Quarterly chain volume estimates of gross value added
6.51 Annual estimates of gross value added by industry are derived in the prices of the previous year by subtracting volume estimates of intermediate consumption from volume estimates of output. This is commonly referred to as double deflation. For quarterly figures, however, in the absence of accurate data for both output and intermediate consumption, double deflation is not generally recommended unless it is applied in quarterly balanced S-U tables. The principal alternative is to extrapolate value added in the base year at a detailed level by indicator series which are deemed to represent the volume movement of value added, such as a volume indicator of output. This is the approach adopted by the ABS for most industries. The exceptions are agriculture and those industries dominated by non-market production.
6.52 Because of substantial variations in the weather from one year to the next the relationship between agricultural outputs and inputs is erratic, and there is little option but to use double deflation to derive quarterly volume estimates of gross value added for agriculture.
6.53 In the case of industries dominated by non-market production, such as public administration and defence, volume estimates of gross value added are assumed to grow at the same rate as an indicator of inputs.