National Accounts - Quarterlies June 2021

Gross domestic product: June 2021 quarter – changes and revisions 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) ). 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 alert level 4 lockdown) some of these relationships have weakened or no longer held. Changes made due to COVID-19 Some series required alternative indicators due to COVID-19 disruptions in the June 2021 quarter. We’ve continued to review and refine approaches applied in the March, June, September, and December 2020 and March 2021 quarters 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 appropriate, we have used alternative data sources in place of the usual quarterly indicator. Due to the alert level 4 conditions in place during the September 2021 quarter, we have decided not to revert to the usual indicator in the June 2021 quarter for any components that were still using alternative indicators in the March 2021 quarter. We will review all components in the September 2021 quarter and, where necessary, will again use alternative indicators to ensure the effects of the higher levels of restriction are appropriately measured. June 2021 quarter gross domestic product and COVID-19, on www.stats.govt.nz, has details of the alternative data sources and changes in methods applied. It includes latest updates on · key events in the June 2021 quarter · data and methodology considerations · use of additive outliers · seasonal adjustment of travel services and the June 2021 quarter · redesign of the Quarterly Employment Survey - update · summary of approaches for Gross domestic product: June 2021 quarter. Changes to approach for agriculture, forestry and fishing support services and hunting In addition to the use of alternative indicators outlined in the above paper, sales volumes data from the business finance data (BFD) has been used as an alternative indicator for agriculture, forestry and fishing support services and hunting from the March 2020 quarter onwards leading to revisions through that time period. This industry normally uses employment data which will not accurately reflect industry movements under COVID-19 conditions, due to changes in the relationship between employment and industry value added. 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 June 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. Impact of seasonal adjustment methods on interpreting contributions to change in June 2021 quarter Multiplicative seasonal adjustment, direct seasonal adjustment, and exports of services As outlined in [June 2021 quarter gross domestic product and COVID-19](June 2021 quarter gross domestic product and COVID-19 | Stats NZ), the use of multiplicative seasonal adjustment through periods of dramatic changes can lead to significant differences between the seasonally adjusted contribution to change of a lower level component, and its actual contribution to aggregate GDP or GDE. This is due to the use of multiplicative seasonal adjustment in GDP and GDE component series, and the use of direct seasonal adjustment at the aggregate GDP and GDE level. We’ve noted that this issue is affecting the ability to reconcile recent changes in the exports of services component, with its actual contribution to aggregate GDE. The seasonal component calculated in a multiplicative seasonal adjustment is scaled by the level of the series; in simple terms it is the seasonal factor times the level of the series. If a series decreases to low levels, the derived seasonal component shrinks. If a series rises significantly, the derived seasonal component increases in magnitude. Pre-COVID-19, March quarters represented the peak international tourist season, as well as the timing of international student arrivals for the start of the academic year. Our seasonal factors for both exports of services, and aggregate GDE, account for this expected rise in activity. Due to border restrictions related to COVID-19, exports of services have fallen significantly and are currently at a low level. Multiplicative seasonal adjustment as a result scales down the calculated seasonal component of exports of services. However, aggregate GDE has not changed in the same way, and is operating at levels similar to pre-COVID 19. Hence the derived seasonal component remains similar in size to pre-COVID. This means that the seasonally adjusted contribution to change in exports of services understate their actual contribution to aggregate seasonally adjusted GDP(E) movements, from September 2020 quarter onwards. Percentage changes however are accurate at both the component and aggregate levels. Revisions to previously published statistics Revisions are usually driven by new or improved data that affect historical results, or changes to the underlying measure. In both cases we aim to better represent the real-life situation of a changing society, economy, and environment. The most significant revisions introduced this quarter are described below. Revisions due to improvements in application of alternative indicators for COVID-19 affected quarters As mentioned in June 2021 quarter gross domestic product and COVID-19, we continue to review our approach to measuring GDP during the COVID-19-affected quarters. As part of this ongoing review process, we have recently identified some areas where we can improve our measurement over the COVID-19-affected period. These changes have led to upward revisions to the level of GDP(P) in the March, June, September, and December 2020 quarters, and the March 2021 quarter. These revisions are in the range of $100‒$600 million per quarter. The June, September, and December 2020 quarters and the March 2021 quarter saw upward revisions to quarterly levels in the range $400‒$600 million. The most significant revisions to quarterly growth were to the June 2020 quarter. There were minimal revisions to quarterly growth rates for the September and December 2020 quarters, and the March 2021 quarter. The revisions have affected the average annual growth rate and same quarter previous year growth rates from the June 2020 quarter onwards. There was a smaller upward revision to GDP(E) of approximately $100‒150 million. This revision affected the March 2020 quarter level and growth rates. Revisions to balance of payments data Revisions to balance of payments data are made annually to stay in line with international best practices. Revisions can be due to new or updated information becoming available, new, or updated annual benchmarks and conceptual or methodical changes. The largest revisions are to the export and import of services, and these have flow on impacts to components of household consumption expenditure and gross fixed capital formation. See [2021 revisions to balance of payments and national accounts]( 2021 revisions to balance of payments and national accounts | Stats NZ) for further information. Correction to domestic household consumption expenditure One of the chaining weights used in a low-level household consumption expenditure series was not updated previously. This has now been corrected and has introduced very small revisions over the entire time series, with an average revision size to the affected low-level component of 0.1%. The revisions to higher level aggregates are negligible. Revisions to value of building work put in place data We published minor revisions in the June 2021 for the September 2020 quarter onwards due to additional information received about surveyed building projects. See [Methodology for Value of building work put in place: June 2021 quarter] (Methodology for Value of building work put in place: June 2021 quarter | Stats NZ) for further information. Incorporating annual agricultural production statistics We incorporated data from Agricultural production statistics: June 2020 (final). The data replaced earlier published data and modelled stock levels. Incorporating the data led to revisions to agricultural activity in GDP, and to agricultural inventories in the expenditure measure of GDP. These changes caused revisions from the June 2019 quarter onwards. Incorporating updated Business Financial Data (BFD) Updated financial data from the [business financial data] (Business financial data: June 2021 quarter | Stats NZ) collection (BFD) has led to some revisions where we have been using the BFD data collection as alternative indicators from our normal methodology. This contributed to revisions in: · fishing · mining · electricity, gas, water, and waste services · construction . retail trade and accommodation · transport, postal and warehousing · information, media, and telecommunications · business services · healthcare and social assistance · arts and recreation Revisions due to updated indicator data We received updated respondent information and other source data, causing revisions to: · agriculture · manufacturing . electricity, gas, water, and waste services . construction · retail trade and accommodation . information, media, and telecommunications · finance services · rental, hiring, and real estate services · public administration and safety · household consumption expenditure . central government final consumption expenditure . local government final consumption expenditure . inventories . gross fixed capital formation. . exports of goods and services . imports of goods and services. Revisions to inventories Revisions 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. Revisions table The following table shows previously published and revised quarterly movements for the December 2018 – March 2021 quarters’ GDP and expenditure on GDP. Previously published and revised quarterly movements Gross domestic product Gross domestic expenditure Percentage change from previous quarter Quarter Previously published Revised 160 Sep 2021 Previously published Revised 16 Sep 2021 December 2018 1.1 1.1 1.1 1.4 March 2019 0.3 0.3 0.8 0.6 June 2019 0.5 0.4 0.4 0.3 September 2019 0.9 0.9 0.6 1.0 December 2019 0.2 0.2 0.4 0.3 March 2020 -1.5 -1.4 -1.1 -1.2 June 2020 -10.8 -9.9 -9.1 -8.9 September 2020 14.1 13.9 14.1 13.8 December 2020 -1.0 -1.0 -1.5 -1.3 March 2021 1.6 1.4 1.4 1.4 Source: Stats NZ en-NZ