DataCollection Methodology

National accounts (income, saving, assets, and liabilities): September 2021 quarter - changes and revisions 1. Introduction National accounts (income, saving, assets, and liabilities) for New Zealand have been produced from the June 2016 quarter and is updated each quarter. The series in these accounts are in current (nominal) price, in both actual and seasonally adjusted terms. The National accounts (income, saving, assets, and liabilities): Sources and methods are thoroughly documented. The data used to compile our estimates of quarterly income, saving, assets, and liabilities are the best that we have available at that point in time. When compiling our quarterly estimates, we usually face trade-offs between timeliness and the quality, coverage, length of historical series, and/or conceptual alignment of available data sources to the component it is meant to represent. As a result, the methodologies vary depending on the data available and are underpinned by certain assumptions. These statistics are experimental and may be subject to greater revision than other releases as we improve methodologies or include more comprehensive data. Part of the rationale for releasing estimates on an experimental basis is to allow users an opportunity to comment on methods and details of published series. If you have any feedback or comments that you’d like to pass on, or for more information on revisions, email [email protected]. 2.Data Collection and Methodology changes 2.1Data revisions 2.1.1 Revisions to Gross Domestic Product (GDP) series Revisions to GDP are reflected in National accounts (income, saving, assets, and liabilities) where the same series are used in both publications such as final consumption expenditure (FCE). Implementing updated quarterly methodologies contributes to revisions to household consumption expenditure which is one of the indicators used in household saving. See 2021 revisions to balance of payments and national accounts for further information. 2.1.2 Revisions to land Quarterly land estimates are derived by using annual land estimates from CoreLogic property values by property type, quarterly CoreLogic residential property estimates for recent quarters, and movements in the CoreLogic House Price Index (HPI) in latest quarters when residential property estimates are not yet available. The HPI estimates for the most recent two quarters are revised as CoreLogic collects more data on housing and land transactions. Thus, given the value of housing and land in New Zealand (over one trillion dollars) it is expected that updated HPI values may contribute to substantial revisions in some sectors, in particular to the non-financial business enterprises sector and the household sector. In quarters after the last annual balance sheet benchmarks, property values are used as a control total for each sector, then non-financial assets such as buildings and land improvements are deducted, to derive land estimates as a residual. Non-financial assets have revised this quarter, for the full time series, due to improvements in methodology (refer to the Non-financial assets section at 2.2.1. for more details). 2.1.3 Revisions to Balance of Payments (BOP) and International Investment Position (IIP) The Rest of World sector is subject to revision in all accounts each quarter due to BOP and IIP revisions. These revisions are due mainly to respondents updating their previously reported data, which affects the most recent previously published quarter. In addition, changes to methods used in compiling BOP and IIP are introduced once each year, in the June quarter BOP and IIP release. These can affect several years. These cause revisions in June quarter releases of National accounts (income, saving, assets, and liabilities). All accounts can be revised for the Rest of World sector, and also resident sectors that are estimated from the counterparty dimension of BOP and IIP data. 2.2 Incorporating data from the annual national accounts Each year, we make regular updates to the most recent data in the annual national accounts. These updates generally reflect more accurate data becoming available from the underlying data sources, such as the low-level financial data that becomes available with the annual enterprise survey update. The annual national accounts are released in November each year and present a comprehensive view of the economy that draws together data from more detailed but less timely sources. The availability of more detailed data allows us to understand the level of activity that has occurred over the period and reflect these in our estimates of quarterly and annual economic growth. Reconciling quarterly measures to annual values is a process called benchmarking. This process largely preserves the pattern of quarter-on-quarter movements drawn from the quarterly indicator series but scales the series to match the level of the annual benchmark. National accounts (industry production and investment): Year ended March 2020 provides the annual benchmarks for consolidated accounts up to the year ended March 2020. This annual benchmarking process causes revisions to FCE, compensation of employees, gross operating surplus and gross mixed income, taxes on production and imports, and subsidies. National accounts (income and expenditure): Year ended March 2021 provides the benchmarks for most domestic sectors in the institutional sector accounts up to and including the year ended March 2020. The central government sector is benchmarked up to and including the year ended March 2021. The provisional estimates for 2021 will not fully reconcile with the new quarterly estimates, as these remain experimental. 2021 preview of national accounts improvements has more information on the range of revisions to annual national accounts statistics. For balance sheets the annual benchmark is currently the year ended March 2019. The benchmark for the year ended March 2020 will be published in March 2022 and will be incorporated in the next quarterly release (December 2021 quarter published in April 2022). It is intended that the annual benchmark for balance sheets will align with other annual national accounts statistics from November 2022. 2.2.1 Changes in non-financial assets Improvements to non-financial asset estimates detailed in the documents above have multiple impacts on National accounts (income, saving, assets, and liabilities). The non-financial asset revisions, to fixed assets in particular, result from the adoption of the Statistical Classification for Institutional Sectors (SCIS) in the Perpetual Inventory Method (PIM) model used to estimate these assets. This required improved SCIS splits of gross fixed capital formation being input into the PIM model, enabling improved output of SCIS consumption of fixed asset and net capital stock estimates. Revised gross fixed capital formation and consumption of fixed capital appear in the Income and Outlay Account for all resident sectors, while revised net capital stock values appear in Balance Sheets for all resident sectors. In Balance Sheets, this also causes revisions to equity assets and liabilities, and net worth. Within the non-financial business enterprises sector, non-financial assets for the corporate business enterprises sub-sector have decreased, offset by increases in the non-corporate business enterprises sub-sector. However, the flow on effects for these sub-sectors differ. For the corporate business enterprises sub-sector reduced non-financial assets reduces total assets of the sector which in turn reduces the net worth for listed companies or equity liabilities for unlisted companies. Net worth for this sub-sector is typically negative, thus these revisions increase the value of negative net worth. For the non-corporate business enterprises sub-sector upward revisions of fixed assets increase total assets and subsequently increase the value of equity liabilities, owed to households, as this is the balancing instrument. Conceptually there is no net worth recorded in this sub-sector. All changes in equity liabilities flow to household equity assets, and so also impact household net worth. 2.3 Methodology changes 2.3.1 Seasonal adjustment outlier treatment Sharp changes in activity, such as those caused by the COVID-19 lockdown, pose challenges for our usual seasonal adjustment process. We have continued our use of additive outliers to treat unusual data points for September 2021 quarter and retained the previous outliers applied from March 2020 quarter onwards. This has the effect of subduing the impact of unusual data points on the seasonal adjustment process. 2.3.2 Interest flows now include a FISIM portion as part of the indicator A new method has been applied to the estimation of interest receipts and payments for sub-sectors 111 (corporate business enterprises), 121 (non-corporate business enterprises), 221 (central bank), 241 (other financial intermediaries excluding insurance and pension funds), 411 (non-profit institutions serving households excluding tangata whenua governance organisations) and 511 (households). This results in significant revisions to these series in recent periods. The new method accounts for Financial Intermediation Services Indirectly Measured (FISIM) as a component of each interest flow. FISIM accounts for the margin between deposit interest rates and lending interest rates retained by the intermediary. The indicator used for the interest flow estimates is now a combination of actual interest and FISIM. This conceptually aligns correctly with the SNA definition of interest flows and also the method for the annual output of the finance industry and expenditure on financial services (National accounts (income and expenditure): Year ended March 2021). With these adjustments, the movements in SNA interest are more accurately measured between periods, whether that be quarterly or annually by a sum of quarters. The new method and indicators are still subject to further review as part of our work on moving the quality of these series from ‘experimental’ to ‘official’. 2.3.3 Dividends review Following this release we have scheduled a review of the methods and data that underly the experimental dividends paid and received series in the income and outlay account. The review will look to confirm the quality of the data that underlies these transactions as well as look at potential conceptual and method improvements, including the treatment of super-dividends. Super-dividends are dividends that are disproportionately large relative to the recent level of a company's dividends and earnings. The System of National Accounts 2008 suggests that these excess dividends (super-dividends) are instead treated as withdrawals of equity. We will be reviewing our methods to confirm that we are appropriately identifying super-dividends, with a focus on quarters that immediately precede the personal tax rate change to 39 percent on 1 April 2021. This review may result in revisions to these series. Any revision to dividends will also have flow on impacts to subsequent items in the accounts, including saving. 3 Revisions to previously published statistics 3.1 Revisions to Income and Outlay statistics 3.1.1 Revisions to household saving Together with revisions to household consumption expenditure, annual benchmarking was a main contributor to revisions to household saving. Revisions from the benchmarking of compensation of employees, gross operating surplus, and entrepreneurial income have a flow on impact to household saving. FISIM methodology changes, also described above, led to downward revisions to interest paid and upward revisions to interest received, increasing household saving. Compensation of employees also revised upwards mainly due to benchmarking, further increasing revisions to household saving. The following table shows the previously published and revised quarterly household saving from the June 2016 – June 2021 quarters. Household saving in current prices, actual values (not seasonally adjusted), $(million)) Quarter Published October 2021 Published January 2022 Jun-16 -130 -292 Sep-16 -342 -452 Dec-16 -1,000 -991 Mar-17 1,967 1,801 Jun-17 -1,047 -1,036 Sep-17 -336 -493 Dec-17 -519 -573 Mar-18 1,824 1,822 Jun-18 -305 -280 Sep-18 -27 195 Dec-18 -846 -818 Mar-19 1,977 2,038 Jun-19 -33 218 Sep-19 844 1,257 Dec-19 -420 176 Mar-20 3,364 3,787 Jun-20 5,640 6,423 Sep-20 1,910 2,693 Dec-20 135 554 Mar-21 2,452 3,161 Jun-21 -933 -65 3.2. Revisions to Balance Sheet statistics 3.2.1. Revisions to household net worth As noted in the Changes to non-financial assets section, revised non-financial assets also cause revisions to land and equity asset balance sheet estimates for households. These are the main contributors to revisions in household net worth. The following table shows the previously published and revised quarterly household net worth from the June 2016 – June 2021 quarters. Household net worth in current prices, actual values (not seasonally adjusted), $(billion) Quarter Published October 2021 Published January 2022 Jun-16 1,444 1,477 Sep-16 1,497 1,532 Dec-16 1,523 1,559 Mar-17 1,537 1,574 Jun-17 1,573 1,611 Sep-17 1,608 1,646 Dec-17 1,642 1,681 Mar-18 1,664 1,702 Jun-18 1,666 1,706 Sep-18 1,696 1,739 Dec-18 1,699 1,743 Mar-19 1,721 1,768 Jun-19 1,720 1,766 Sep-19 1,761 1,807 Dec-19 1,816 1,863 Mar-20 3,364 3,787 Jun-20 1,885 1,928 Sep-20 1,973 2,012 Dec-20 2,126 2,163 Mar-21 2,336 2,370 Jun-21 2,349 2,431 en-NZ