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Gross Domestic Product: September 2014 quarter
Embargoed until 10:45am  –  18 December 2014
Data quality

Period-specific information
This section contains information that has changed since the last release.

General information
This section contains information that does not change between releases.

Period-specific information

Reference period

We collected information for this release for the period July–September 2014.

General information

Data source

Quarterly gross domestic product: Sources and methods (fourth edition) presents the sources and methods we use in compiling quarterly GDP.

Incorporating annual data

National Accounts (Industry Benchmarks): Year ended March 2012 and National Accounts (Income and Expenditure): Year ended March 2014 were released on 21 November 2014. As annual data has a wider range of data sources, it is more complete. We reconciled the quarterly estimates of industries in GDP and the components of gross domestic expenditure (GDE) to annual estimates to ensure we show the most robust picture of economic activity.

We incorporated annual benchmarks for the production measure of GDP up to the year ended March 2012, and to the year ended March 2014 for GDE.

System of National Accounts

The conceptual framework we use to compile New Zealand's national accounts and GDP is based on the System of National Accounts 2008 (2008SNA). The 2008SNA is jointly published by the United Nations, the Commission of the European Communities, the International Monetary Fund, the Organisation for Economic Co-operation and Development, and the World Bank.

The 2008SNA was first introduced into New Zealand accounts at the end of 2014.

See Preview of 2014 national accounts improvements for more information about implementing 2008SNA.

Gross Domestic Product: June 2014 quarter was the last GDP release to use the 1993 version of the System of National Accounts 1993.

Australian and New Zealand Standard Industrial Classification 2006

The production measure of GDP is presented by industry. The industry classification we use for GDP is the Australian and New Zealand Standard Industrial Classification 2006 (ANZSIC06).

See ANZSIC 2006 – industry classification for more information about implementing ANZSIC06.

Constructing a chain-volume series

We construct the chain-volume measures of GDP and GDE by:

(a) compiling a Laspeyres volume index of the component in question, using the previous year's prices as weights; then

(b) chaining the sequence of annual movements to produce a continuous time series.

This procedure is used at different levels within the accounts. For example, we compile GDP by weighting together the individual industry value-added components to produce a Laspeyres volume index for each quarter, and then linking the resulting indexes to produce the GDP time series. Each industry component, such as transport, postal, and warehousing, is also a chained-volume series. At the lowest level, the 'elemental series' are not chained and are either single series in their own right or fixed-weight series comprising many components. Chaining is not adopted, either because the details needed for annual weights are not available, or relative price changes are not significant.

The base year for fixed-weight series was updated from 1995/96 to 2009/10 in Gross Domestic Product: September 2014.

Note that chain-volume series are not additive (ie the chain-volume series for an aggregate will not equal the sum of the values of its components). 

See Chain volume measures in national accounts for a full explanation of the concepts and procedures used to compile chain-volume series.

Revisions resulting from chain-linking

One of the key benefits of adopting chain-volume measures in place of fixed-weight series is that the relative weights of the component series are more up-to-date. This reduces the likelihood of introducing biases in the volume measures, which would otherwise become progressively unrepresentative as relative prices change. The disadvantage is that the annual reweighting introduces another cause for revision.

Reweighting is part of our annual revisions cycle and is usually timed to coincide with introducing other new annual data from the current price GDP accounts. See 'Incorporating annual data' above.

The current price annual accounts provide the detailed component series needed for weighting the production-based series of GDP. There is usually a two-year time lag before these detailed series are available. The latest year for which up-to-date weights were used for the production-based series is for the year ended 31 March 2012; all subsequent quarters use these weights.

Current price data for GDE components are more timely. As a result, the latest year for which we use up-to-date weights for the GDE series is for the year ended 31 March 2014. All subsequent quarters use these weights.

When the weights are updated, this procedure results in revisions to all periods beyond the latest year for which detailed series are available (currently 2011/12 for the production-based measure and 2013/14 for the expenditure-based measure).

Calculating real gross national disposable income

We calculate RGNDI as follows:

chain-volume measure of gross domestic product (production-based measure)
plus a terms of trade effect (trading gain/loss)
equals real gross domestic income
plus real value of total net investment income
equals real gross national income
plus real value of total net transfers
equals real gross national disposable income

where the terms of trade effect is defined as:
current price exports deflated by an imports implicit price index
less chain-volume measure of exports

and the real value of total net investment income equals:
investment income credits
less investment income debits
all deflated by an imports implicit price index

and the real value of total net transfers equals:
transfers credits
less transfers debits
all deflated by an imports implicit price index.

Per capita measures

A per capita measure is simply the series in question divided by the projected population of New Zealand. From the March 1991 quarter onwards, we use the 'estimated resident population of New Zealand'. This is defined as New Zealand residents currently in New Zealand plus those temporarily overseas. We exclude overseas tourists visiting New Zealand.

Calculating implicit price deflators

We calculate implicit price deflators (IPDs) by dividing the seasonally adjusted current price quarterly series by the equivalent chain-volume series. This provides a broad estimate of price change between the base period and any other period. Significant compositional changes may result in the IPDs being a less precise estimate of price change. This problem is more likely to occur in the gross national expenditure and expenditure on GDP aggregates. This is because both measures include the change in inventories item, which is highly subject to compositional changes, including a change in sign.

Revisions policy

We may revise previously published series each quarter. The frequency and cause of these revisions are listed below. 

  • Quarterly – more data becoming available for the latest quarters, which is used to replace existing estimates. Revisions to quarterly data (eg revisions to BoP or the Retail Trade Survey), which we incorporate as soon as possible to maintain consistency between published macroeconomic statistics.
  • Annual – introduction of annual data after the release of the latest annual national accounts; annual updating of the weights used to link component series to totals and subsequent chaining (see 'Revisions resulting from chain-linking' above).
  • Irregular – for example, methodological changes. Note that as far as possible, we incorporate revisions of this nature to coincide with the annual cycle of revisions outlined above, or discuss them in a separate paper ahead of the changes.

Each of the above causes for revision, and/or the addition of a new point in the actual quarterly series, can alter seasonal factors and may lead to a revision in the seasonally adjusted series.

Interpreting the data

Annual percentage changes

When using annual percentage changes, our customers should take care to ensure the measures used are correctly understood. Annual measures are calculated by summing the actual series for a four-quarter period. Unless otherwise stated, the annual percentage change is the most recent four-quarter period compared with the previous four-quarter period.

Direct and indirect seasonal adjustment

The level at which a series is seasonally adjusted is important, since it has the potential to affect the series' quality. The individual component series of the main economic variables can be seasonally adjusted and then summed to derive totals. This is called an indirect seasonal adjustment. Alternatively, the main economic variables can be seasonally adjusted at the total level, independently of the seasonal adjustment of their components. The adjustment of the total of an aggregate series is called a direct seasonal adjustment. The indirect approach has the advantage of retaining additivity, but this applies only to the current price series. While the indirect approach conceptually also provides additivity for volume series, additivity is lost by chain-linking.

The direct approach will often give better results if the component series show similar seasonal patterns. At the most detailed level, the irregular factor may be large compared with the seasonal factor and therefore may make it difficult to perform a proper seasonal adjustment. In a small country like New Zealand, irregular events can have a strong impact on particular data. However, if the component series show the same seasonal pattern, aggregation often reduces the effect of the irregular factors in the component series. This is relevant for New Zealand, where seasonal fluctuations in the primary industries affect economic series.

We analysed both direct and indirect approaches for the two quarterly GDP aggregates, the production and expenditure on GDP. We prefer to use the direct approach because the resulting series are smoother and more stable.

The residual between the seasonally adjusted components and the aggregates is referred to as the balancing item. The balancing item will often show significant seasonal variations. This is expected, as it captures the undetected seasonality in the component series.

Note: The level at which seasonal adjustment is applied to quarterly GDP series may differ from other Statistics NZ surveys (eg the Economic Survey of Manufacturing and the Wholesale Trade Survey). These may contribute to differences in the aggregate seasonally adjusted series.

Explanation of the seasonally adjusted balancing item

Seasonal adjustment removes seasonal variation from a statistical series. By removing seasonal effects from GDP, we can better understand the underlying economic activity. Examples of seasonal variation in economic activity are milking and lambing seasons, Christmas shopping, and peak periods for visitors to New Zealand.

The seasonal adjustment balancing item is the difference between directly seasonally adjusting total GDP and seasonally adjusting each component of GDP and adding them together. Directly seasonally adjusting total GDP is our preferred method. The seasonal adjustment balancing item does not contribute to GDP and therefore should not be interpreted as an economic variable. It should also not be interpreted as a margin of error for the headline measure of GDP, as over the course of a year it balances out to zero.

We seasonally adjust quarterly GDP in line with international best practice.

Confidentiality and accessing the data

Data collected and information contained in this publication must conform to the provisions of the Statistics Act 1975. This requires that published information maintains the confidentiality of individual respondents.

More information

See more information about the quarterly gross domestic product.

Statistics in this release have been produced in accordance with the Official Statistics System principles and protocols for producers of Tier 1 statistics for quality. They conform to the Statistics NZ Methodological Standard for Reporting of Data Quality.

Liability

While all care and diligence has been used in processing, analysing, and extracting data and information in this publication, Statistics NZ gives no warranty it is error-free and will not be liable for any loss or damage suffered by the use directly, or indirectly, of the information in this publication.

Timing

Our information releases are delivered electronically by third parties. Delivery may be delayed by circumstances outside our control. Statistics NZ does not accept responsibility for any such delay. 

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