Background to the survey
The Economic Survey of Manufacturing (QMS) is designed to provide short-term economic indicators for the manufacturing sector. In addition, the data is used to compile the manufacturing sector component of quarterly national accounts. The survey was last redesigned in the June 2001 quarter.
Population
The target population for this survey is all kind-of-activity units (KAUs) operating in New Zealand that are classified as Manufacturing (Australian and New Zealand Standard Industrial Classification Division C) on Statistics New Zealand's Business Frame.
Sample design
The survey population is stratified according to:
- industries defined by the ANZSIC-based ANZIND classification at the working industry level
- size (in terms of rolling mean employment)
- turnover (annualised GST sales).
Each ANZIND working industry division contains between two and four substrata. Because of the contribution large units make to the economic activity within each industry group, they are all included in the sample. A portion of the remaining medium to large units is also included in the sample. In addition, small- to medium-sized businesses have their data modelled from administrative data (GST and Employee Monthly Survey (EMS)) sourced from Inland Revenue. All manufacturing KAUs belonging to a selected 'enterprise' are included.
About 1,600 units have been selected in the postal sample from the entire population, and approximately 17,000 units have their data modelled from tax data.
Sample maintenance
Sample maintenance is the process that maintains the sample over time, to reflect births, deaths, and other structural changes identified on the Business Frame. The information for Business Frame changes comes from a variety of sources, including GST registrations and respondent contact.
New enterprises are identified when they register for GST. Once a quarter, the new enterprises are selected into the sample using the same criteria as for the original sample. These are referred to as births. When an enterprise ceases trading, its manufacturing KAUs are removed from the survey. These are referred to as deaths.
Enterprises can also enter or leave the survey sample if they are reclassified from another industry to manufacturing. Reclassifications occur when an enterprise changes its main form of activity (eg from wholesale trade to manufacturing). These are usually identified in the Annual Frame Update Survey (AFUS) conducted in February each year.
Sample reselection
The sample for the QMS is reselected each quarter to ensure the sample reflects changes occurring in the manufacturing population.
Industry classifications
From the September 2001 quarter, QMS estimates have been published using industries defined by the ANZSIC-based ANZIND classification. The ANZSIC series are the official QMS statistics.
The introduction of ANZSIC ensures the industry classification used by Statistics NZ better reflects contemporary economic activity. It also improves the comparability of statistics produced in New Zealand and Australia.
Measurement errors
Errors in the survey are divided into two classes:
Non-sampling error
Non-sampling error includes errors arising from biases in the patterns of response and non-response, inaccuracies in reporting by respondents, and errors in the recording and coding of data. The size of these errors is difficult to quantify. Data is subject to revision if significant errors are detected in subsequent quarters.
Sampling error
Sampling error is a measure of the variability that occurs by chance because a sample, rather than an entire population, is surveyed.
Definitions
ANZSIC
Australian and New Zealand Standard Industrial Classification system.
ANZIND
An ANZSIC-based classification used to group industries for publication.
Business Frame
A register of all economically significant businesses operating in New Zealand. The population of the QMS is drawn from the Business Frame.
Enterprise
A business entity operating in New Zealand either as a legally constituted body such as a company, partnership, trust, local or central government trading organisation, or as a self-employed individual.
Kind-of-activity unit (KAU)
A subdivision of an enterprise engaged in predominantly one activity and for which a single set of accounting records is available.
Rolling Mean Employment (RME)
RME is a 12-month moving average of the monthly employee count (EC) figure which replaces the numbers of full-time and part-time employees.
Operating income
Income from total sales. This includes:
- sales of processed goods
- sales of goods purchased for resale
- sales of services
- repair services
- manufacturing and processing fees
- management fees
- rental income
- leasing income
- royalties
- patent fees.
Operating incomemay contain end-of-year payouts that relate to production from earlier quarters. Operating income excludes:
- donations
- insurance claims
- subsidies/government grants
- exchange rate gains
- extraordinary items
- gains on sales of fixed assets
- excise duties
- bad debts.
Purchases and operating expenditure
This includes:
- purchases of goods for resale
- purchases of goods and materials for production
- motor vehicle expenses
- electricity and fuels
- management fees
- telecommunication expenses
- charges and fees paid to other businesses/divisions
- general operating expenditure (eg freight, rent)
- royalties
- patent fees.
Purchases and operating expenditure may incorporate payments for materials or services that may relate to quarters other than those in which they are recorded.
Purchases and operating expenditure excludes:
- interest/dividend payments
- sales tax
- excise duties
- fringe benefit tax
- donations
- bad debts
- extraordinary items
- exchange rate losses
- losses on sales of fixed assets
- depreciation.
Salaries and wages
Gross salaries and wages paid to employees during the quarter, excluding salaries and wages to working proprietors and drawings.
Stocks of raw materials
Closing stocks of raw materials for use in production.
Stocks of finished goods
Closing stocks of finished goods, work in progress and trading stocks.
Additions to fixed assets
This includes purchases of land, and other fixed assets and capital works by own employees. It excludes any revaluation of fixed assets.
Disposals of fixed assets
This includes sales of land or other fixed assets (reported at sale price). It excludes any devaluation of fixed assets.
Use of manufacturing data in quarterly national accounts
A key use of the QMS is in the calculation of manufacturing value added for the compilation of quarterly Gross Domestic Product (GDP).
Base year manufacturing value added is extrapolated using volume indexes. For each ANZSIC division, volume indexes are calculated from deflated sales and the deflated finished goods stock change. Sub-indexes from the Producers Price Index (PPI) are used for deflating QMS sales and finished goods stocks.
QMS data is supplemented with production data for the following industries:
- meat and dairy product
- petroleum and industrial chemical
- basic metal.
Seasonally adjusted series
The X-12-ARIMA package has been used to produce the seasonally adjusted estimates and trend estimates for sales in all subdivisions. Seasonal adjustment aims to eliminate the impact of regular seasonal events (such as annual cycles in agricultural production, winter or annual holidays) on time series. This makes the data for adjacent quarters more comparable.
All seasonally adjusted figures are subject to revision each quarter. This enables the seasonal component to be better estimated and removed from the series.
The X-12-ARIMA seasonal adjustment package is a very robust procedure; however, it has problems when there has been an abrupt change in the seasonal variation, as do other seasonal adjustment packages.
As a result of the restructuring within the dairy industry, there has been a discontinuity in the meat and dairy product and total manufacturing series. The seasonal pattern of the dairy series may have become less closely tied to production cycles due to the removal of the monopsony in the industry. Should this occur, it is likely that the seasonality of the total sales series will also change, as it has been strongly influenced by the seasonality of the meat and dairy series. Therefore, a seasonal movement of a given magnitude in the meat and dairy product and total manufacturing series before June 2002 may not have the same meaning as a seasonal movement of a similar magnitude after June 2002.
Since September 2002, the dairy series have been adjusted to take some account of this expected change in behaviour. There may be further revisions to the meat and dairy, and the total manufacturing series, as further information becomes available which enables Statistics NZ to better quantify the effect of the changes in the dairy industry.
Due to the changes in the meat and dairy series, it has been decided to change the seasonal adjustment method for total sales from direct to indirect. This will allow the series to better respond to changes in the seasonality of the components, and was considered preferable to our usual selection criteria. More information on direct and indirect adjustment is available on our website www.stats.govt.nz. in the seasonal adjustment FAQ pages.
For further information contact seasonaladjustment@stats.govt.nz.
The trend series are calculated using the X-12-ARIMA seasonal adjustment package. They are based on a five- or seven-term moving average of the seasonally adjusted series, with an adjustment for outlying values.
Trend estimates towards the end of the series incorporate new data as they become available and can therefore change as more observations are added to the series. Revisions can be particularly large if an observation is treated as an outlier in one quarter, but is found to be part of the underlying trend as further observations are added to the series. Typically, only the estimates for the most recent quarter will be subject to substantial revisions.
Volume series
These are value series that have been adjusted by a price index to remove the effect of price changes. They can then be used for measuring quantity change. The volume series, at present, are expressed in December 1997 quarter dollars.
Values are adjusted using sub-indexes from the PPI. These sub-indexes measure price movements in each of the 15 published manufacturing industries, as well as total manufacturing. When the value series are divided by the respective sub-indexes, price effects are removed and a volume measure remains. The PPI sub-indexes are available on Infoshare.
More information
For more information, follow the link from the technical notes of this release on the Statistics NZ website.
Estimated trend
For any series, the survey estimates can be broken down into three components: trend, seasonal and irregular. While seasonally adjusted series have had the seasonal component removed, trend series have had both the seasonal and irregular components removed. Trend estimates reveal the underlying direction of movement in a series, and are likely to indicate turning points more accurately than are seasonally adjusted estimates.
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Timing
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