For explanation of terms, see the definitions section below.
Background to the survey
The Economic Survey of Manufacturing (ESM) provides short-term economic indicators for the manufacturing sector. The data is also used to compile the manufacturing sector component of the quarterly national accounts. Published values exclude GST.
Population
The target population for this survey is all manufacturing businesses operating in New Zealand. This is as specified on Statistics New Zealand’s Business Frame using the 1996 Australian and New Zealand Standard Industrial Classification (ANZSIC) for Division C at the kind-of-activity business unit.
Sample design
The survey population is split into ANZIND working industries and stratified according to size (based on GST sales and rolling mean employment numbers). All units that are large enough to be in the top strata are included in the postal survey, together with sampled units from the middle strata. All manufacturing units belonging to a selected enterprise are included. For units in the bottom strata, data is obtained via modelling of administrative data (GST and Employee Monthly Survey) from Inland Revenue.
About 1,500 units are selected each quarter for the postal survey while about 17,500 units have their data modelled from administrative data.
Sample maintenance
Sample maintenance is the process that keeps the sample up to date by taking account of business start-ups, close-downs, and other structural changes recorded on the Business Frame. Information for the Business Frame comes from a variety of sources, including GST registrations and respondent contact.
New enterprises are identified from GST registrations and may be selected into the postal sample. When an enterprise ceases trading, its manufacturing units are removed from the survey.
Enterprises can also enter or leave the survey sample if they are reclassified to or from the manufacturing sector. Reclassifications occur when an enterprise changes its main form of activity (eg from wholesale trade to manufacturing). These changes are usually obtained from the Annual Frame Update Survey conducted each February.
Sample reselection
The survey sample is reselected each quarter to ensure that it reflects changes in the manufacturing population.
Industry classification
From the September 2001 quarter, ESM values are published on an ANZIND working industry basis. ANZIND industries are defined groupings of ANZSIC industries. The 1996 version of ANZSIC is currently used but in 2011 will be superseded by the 2006 version.
Measurement errors
Errors in the survey are divided into two classes:
Non-sampling error
Non-sampling error includes errors arising from biases in the patterns of response and non-response, inaccuracies in reporting by respondents, and errors in the recording and coding of data. The magnitude of these errors is difficult to quantify. Statistics are subject to revision when errors are corrected.
Sampling error
Sampling error is a measure of the variability that occurs by chance because a sample, rather than an entire population, is surveyed.
Definitions
ANZIND
An ANZSIC-based classification that groups industries for publication.
ANZSIC
Australian and New Zealand Standard Industrial Classification.
Business Frame
A register of all economically significant businesses that operate in New Zealand. The population of the ESM is drawn from the Business Frame.
Enterprise
A business entity operating in New Zealand either as a legally constituted body such as a company, partnership, trust, local or central government trading organisation, or as a self-employed individual.
Kind-of-activity unit
A subdivision of an enterprise engaged in predominantly one activity and for which a single set of accounting records is available.
Rolling mean employment
A 12-month moving average of the monthly employee count.
Sales / operating income
Current sales may include goods or services produced or supplied in other quarters.
Included:
- sales of goods (whether manufactured, processed, or traded)
- sales of services (including repair services)
- manufacturing, processing, and management fees
- rental and leasing income
- royalties and patent fees.
Excluded:
- interest, dividends, donations, bad debts, and insurance claims
- excise duty, government grants, and subsidies
- extraordinary items (eg exchange rate gains, gains on sales of fixed assets).
Purchases and operating expenditure
Current payments may include goods or services obtained in other quarters.
Included:
- purchases of goods, fuels and materials (whether for production or resale)
- general expenses (eg advertising, freight, insurance, motor vehicle, rates, rent, repairs, utilities)
- management fees and payments to other businesses or divisions
- payments to welfare and superannuation schemes (eg ACC, KiwiSaver)
- royalties and patent fees.
Excluded:
- interest, dividends, donations, and bad debts
- excise duty, fringe benefit tax, and road user charges
- extraordinary items (eg exchange rate losses, losses on sales of fixed assets)
- depreciation.
Salaries and wages
Included:
- gross salary, wage, bonus, and redundancy payments to employees.
Excluded:
- drawings
- salaries and wages paid to working proprietors
- payments to welfare and superannuation schemes (eg ACC, KiwiSaver).
Stocks of raw materials
Closing stocks of raw materials for use in production. Includes materials, fuels, and livestock.
Stocks of finished goods
Closing stocks of finished goods, trading goods and work in progress.
Additions to fixed assets
Purchases of fixed assets (including land) plus capital works by own employees. Revaluations are excluded.
Disposals of fixed assets
Sales of fixed assets (including land) at selling prices. Devaluations are excluded.
Volume series
These are value series that have been adjusted (divided by price indexes) to remove the effect of price changes. They provide a measure of quantity change and are currently expressed in December 1997 quarter dollars. The price indexes used are from the Producers Price Index and are available on Infoshare.
Seasonally adjusted and trend series
For any series, the survey estimates can be broken down into three components: trend, seasonal and irregular. While seasonally adjusted series have had the seasonal component removed, trend series have had both the seasonal and irregular components removed. This reveals turning points and the underlying direction of quarterly movement.
Seasonally adjusted and trend values are re-estimated quarterly when each new quarter’s data becomes available. Figures are therefore subject to revision, with the largest changes normally occurring in the latest quarters. Estimates are produced by the X-12-ARIMA seasonal adjustment program, developed at the U.S. Census Bureau.
Further information about seasonal adjustment and trend estimation is on the Statistics New Zealand website (www.stats.govt.nz).
Seasonally adjusted series
Seasonal adjustment removes the estimated impact of regular seasonal events, such as annual cycles in agricultural production, pre-Christmas shopping, and summer holidays, from statistical series. This makes figures for adjacent periods more comparable.
For the ESM, the removal of the purchasing monopoly in the dairy industry in mid-2002 caused an abrupt change to seasonal variation in the meat and dairy industry. In response, the calculation method for total sales was changed from direct to indirect (whereby component industries are individually adjusted before being summed). Direct and indirect adjustment methods are both used, according to appropriateness.
Trend series
Trend estimation removes the estimated impact of regular seasonal events and irregular short-term variation from statistical series. Trend estimates reveal the underlying direction of movement in a series, and are likely to indicate turning points more accurately than are seasonally adjusted estimates.
Use in national accounts
A key use of the ESM is in the quarterly Gross Domestic Product (GDP for calculating manufacturing ‘value added’ (value of output after the cost of input materials and services has been deducted). GDP base-year manufacturing value added is moved forward using volume indexes that are calculated from ESM sales and finished good stock changes (deflated by sub-indexes of the Producers Price Index).
ESM volumes are supplemented with quantity production data for the following industries:
- meat and dairy product manufacturing
- petroleum and industrial chemical manufacturing
- basic metal manufacturing.
The ESM is also used in the expenditure measure of GDP for compiling stock change values at current and constant prices.
More information
For more information, follow the link from the Technical notes of this release on the Statistics New Zealand website.
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