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3 The scope excludes public sector business units (i.e. all departments, authorities and other organisations owned and controlled by Commonwealth, State and Local Government).
4 The Quarterly Economic Activity Survey, like most ABS economic collections, takes its frame from the ABS Business Register which is primarily based on registrations to the Australian Taxation Office’s Pay As You Go Withholding (PAYGW) scheme (and prior to 1 July 2000 its Group Employer scheme). The frame is updated quarterly to take account of new businesses, businesses which have ceased employing, changes in employment levels, changes in industry and other general business changes.
5 Businesses which have ceased employing are identified when the Australian Taxation Office cancels their PAYGW registration (or previously their GE registration). In addition, from September quarter 1999, businesses which did not remit under the GE scheme for the previous five quarters were removed from the frame. A similar process will be adopted to remove businesses who do not remit under the PAYGW scheme.
6 The statistics in this publication exclude non-employing businesses. Though there are a substantial number of these businesses, it is expected that they would not contribute significantly to the estimates, although the impact would vary from industry to industry.
7 Inventories data are not collected from businesses with less than 20 employees, as smaller businesses have difficulty in providing accurate quarterly information on the level of their inventories. Estimates for these businesses are derived by applying sales information to an estimated sales to inventory ratio. The sales to inventories ratio is based on data from the current quarter for medium sized businesses, and benchmarked to data from the annual Economic Activity Survey for small businesses. Investigations indicate that this technique produces estimates of inventories of sufficient quality.
CHANGES TO ABS BUSINESS REGISTER
8 The introduction of The New Tax System has a number of significant implications for ABS business statistics, and these are discussed in the information paper ABS Statistics And The New Tax System (ABS Cat. no. 1358.0). The replacement of the GE registration process by PAYGW registration resulted in a number of changes to most business survey frames. However, an adjustment has been made to the Inventories and Sales series so that these changes will not affect broader level estimates of level and movement.
9 From the September quarter 2002, the ABS will make further changes including adopting a new units model and expanding its Register to include all units on the Australian Business Register, including non-employers. Further information on the impact of these changes will be provided before they are implemented.
10 The survey is conducted by mail on a quarterly basis. It is based on a random sample of approximately 16,000 units which is stratified by industry, state/territory and number of employees. All private sector units with over 250 employees, and other statistically significant units, such as joint venture partners, are included in the sample.
11 Respondents are asked to provide data on the same basis as their own management accounts. Where a selected unit does not respond in a given survey period, a value is estimated. If data are subsequently provided, the estimated value is replaced with the reported data. Aggregates are calculated from all data using the ‘number raised’ estimation technique. Data are edited at both individual unit level and at aggregate level.
TIMING OF SURVEY CYCLE
12 Surveys are conducted in respect of each quarter and returns are completed during the 8 or 9 week period after the end of the quarter to which survey data relate e.g. December quarter survey returns are completed during January and February.
13 The survey frames and samples are revised each quarter to ensure that they remain representative of the survey population. The timing for creating each quarter’s survey frame is consistent with that of other ABS business surveys. This provides for greater consistency when comparing data across surveys.
14 Additionally, with these revisions to the sample, some of the units from the sampled sector are rotated out of the survey and are replaced by others, to spread the reporting workload equitably.
15 Adjustments are included in the estimates to allow for lags in processing new businesses to the ABS Business Register. The adjustments contributed 2.3% to the current quarter’s estimate of reported inventories, 1.5% to reported Manufacturing sales, and 2.7% to reported Wholesale trade sales.
16 This survey uses the management unit as the statistical unit. The management unit is the highest-level accounting unit within a business, having regard to industry homogeneity, for which accounts are maintained. In nearly all cases it coincides with the legal entity owning the business (i.e. company, partnership, trust, sole operator, etc.). In the case of large diversified businesses, however, there may be more than one management unit, each coinciding with a ‘division’ or ‘line of business’. A division or line of business is recognised where separate and comprehensive accounts are compiled for it.
CLASSIFICATION BY INDUSTRY
17 The Australian and New Zealand Standard Industrial Classification has been developed for use in both countries for the production and analysis of industry statistics. For more information, users are referred to Australian and New Zealand Standard Industrial Classification (ANZSIC), 1993 (Cat. no. 1292.0).
18 In order to classify inventories and income from sales of goods and services data by industry, each statistical unit (as defined above) is classified to the Australian and New Zealand Standard Industrial Classification industry in which it mainly operates.
DESCRIPTION OF TERMS
19 Income from the sales of goods and services. This includes income from sales of goods by the business and income from services provided such as commission income, repair and service income and fees, management fees, rent leasing and hiring income, delivery and installation charges, income from consulting services, sponsorship income, membership/subscription fees and royalties income.
20 Manufacturing Sales. Income from sales of goods and services (as defined above) by businesses classified to the Manufacturing industry. From the March quarter 2001 issue of this publication this series replaced the Manufacturers' sales series which was more narrowly defined. A consistent time series on the new basis has been compiled back to the June quarter 1984.
21 Wholesale Trade Sales. From September quarter 1999, the Wholesale Trade Sales comprises all income from sales of goods and services (as defined above) by businesses classified to the Wholesale Trade industry. Prior to September quarter 1999, only the sales of goods by wholesalers was collected. No break in series was identified with this change.
22 Inventories. All inventories of materials etc., work in progress and finished goods owned by the business, whether held at locations of the business or elsewhere.
INCOME FROM SALES OF GOODS AND SERVICES
23 As part of a strategy to increase the range of information available relating to service industries, the ABS introduced quarterly experimental estimates relating to income from sales of goods and services for most service industries in the June quarter 2000 issue of this publication. This information was first collected in the March quarter 1999. Previously, quarterly data relating to sales had only been released in respect of the Manufacturing and Wholesale trade industries.
24 Income from sales of goods and services is the most readily available measure of output across different industries. This measure is consistent with that used in the Manufacturing and Wholesale trade sales series currently released in this publication. Table 11 presents experimental estimates of income from sales of goods and services for private sector businesses in the newly-measured service industries, as well as comparable data for the Manufacturing and Wholesale trade industries.
25 Users should treat the estimates in table 11 with caution. They are experimental at this stage and further analysis is required to ensure that they are robust and reliable indicators for measuring income in the selected service industries over time.
26 In addition to the current price data, the ABS has recently produced chain volume estimates of income from sales of goods and services for service industries. These are also experimental, and require further analysis to ensure they are of sufficient quality for publication. However, if users are interested in accessing the chain volume data, they should contact Mark Wise on Sydney 02 9268 4241.
CHAIN VOLUME MEASURES
27 The chain volume measures appearing in this publication are annually reweighted chain Laspeyres indexes referenced to current price values in the chosen reference year (currently 1999-2000). The current price values may be thought of as being the product of a price and quantity. The value in chain volume terms can be derived by linking together movements in volumes, calculated using the average prices of the previous financial year and applying compound movements to the current price estimates of the reference year. Each year’s quarter-to-quarter growth rates in the chain volume series are based on the prices of the previous financial year, except for those quarters of the latest incomplete year which are based upon the second most recent financial year. Quarterly chain volume estimates are benchmarked to annual chain volume estimates, so that the quarterly estimates for a financial year sum to the corresponding annual estimate.
28 With each release of the June quarter estimates, a new base year is introduced and the reference year is advanced one year to coincide with it. This means that with the release of the June quarter 2002 estimates, the chain volume measures for 2001-2002 will have 2000-2001 (the previous financial year) as their base year rather than 1999-2000, and the reference year will be 2000-2001. A change in the reference year changes levels but not growth rates for all periods. A change in the base year can result in revisions, small in most cases, to growth rates for the last few years.
29 Chain volume measures are not generally additive. In other words, component chain volume measures do not, in general, sum to a total in the way original current price components do. For inventories and sales data, this means that the original chain volume estimates for industry groups will not add to total inventories and sales for Australia. In order to minimise the impact of this, the ABS uses the latest base year as the reference year. By adopting this approach, addivity does exist for the quarters following the reference year and non-additivity is relatively small for the quarters in the reference year and those immediately preceding it. For further information on chain volume measures refer to the Information Paper: Introduction of Chain Volume Measures in the Australian National Accounts (Cat. no. 5248.0).
RELIABILITY OF THE ESTIMATES
30 Estimates provided in this publication are subject to non-sampling and sampling error. The most common way of quantifying sampling error is to calculate the standard error for the published estimate. In calculating the standard error, the common practice for the statistics in this publication has been to examine the most recent two years of the quarterly series, and to produce a smoothed standard error for that period for the major published aggregates. This approach takes account of the variability in standard error estimates for quarterly statistics. This estimated standard error is then used as an indication of the sampling error for the current published series. The data in the current publication has been sourced from the new Quarterly Economic Activity Survey, which has been conducted since March quarter 2001, and this does not allow for a smoothed estimate of the standard error to be calculated. Therefore standard errors are based upon the data in the currently published quarter. Details of standard
errors are on pages 24 and 25 of this publication.
31 Non-sampling errors may arise as a result of errors in the reporting, recording or processing of the data and can occur even if there is a complete enumeration of the population. These errors can be introduced through inadequacies in the questionnaire, treatment of non-response, inaccurate reporting by respondents, errors in the application of survey procedures, incorrect recording of answers, and errors in data entry and processing.
32 It is difficult to measure the size of non-sampling errors. However, every effort is made in the design of the survey and development of survey procedures to minimise their effects.
33 The quarterly inventories and sales series in this publication are affected to some extent by seasonal influences and it is useful to recognise and take account of this element of variation.
34 Seasonal adjustment is a means of removing the estimated effects of normal seasonal variations for the series so that the effects of other influences can be more clearly recognised.
35 In the seasonal adjustment of the series, account has been taken of both normal seasonal factors (e.g. increase in retail inventories due to Christmas period) and, in the case of sales, also trading day effects (arising from the varying lengths of the quarters and the varying numbers of Sundays, Mondays, Tuesdays etc. in each quarter). Seasonal adjustment does not remove from the series the effect of irregular or non-seasonal influences (e.g. change in interest rates), and reflects the sampling and other errors to which the original figures are subject. Particular care should be taken in interpreting quarterly movements in the adjusted figures in this publication, especially for detailed industry estimates.
36 At least once each year the seasonally adjusted series are revised to take account of the latest available data. The most recent reanalysis takes into account the data collected up to and including the June quarter 2001. Data for periods after June 2001 are seasonally adjusted on the basis of extrapolation of historical patterns. The nature of the seasonal adjustment is such that the magnitude of some revisions resulting from the reanalysis may be quite significant especially for data for more recent quarters.
37 Seasonally adjusted data are not available for income from sales of goods and services in table 11 as at least three years of data are required to discern a seasonal pattern.
38 The trend estimates are derived by applying a 7-term Henderson moving average to the seasonally adjusted series. The 7-term Henderson average (like all Henderson averages) is symmetric, but as the end of a time series is approached, asymmetric forms of the average are applied. Unlike the weights of the standard 7-term Henderson moving average, the weights employed here have been tailored to suit the particular characteristics of individual series. While the asymmetric weights enable trend estimates for recent quarters to be produced, it does result in revisions to the estimates for the most recent three quarters as additional observations become available. There may also be revisions because of changes in the original data and as a result of the re-estimation of the seasonal factors. For further information, see Information Paper: A Guide to Interpreting Time Series - Monitoring Trend, An Overview (Cat. no. 1348.0) or contact the Assistant Director, Time Series Analysis on Canberra 02 6252 6345.
PRIVITISATION OF PUBLIC SECTOR UNITS
39 Three significant privatised marketing authorities came into scope of the Survey of Inventories, Sales and Services from the September quarter 1999. The introduction of these units resulted in a break in series between the June and September quarters 1999 and comparison of the series over time should be undertaken with care.
40 The methodology used by the ABS has ensured that the trend series has not been distorted by the introduction of these units, although the shift in level is still evident between the June and September quarters 1999. For this reason, the trend estimates of movement have not been published for the Wholesale trade inventories, Total inventories and Wholesale trade sales series in respect of the September quarter 1999.
COMPARABILITY WITH NATIONAL ACCOUNTS ESTIMATES
41 The data collected in the Quarterly Economic Activity Survey are used to compile estimates of the increase in book value of non-farm inventories in the quarterly and annual national accounts. Income from the sales of goods and services for the Manufacturing and Wholesale trade industries are used to help derive quarterly chain volume measures of gross value added for these industries. For further details see Australian National Accounts: Concepts, Sources and Methods (Cat. no. 5216.0).
42 The statistics shown for the movement in the book value of inventories in this publication will differ from corresponding data for private non-farm inventories shown in the national accounts publications because the national accounts estimates are benchmarked to the annual supply and use tables and include estimates for the construction and transport industries.
43 Income from the sales of goods and services now collected from the service industries is eventually expected to lead to an improvement in the quality of the quarterly national accounts chain volume estimates of gross value added for the service industries involved, after the series have been subject to further analysis.
44 Users may also wish to refer to the following publications:
Australian Business Expectations (Cat. no. 5250.0)
Australian National Accounts: Concepts, Sources and Methods (Cat. no. 5216.0)
Australian National Accounts: National Income, Expenditure and Product (Cat. no. 5206.0)
Business Operations and Industry Performance, Australia (Cat. no. 8140.0). Company Profits, Australia (Cat. no. 5651.0)
Experimental Estimates: Australian Industry, a State Perspective, Australia 1998-99 (Cat. no. 8156.0)
Information Paper: Introduction of Chain Volume Measures in the Australian National Accounts (Cat. no. 5248.0)
Improvements to ABS Quarterly Business Indicators (Cat. no. 5677.0)
Manufacturing Production, Australia (Cat. no. 8301.0)
Private New Capital Expenditure and Expected Expenditure, Australia (Cat. no. 5625.0)
Retail Trade, Australia (Cat. no. 8501.0)
State Estimates of Private New Capital Expenditure (Cat. no. 5646.0)
45 Current publications produced by the ABS are listed in the Catalogue of Publications and Products, Australia (Cat. no. 1101.0). The ABS also issues on Tuesdays and Fridays a Release Advice (Cat. no. 1105.0) which lists publications to be released in the next few days. The Catalogue and Release Advice are available from any ABS office.
ABS DATA AVAILABLE ON REQUEST
46 As well as the statistics included in this and related publications, the ABS may have other relevant data available on request. Inquiries should be made to the National Information Service on 1300 135 070.
SYMBOLS AND OTHER USAGES
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