction of the new base year 2005=100 • Backcasted series back to 2000 (or further if possible) This presentation includes STS indices: industrial production (IPI), turnover, new orders, output prices and import prices.

3. Preparation of new weights Purpose: • For the calculation of European aggregates • For national calculations of aggregated IPI Sources: • Double coded SBR back to the year 2000 (new and old activities) • Structural business statistics (SBS, source for value added, turnover total) • Enterp. final accounts (shares of domestic and non-domestic turnover in total turnover) • International trade statistics (turnover dividedinto: non-domestic € and non-€ area, imports total, imports € and non-€ area)

4. Process of transference of weights according to the new NACE • SBS and other sources available only according to the old classification • Switch to the new classification through already translated statistical business register (SBR), at enterprise level • Aggregation of values for all the variables according to the new NACE activities

5. Conversion of data series according to NACE Rev. 2 Implementation of the new NACE was centrally guided and a list of possible methods with the recommendations when and where to be used was prepared: • translation key – in relations 1:1 or n:1 (old:new classification) • micro level recalculation with the recoded activity at the enterprise or LKAU level and the new calculation of indices • macro level backcasting using the translation tables or matrices • combination of micro and macro level methods, e. g. recalculation using micro level method for the recent years and matrices (macro level) for the preceding years

6. Micro method advantages and disadvantages The main advantage is its accuracy. Disadvantages are connected with its exhaustive course from stage to stage: • firstly the new activity code for all of the enterprises for past years has to be defined • then all the data processing for the past periods must be repeated • then appears the data imputation problem (new models) • in the case of sampling surveys, the design weights have to be re-calculated • finally the problem on the missing data (activities) occurs

7. Macro method advantages and disadvantages The advantages of the macro method using the translation matrices are: • Not necessary to provide the translation tables for all of the reference periods (=months), but only the yearly situations • Backcasting is done on indices and not on micro data of enterprises • The whole process is less extensive and exhaustive The disadvantage of this method is that the direct connection between the indices at the aggregated level and the micro data is threatened.

8. Transference of the industrial production and turnover The reasons why the macro method was selected: • The change of methodology for the industrial production index calculation in 2004 • The easier acquirement of data for the activities previously out of scope • Great extent of the survey (in terms of time and finance) • Demographical changes of the enterprises

9. Conditions for the successful backcasting • Double-coded SBR (both activities 2008-2000) • Double survey sample for 2008 (for both activities) • Preparation of the translation matrices (2007-2000) according to the following variables: • enterprise's turnover • number of persons working in the enterprises/LKAUs • number of enterprises/LKAUs within the activity • Preparation of new weights for 2005, 2006 and 2007 on the basis of the SBS

10. Translation matrices for industrial production and turnover • Most suitable were the translation matrices according to the number of employees • Because in Slovenia, due to its small economy, besides the enterprises also the LKAU's are observed in short-term industrial statistics • For LKAUs no information on turnover is available (neither from final accounts nor from VAT declarations)

11. The translation matrices

12. Backcasting for IPI OLD WEIGHTS old classification NEW WEIGHTS new classification 2004-2007 SBR YEARLY STATE 2007-2000 old + new class. code AGGR. NEW SERIES 2005=100 TRANSLATION MATRICES 2000-2007 industrial groups level OLD INDICES SERIES old classification 2000=100 SERIES OF INDICES industrial groups level new classification, 2000=100 series before 2004 SERIES OF INDICES industrial groups level new classification, 2005=100 SERIES OF INDICES prev. out of scope, 2-digit level old class. 2000=100

13. Linking of series before and after 2004 • We have recalculated the 2004-2007 series, acc. to the new NACE, 2005=100, by using new weights; and • Translated the series before 2004, acc. to the new NACE, 2000=100, by using translation matrices Link these series: • Via the chain indices (from February 2004 on) the recalculation of the whole 2004-2007 series on the base year 2000=100 was made • Then finally the recalculation of the whole 1998-2007 on series the base year 2005=100 was prepared

14. Backcasting for turnover, new orders, stocks (non-weighted series) TRANSLATION MATRICES 2000-2007 industrial groups level from 2-digit level classif. upwards SBR YEARLY STATE 2007-2000 old + new class. code SERIES OF INDICES from 2-3-digit level 2000=100 SERIES OF INDICES 2-digit level new classif. and all the aggregats 2000=100 SERIES OF INDICES 2-digit level and aggr. new classif. 2005=100 SERIES OF INDICES prev. out of scope, 2000=100

15. Differences between old and new series Mining and quarrying designation from C to B • some differences at the lower level of classification, of minor importance Manufacturing designation from D to C • split of publishing activities and recycling of materials out of scope caused about 2.6% smaller area of observation (in terms of the number of employees) • newly included agriculture, wholesale trade and services activities comprise a small share and are scattered over the different groups of manufacturing activities • rearrangements among the variety of groups within the manufacturing activities Electricity, gas and water supply designation from E to D • water collection, treatment and supply is now within the div. E, which is not relevant for us since it has always been out of scope • some additional differences are also on the lower classif. levels

16. Quality check Comparison of 2008 data: • results of the macro method backcasting, and • of the micro method calculation results The 2008 double survey sample enabled the parallel calculations. Quality check showed: • the corr. coefficients between 0.96 and 0.99 • visual control of the diagrams verified the reliability of backcasted series

17. IIP - Industry total: comparison between NACE Rev. 1 and NACE Rev. 2 data

18. IIP - Industry total: various calculations

19. IIP - Capital goods industries (B)

20. IIP - Consumer goods industries (C)

21. IIP – Intermediate goods industries (A)

22. Conversion of the price indices • Micro level, two steps: • correspondence table (NACE Rev. 1 : NACE Rev. 2) • special conversion table (Prodcom 2007 : Prodcom 2008)

23. Backcasting of price surveys • all historical data, for all price surveys • new code tables for calculation (total and MIGs) • new calculation of historical data

24. Control of conversion and backcasting • weights (total, conversion at the lower level 1:1) • calculated indices (tree calculations for each price survey)

25. Acknowledgment • We would like to give thanks to all our cooperative colleagues who actually performed the presented process of backasting, particularly A. Kuhar, R. Seljak and M. Jankovič. • And we would also like to thank you for your attention!