Hungary - Industrial Production

The Industrial Production Index is a business cycle indicator for Europe showing the output and activity of industry. It measures changes in the volume of output at close and regular intervals.

The indicators in the industry sector cover economic activities listed in sections B to E of NACE (B-Mining and quarrying, C-Manufacturing, D-Electricity, gas, steam and air conditioning supply, E-Water supply; sewerage, waste management and remediation activities); the import prices indicator covers products listed in Sections B, C and D of the CPA.

Definition of indicators

PRODUCTION
The objective of the production index is to measure changes in the volume of output at close and regular intervals, normally monthly. It provides a measure of the volume trend in value added over a given reference period. The production index is a theoretical measure that must be approximated by practical measures.
Value added at basic prices can be calculated from turnover (excluding VAT and other similar deductible taxes directly linked to turnover), plus capitalised production, plus other operating income plus or minus the changes in stocks, minus the purchases of goods and services, minus taxes on products which are linked to turnover but not deductible plus any subsidies on products received. The division of production in construction between building construction and civil engineering is based on the classification of types of construction (CC).

Classification system

NACE Rev.2 classification (Statistical Classification of Economic Activities in the European Community) is used for all the STS indicators, except Industrial Import Prices; for this indicator, the information is available according to CPA classification (Statistical Classification of Products by Activity in the European Economic Community).The split of the construction indicators into Building and Civil engineering is made based on CC classification (Classification of Types of Construction).

Source data

The production of indices within Member States is normally based on the compilation of data from numerous sources. Detailed methodological information about Member States practices is available from the STS sources.

Statistical surveys

All national statistical authorities have statistical questionnaires used for compiling STS. However, their content and style vary greatly, partly because of cultural differences and partly because of the greater or lesser importance attached to respondent burden and cost. These influences as well as others determine what information the national statistical authorities think that they can observe. In most of the national statistical authorities, the surveys are rarely restricted to one standard questionnaire or form but tend to be a combination of forms, differentiated by major characteristics, namely:

• the activity, size, legal form and the type of variables asked on the form (output, prices, employment, other specialised variables);
• occasionally, an extra characteristic, the geographical location of the unit, may influence the contents of a survey.

Administrative sources / registers / declarations

For the purposes of business statistics a limited definition of administrative sources can be used. According to the purpose they serve, administrative registers can be subdivided into basic registers and specialised registers. Examples of indicators which use more frequently administrative sources are turnover (VAT declarations) or number of persons employed.

Estimations

The STS-Regulations explicitly permit the use of statistical estimation procedures. For example, these may be used for item or unit non-response, grossing of sample results to the level of the frame population or to adjust results from surveys or administrative sources where the frame population does not match sufficiently the target population or the variables collected are not sufficiently close to those required. Hence, this need for estimation may arise because of non-response or because the statistical authority has chosen not to collect directly the information required.

Non-official sources

There is a great variety of non-official data, much of it available from consultancies or research institutes. Trade associations and chambers of commerce also produce non-official data about the business community. With only a few exceptions, private research institutions do not carry out regular surveys and tend to produce results from ad hoc surveys for clients.

Data validation

Data received from the countries and the European indices are validated using logical validation rules.

At national level, editing involves studying data from respondents with the aim of identifying (and eventually correcting) errors. Not all errors can be identified and the aim is to detect the errors that have a significant influence on the results. Rules to assist in identifying errors may flag possible errors that require further investigation to determine where there really is an error as opposed to an unusual result or they may identify definite errors. Editing involves checks for completeness, that values are within given ranges and that values for related variables are coherent. Data editing may take place during or after data entry.

Responses can be compared to the response of previous months. Inconsistency or large deviations (outside of a pre-established range) indicate that a closer look is desirable. This may result in editing. In the context of timeliness, the editing process may be designed to give top priority to those outliers that are most in need of editing for the sake of reliable aggregates. By solving the worst cases, large improvements can be achieved.

Eurostat also carries out validation checks on the national aggregated indices it receives.

Data compilation

National level

The starting point for the processing stage is the information as collected from respondents. The aim is to bring these data to the level of the intended statistical output. For various reasons, the act of processing comprises more than just aggregating questionnaire items.

Processing steps can be summarised as follows.

• After data entry, errors and inconsistencies are detected and corrected during editing.
• Subsequently, item non-responses as well as gaps between questionnaire concepts and output concepts are dealt with by imputation.
• The resulting set of clean and complete micro data serves as the basis for weighting and reweighting. During this stage, also frame errors may be accounted for.
• The aggregated data may then be confronted with related data from other sources and possibly integrated.
• Finally, where appropriate, statistical compilations and analysis are carried out, resulting in a non-public data set. Prior to dissemination, the one remaining stage is to identify and treat confidentiality.

European level

The European indices are calculated from national indices, taking into account the relative share of each Member State in the appropriate geographical aggregate, for the gross and working day adjusted forms. This is done at each level of the activity classification level. Only after calculation at all levels of classifications are the EU indices analysed to produce seasonally adjusted and trend series.

However, the data received from each country may need a certain amount of pre-treatment before the EU indices can be calculated. Three necessary stages can be identified as well as one extra stage that is not directly needed for the calculation of EU indices.

Firstly, any data supplied in absolute figures need to be compiled as indices. Secondly, base years need to be harmonised. Thirdly missing activity aggregates need to be calculated. Finally, any of the required forms (for example seasonally adjusted) that are missing are produced, although these are not used for compiling geographical aggregates.

The procedures for compiling the geographical aggregation starts with the gross and working day adjusted series. The European aggregates start - with any number of countries - from the reference period for which 60% of the total weight is reached; as new series pile up, the total weight increases, to reach eventually 100% of the target aggregate. Thresholds also apply to the ending portion of the series; missing countries are approximated by ARIMA (autoregressive integrated moving average) forecasts. More information on ARIMA models can be found at http://www.bde.es/servicio/software/econome.htm).

The weighting system used by Eurostat plays a double role, to carry out geographical aggregation and, when national statistical authorities choose not to provide higher levels of activity classifications, to make activity aggregation as well. The current weighting system uses 2005 data. The weights are sometimes confidential, especially at a detailed level. This can be because the weights are in general based on SBS data which itself may be confidential. The tables containing non-confidential weights can be found here.

Data are revised when additional information from national statistical authorities becomes available. Major revisions and changes in methodology are announced in the monthly News Releases and/or in the publication Quarterly Panorama of European Business.

At the source:

• http://ec.europa.eu/eurostat/statistics-explained/index.php/Industrial_production_(volume)_index_overview