National Accounts- Quarterlies Data Collection September 2022

Gross domestic product: September 2022 quarter – changes and data updates Introduction Gross domestic product (GDP) sources and methods are thoroughly documented (see: Quarterly gross domestic product: Sources and methods (second edition), with a further update in Quarterly gross domestic product: Sources and methods (fifth edition). Overview of sources and methods for quarterly gross domestic product: Updates and COVID-19 adjustments provides a summary of the sources and methods and also includes information about where we have used alternative indicators to better capture the impacts of COVID-19 on economic activity. The quarterly indicators used to compile our estimate of GDP 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 that we use vary depending on the data available and are underpinned by certain assumptions. In normal periods of activity, these assumptions provide us with reasonable estimates of activity. In periods of abrupt disruption (such as the COVID-19 alert level 4 lockdowns) some of these relationships have weakened or no longer hold. Changes made due to COVID-19 We’ve continued to review and refine approaches applied in each of the quarters from March 2020 to September 2022 by confronting our usual quarterly indicators against other data sources to identify instances where our usual quarterly indicators were unable to represent the actual level of activity through the quarter. Where necessary, we have again used alternative indicators to ensure the effects of the COVID pandemic and related restrictions on activity are appropriately measured. This includes appropriately measuring activity during the easing of such restrictions. September 2022 quarter gross domestic product and COVID-19 has details of the alternative data sources and changes in methods applied. It includes latest updates on Key events in the September 2022 quarter Data and methodology considerations Data updates to GDP(P) and GDP(E) components Overview of sources and methods for quarterly gross domestic product: Updates and COVID-19 adjustments is an updated guide to the concepts and methods we are using to compile gross domestic product (GDP) during COVID-19 in New Zealand. Seasonal adjustment additive outlier treatment Sharp changes in activity, such as those caused by the lockdown, pose challenges for our usual seasonal adjustment processes. We have continued our use of additive outliers to treat unusual data points for the September 2022 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. Incorporating new annual data The main driver of updates to GDP data for 2021 and 2022 is the incorporation, for the first time, of balanced annual data for the year ended March 2021. 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 volume estimates of quarterly and annual economic growth. The release of National accounts (industry production and investment): Year ended March 2021 provides the annual benchmarks for GDP(P) up to the year ended March 2021. The release of National accounts (income and expenditure): Year ended March 2022 provides the benchmarks for GDP(E) up to year ended March 2021 and for gross fixed capital formation up to the year ended March 2022. Prior to annual balanced data being available, average annual growth rates are calculated from our quarterly indicators. As our quarterly indicators are mainly single indicator and output based, the incorporation of annual value-added data for selected industries can lead to updates in average annual growth rates. This is because we are now accounting for changes in intermediate consumption in those industries (double deflation) for the first time, as well as incorporating more detailed and better-quality data measuring output. We reconcile the quarterly measures of growth to the annual values in 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. Improvements to gross domestic product September 2022 quarter has more details on incorporating the latest balanced annual national accounts data. 2022 preview of national accounts improvements has more information on the range of updates to annual national accounts statistics. Not all industries are reconciled to the annual national accounts data, some make use of other annual data sources. See Quarterly gross domestic product: Sources and methods (fifth edition) and Overview of sources and methods for quarterly gross domestic product: Updates and COVID-19 adjustments for an overview of the quarterly and annual methodologies used for GDP(P) and GDP(E). New updated data weights The availability of updated annual data allows us to update the weights that we use to aggregate lower-level components to higher-level estimates of activity. This ensures that our estimates of economic activity reflect structural changes in the economy over time. Previously published growth rates compiled from lower-level series can therefore change as a result of incorporating updated weights. For components of GDP(P) our latest annual data and weights are for the year ended March 2021. These weights apply from the June 2021 quarter onwards. For components of GDP(E) our latest annual data and weights are for the year ended March 2022. These weights apply from the June 2022 quarter onwards. Changes to weights reflect change in relative price, as measured by implicit price deflators (IPDs). For a small number of subindustries, COVID-19 impacts have made reliable measurement of IPDs impossible, and so we have retained pre-covid weights for use in chain-linking. Corrections to quarterly gross domestic product Correction to Gross fixed capital formation – other construction Correcting a data input error has led to small data updates to gross fixed capital formation – other construction in the June 2022 quarter. Incorporating updated Business Financial Data (BFD) Changes due to updated Business Financial Data (BFD) Updated financial data from the business financial data: September 2022 quarter has led to some changes where we have been using the BFD data collection as alternative indicators from our normal methodology. This contributed to changes in: Transport, postal and warehousing Updates due to improvements in applying alternative indicators from Business Financial Data (BFD) There have been minor updates to components which use the BFD collection that are not due to the BFD updating, but instead due to other improvements in the processing of BFD data to form our alternative indicators. Where components use a derived value added measure which combines BFD sales and purchases, the chaining weights used in this derivation have been updated using the latest annual national accounts data. This has contributed to updates in: Fishing, aquaculture, and agriculture, forestry and fishing support services Mining Construction Retail and Accommodation Information, media and telecommunications Professional, scientific, technical administrative and support services Education and training Healthcare and social assistance Arts and recreation Gross fixed capital formation – intangibles and other construction Household consumption expenditure Changes due to updated indicator data Updates to travel debits in production-side industries We have continued to make minor adjustments so that changes in business travel debits are reflected in the production measure of GDP, however the calculations have been adjusted to account for the incorporation of annual data for the March 2021 year. This will have a small impact upon quarterly movements of many production-side industries. Changes due to updated indicator data We received updated respondent information and other source data, causing updates to: Agriculture – updated data from the Agricultural Production Survey (APS) Manufacturing – updated BFD data and other input data Electricity, gas, water and waste services – new and updated Linked Employer-Employee Data (LEED) Construction – updated QBAS data Information, media, and telecommunications – updated administrative data from Inland Revenue Department Finance and insurance – updated FISIM data Rental, hiring, and real estate services – updated REINZ and QVNZ data, updated FISIM data, updated CPI rental index Public administration and safety, local government – updated QLAS data Arts and recreation – updated BFD data Central government administration, defence, and public safety – updated EMS and other input data Local government final consumption expenditure – updated QLAS data Gross fixed capital formation – non-residential buildings, residential buildings – updated REINZ and QVNZ data, and QBAS data Household consumption expenditure – miscellaneous goods and services – updated FISIM data Household consumption expenditure – communications - updated administrative data from Inland Revenue Department Household consumption expenditure – housing and household utilities - updated CPI rental index Imports and exports – updated FISIM data Unallocated taxes – flow-through from updates to household consumption expenditure Inventories – updated BFD data Updates to inventories Updates were also made during the process of reconciling change in inventories with other movements in production and expenditure series. This process is designed to minimise inconsistencies in timing and valuation. Implementing updated quarterly methodologies Updates and improvements to GDP production Change to import duties on fuel We identified a deficiency in our measurement of the volume of import duties on fuel in the June 2022 quarter. We implemented an improved method to the June 2022 quarter, which we will now backdate throughout the whole time series in the upcoming Gross domestic product: September 2022 quarter. This will result in updates to levels and quarterly movements of unallocated taxes across the whole time series. Changes to health, and education and training We have identified some deficiencies in volume methods used for health, and education and training. We have implemented improvements which will result in data updates for the whole time series. These data updates will also flow to central government final consumption expenditure volumes. Change to rail transport We have extended collection of passenger rail data to include all major commuter rail networks, which will result in changes to quarterly indicators and low-level chaining weights from 2005 onwards. These data updates will also flow to household consumption expenditure. Change to mining We identified an issue with chaining weights for oil and gas exploration and we have now removed this subindustry from the derivation of the quarterly indicator series for mining support services. This will cause updates to quarterly movements across the time series. We have also suppressed the incorporation of 2021 data into chaining weights for oil and gas exploration during the aggregation of the exploration and other mining services subindustry. Change to air transport services We have suppressed the incorporation of 2021 data into chaining weights for air transport services during the aggregation of the transport services. Updates and improvements to GDP expenditure Change to investment in plant, machinery and equipment, and other construction We have made improvements to the coverage of our quarterly indicators for gross fixed capital formation of plant, machinery and equipment, and other construction. This will result in updated quarterly movements from June 2016 onwards. Change to central government final consumption expenditure volumes We have made improvements to the deflator used for central government final consumption expenditure compensation of employees on health. This will result in updated quarterly volume movements for the whole time series. In the 2022 national accounts preview paper, we signalled the likely changes to central government final consumption expenditure health and education compensation of employees. We indicated that we would be aligning the volume of health and education compensation of employees with central government components of the production measurement of health and education. For the health component we have decided to defer this change while we further investigate this issue and potential solutions. In the interim we have made coherence adjustments to both the annual government health output volumes and the annual central government final consumption expenditure volumes for the 2019 March year onwards. We have found that education compensation of employees volumes are sufficiently aligned with production measurement by the design of the existing methods, and so we will not be progressing with any changes. As mentioned earlier, improvements to the volume methods for the GDP production measurement of education and training will result in data updates to the education compensation of employees volumes for the whole time series. Change to volumes of consumer goods imports A targeted piece of work identified inconsistencies between the price deflators used in the volume measurement of imports and household consumption expenditure, for a range of goods predominantly consumed by households. The inconsistency in price measures was significant over the four-year period from 2016 to 2019. Information about price collection over this period indicates that household consumption price indexes took better account of technological and other quality changes. We have aligned the imports price deflators with household consumption expenditure deflators between 2016 and 2019 to improve the volume measures of durable and semi-durable consumer goods imports. Change to volumes of passenger motor vehicles imports We have made improvements to the price deflator used for imports of passenger motor vehicles in the March 2020 year, to address an inconsistency in that year between the volume of passenger motor vehicles imported and the final use of these vehicles. Change to retail and accommodation and household consumption expenditure A few businesses’ structural changes resulted in some activity moving from the electrical and electronic goods retailing industry in the June quarter to the department stores industry in the September quarter. We have adjusted household consumption expenditure calculations to avoid unwanted changes in allocation to expenditure classes. See Retail trade survey: September 2022 quarter for more details. Data updates table The following table shows previously published and updated quarterly movements for the June 2017 – June 2022 quarters’ GDP and expenditure on GDP (GDE). There were also some changes to earlier quarters, but these were less material. Previously published and updated quarterly movements Gross domestic product Gross domestic expenditure Percentage change from previous quarter Quarter Previously published Updated 15 December 2022 Previously published Updated 15 December 2022 June 2017 1.1 1.0 1.4 1.4 September 2017 0.9 0.9 1.1 1.2 December 2017 0.8 0.9 1.2 1.2 March 2018 0.8 0.8 0.9 0.8 June 2018 1.1 1.3 1.4 1.4 September 2018 0.3 0.2 0.2 0.1 December 2018 1.3 1.3 1.4 1.4 March 2019 0.6 0.6 0.7 0.7 June 2019 0.5 0.6 0.7 0.6 September 2019 0.8 0.9 1.2 1.1 December 2019 0.3 0.5 0.2 0.2 March 2020 -1.1 -1.1 -1.0 -0.9 June 2020 -10.4 -10.1 -9.5 -9.7 September 2020 13.7 14.1 14.3 14.9 December 2020 -0.4 -0.6 -1.0 -0.8 March 2021 1.7 2.1 1.6 1.6 June 2021 2.3 2.4 2.0 2.3 September 2021 -3.9 -3.9 -4.7 -4.1 December 2021 3.0 2.9 2.8 2.4 March 2022 -0.2 -0.4 -0.1 -0.3 June 2022 1.7 1.9 2.1 2.3 Source: Stats NZ en-NZ