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

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

2. Main uses Production indices Turnover indices Are both key indices Widely produced monthly – differences in activity coverage, data sources, compilation methods 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. Input series Short-term economic indicator in its own right. Used to assess current trends in sales and thus demand Compilation of QNAs Used to assess current trends in production and thus supply

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 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 Production indices Turnover indices 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] 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 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 Scope / coverage (classifications) Target variables (definitions) Data sources Compilation Dissemination Guidelines and recommendations on:

3. International standards International recommendations Scope / coverage (classifications) Target variables (definitions) Data sources Compilation Dissemination International recommendations Scope / coverage (classifications) Target variables (definitions) Data sources Compilation Dissemination 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] 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 Focus on the really important issues Register frames - coverage Classifications Key target variables Questionnaire design Admin data quality 100’s of pages

3. International standards – Production indices IssuesRecommendation ClassificationsISIC Rev. 4; CPC Ver. 2 [or EU equivalent NACE Rev. 2; CPA 2008] ScopeMining and quarrying; Manufacturing; Electricity, gas, steam, etc; Water collection, sewerage, etc; Construction Coverage80% - 90% of total output or value added FrequencyMonthly Timeliness6-12 weeks [GDDS]; 6 weeks, 1 month encouraged [SDDS] Key target variablesValue added [ideal]; Production [collect components to derive] Price indices for deflationSuitable PPIs at required level of activity classification [class] WeightsValue added [updated annually]

3. International standards – Turnover indices IssuesRecommendation ClassificationsISIC Rev. 4; CPC Ver. 2 [or EU equivalent NACE Rev. 2; CPA 2008] ScopeMining and quarrying; Manufacturing; Electricity, gas, steam, etc; Water collection, sewerage, etc; Retail trade; other Services [market] Coverage70% - 90% of total turnover FrequencyMonthly Timeliness1 month [SDDS] Key target variablesTurnover [collect components to derive] Price indices for deflation [except for Industry] Suitable CPIs and SPPIs at required level of activity classification [class] WeightsTurnover [updated annually]

3. International standards v. national concepts & data sources Production and Turnover indices International recommendations on: Scope / coverage (classifications) Target variables (definitions) Data sources Compilation Dissemination International recommendations on: Scope / coverage (classifications) Target variables (definitions) Data sources Compilation Dissemination National accounts integration framework National environment Data sources (register infrastructure) National classifications National concepts and definitions Skill capacity Funding National environment Data sources (register infrastructure) National classifications National concepts and definitions Skill capacity Funding Reference metadata on: Scope / coverage; key variables and concepts; data sources; compilation Metadata standards & recommended practices Descriptive metadata Quality declarations Descriptive metadata Quality declarations Ideal environmentReality

4. Basic concepts: Key concepts International recommendations Value added Output / production Turnover / sales 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 + 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. 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

4. Basic concepts: Key concepts National concepts and variables Production indices 1.Value added (no intermediate consumption) 2.Output / production 3.Turnover / sales Turnover indices 1.Turnover / sales National concepts and variables Production indices 1.Value added (no intermediate consumption) 2.Output / production 3.Turnover / sales Turnover indices 1.Turnover / sales National accounts integration framework 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. 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 Metadata Essential to describe what you do and how it departs from international concepts Metadata Essential to describe what you do and how it departs from international concepts

5. Compilation methods: Availability Indicator (by major Division)EgyptTunisiaQatarPalestineJordanOmanLebanon Production index - industryYYYYYNN Production index - constructionNNNNNNN Turnover index – retail tradeNNNNNNN Turnover index - industryYYNNNNN Turnover index – other servicesNNNNNNN

5. Compilation methods: Frequency; Timeliness Indicator (by major Division)RecommendationEgyptTunisiaQatarPalestineJordanOmanLeban on Production index - industryMMM?QM Production index - constructionM Turnover index – retail tradeM Turnover index - industryMMM Turnover index – other servicesM Indicator (by major Division)RecommendationEgyptTunisiaQatarPalestineJordanOmanLeban on Production index - industry 6-12W (GDDS) 6W, 1M encouraged (SDDS) 6W45D?35D6W Production index - construction 6-12W (GDDS) 6W, 1M encouraged (SDDS) Turnover index – retail trade 1M (SDDS) Turnover index - industry 1M (SDDS) 6W? Turnover index – other services 1M (SDDS) Frequency Timeliness

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

Thank you Questions? Denis Ward