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Greater use of sales data in quarterly gross domestic product

This article describes how we are making greater use of quarterly sales data in some services industries, in order to estimate value added for gross domestic product (GDP). It provides technical users with more detailed information on the use of sales data we signalled with the publication of Preview of 2015 national accounts improvements. See:

Methodology change

In late-2015 we extended our use of sales data to estimate value added for gross domestic product (GDP). Sales indicators are better than the existing employment indicators for measuring value added for some services industries. In the Gross Domestic Product: September 2015 quarter release, we replaced the quarterly employment indicators for some services industries with sales (turnover) data. The sales data is based on Goods and Services Tax (GST) data from Inland Revenue. Previously we used employment indicators to measure the value added for these industries (ie ‘hours paid’ from the Quarterly Employment Survey (QES), and ‘number of working proprietors’ from Linked Employer-Employee Data (LEED)).

The business services (MN) industry is directly affected by this methodology change, as the quarterly indicators we used previously were primarily QES and LEED data.

The arts, recreation, and other services (RS) industry uses QES hours paid and sales data from the Selected Services Survey (SSS) as the quarterly indicators. There is no change to the methodology we use to estimate value added for the RS industry. However, the SSS has shifted to using GST sales data for all units except the largest units, which we will continue to survey. The change in the SSS affects the other services (RS2) industry, as the SSS is used as part of the quarterly indicators for RS2.

See Methodology changes to manufacturing, wholesale trade survey, and selected services statistics for more information.

We also use the SSS to estimate household consumption expenditure (HCE) on ‘repair and maintenance’ and ‘personal care services’. There is no change to the methodology we use to estimate these two HCE components. The updated SSS sales indicator series resulted in revisions to the HCE estimates.

There is no change to the annual methods we use to estimate value added for the industries mentioned above.

Why we chose sales data to measure value added

We moved to using sales data to measure value added for these services industries after comparing sales data with the annual value added series – because we found that the sales indicators aligned more closely than employment indicators.

Until recently, labour measures were the best available indicators of value added. Labour measures are good indications of the amount of employment activities happening in the economy. They can also be used to estimate the amount of value added in the services industries. However, economic activity does not always have a strong relationship with paid hours – any labour utilisation or technological changes are not directly reflected in the hours paid. Also, using labour measures below design level limits the transparency of the data.

See Maximising the use of administrative data in sub–annual business collections for more information on the sales indicator.

Although only a selection of services industries currently use GST as quarterly indicators, we are working towards making greater use of administrative data in the future. 

Current price weights, key indicators, and methodology

This section describes the current price weights, key indicators, and methodology we use to estimate value added for the business services industry, and the arts, recreation, and other services industry.

The current price weight structure shows which industries use GST sales data as quarterly indicators, and how much weight these industries have within the overall industry.

Business services (MN)

Current price weight structure

Detailed methodology

We deflate the actual current price GST sales with corresponding producers price index (PPI) indexes for selected business services industries (MN111, MN112, and MN114; market part only). The deflated GST sales volume series are the quarterly indicators. We then apply seasonal adjustment to the quarterly series. Annual benchmarks are available for all business services industries, and the quarterly series are reconciled to the annual benchmarks.

For the rest of the business services industries that do not use GST sales, we continue to use QES hours paid and number of working proprietors as the indicators.

Key indicators 

Industries Time series identifiers Industry description Type of data used Published deflator series
MN111 SSSQ.SFMN1111CA Scientific, architectural, and engineering services  Actual, current price GST sales PPIQ.SQUMN1110
MN112 SSSQ.SFMN1121CA Legal and accounting services Actual, current price GST sales PPIQ.SQUMN1120
MN114 SSSQ.SFMN1141CA Veterinary and other professional services Actual, current price GST sales PPIQ.SQUMN1140
MN113 and MN115 Below published level QES indicator series; LEED MN113 (Advertising, market research, and management services); MN115 (Computer system design and related services) Hours paid from QES; number of working proprietors sourced from LEED  Not applicable
MN2 QEXQ.SGAN9; LEED Administrative and support services Hours paid from QES; number of working proprietors sourced from LEED Not applicable

Arts, recreation, and other services (RS)

Current price weight structure

Detailed methodology

We deflate the actual current price Selected Services Survey sales data with corresponding PPI indexes for selected arts, recreation, and other services industries (RS211 and RS212). The deflated sales volume series are the quarterly indicators. We then apply seasonal adjustment to the quarterly series. Annual benchmarks are available for all arts, recreation, and other services industries, and the quarterly series are reconciled to the annual benchmarks.

For the rest of the arts, recreation, and other services industries that do not use Selected Services Survey sales data, we continue to use QES hours paid as the indicator. 

Key indicators 

Industries Time series identifiers Industry description Type of data used Published deflator series
RS1 and rest of RS2 QEXQ.SIAS Arts, recreation, and other services (excluding Repair and maintenance, and Personal care, funeral, and other services) Hours paid Not applicable
RS211 SSSQ.SFRS2111CA Repair and maintenance Actual, current price Selected Services Survey data PPIQ.SQURS2110
RS212 SSSQ.SFRS2121CA Repair and maintenance Actual, current price Selected Services Survey data Not applicable

Published 14 April 2016

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