International Workshop
From Data to Accounts: Measuring Production in
National Accounting
8-10 June 2009, Beijing, China
UN STATISTICS DIVISION
 Services
in the System of National Accounts
 International
Recommendations for
Distributive Trade Statistics 2008
 Output
estimates of particular service
activities
Services in the System of
National Accounts
Output of Services

Two main kinds of output in the System
Goods
Services

Services are the result of a production activity
that:
Changes the conditions of the consuming units
(transportation, cleaning, medical treatment,
education, entertainment, etc.)
 Ownership rights can not be established over services
 Cannot be traded separately from their production
Facilitate the exchange of products or financial
assets (the so called “margin services” like wholesale
and retail trade, insurance and financial services)


A fundamental distinction is drawn in the System
between producers of market and non-market
services because of the way the output of each is
estimated
Market services/output
 Producers make decisions about what to produce and how
much to produce
 Services (and goods) are sold at economically significant
prices

Non-market services/output
 Individual or collective services produced by NPISH or
Government
 Supplied free, or at prices that are not economically
significant
Producers of market
services
Producers for own final
use
Producers of other
non-market services
Activities
Services in sections G, H,
I, J, K, M, N, O of ISIC,
Rev. 3
Imputed services of owner
occupied dwellings (part
of section K)
Services in sections L,
M, N,O
Units
Large corporations or
small unincorporated units
Households
unincorporated enterprises
Market
Mostly
output
Output
Some (e.g. actual rent)
General Government
and NPISH units
Some (fees paid for
government services,
sales of publications,
etc.)
Some (e.g. own account
capital formation, software
Output
development, R&D,
for own
Mostly
output retained for final
final
consumption of owners of
use
unincorporated
enterprises)
Some (e.g. government's
own capital formation
Other
nonmarket
output
Mostly (e.g. free or at
economically
insignificant prices
services provided by
government and NPISH)
None
None

Change-effecting services
Market services (transport, storage, communication,
business services, other community social and
personal services, health, education, etc.)
 Output is measured on the basis of revenues from sales
Non-market services (public administration, defence,
education, health, etc.)
 Output is measured as a sum of production costs

Margin services (distributive trade, financial and
insurance services)
 Trade margin is measured as a difference between the sales
and the purchases of goods bought for resale
 Service charge – for bank and insurance output

Business accounts of enterprises – main source of
data for the compilation of NA, collected through
statistical surveys or administrative data sources
 Show amounts of sales and of purchases
 Output and intermediate consumption figures
 Not always available directly
 Should be calculated by statisticians
 Differences in terminology and accounting rules
 Valuation
 Time of recording
Measurement of Output and Intermediate Consumption of Market Producers
Sales and output
Purchases and intermediate consumption
+ Sales (turnover) of goods and services
(sold, bartered, etc.)
+ Receipts for a work done or services
rendered to others units (contract and
commission work, maintenance, etc.)
- Purchases of goods and services for
resale in the same condition as received
+ Other revenues (rentals, storage of
goods, etc.)
+ Value of own-account fixed assets
+ Change in work-in-progress
+ Change in inventories of finished
goods
+ Purchases of raw materials and
supplies
+ Purchases of gas, fuel, and electricity
purchased
+ Purchases of water and sewerage
services
+ Purchases of services except rentals
+ Rental payments
+ Changes in inventories of materials,
fuels and supplies
VA = GO - IC
Output
Intermediate Consumption

The value of the non-market output provided
without charge or at nominal costs is
estimated as a sum of costs of production
GO = IC + VA
Intermediate consumption
Compensation of employees
Consumption of fixed capital
Other taxes (less subsidies) on production
VA can be obtained directly

If non-market producers are engaged in
market production
Whenever possible, separate establishments should be
distinguished
Receipts from sale of market output produced by a
secondary activity
Hint: Total output (market and non-market)
still valued at production costs
Market output = revenues from sales of market
products
Non-market output = total output - market output


Since 1950s, UN has published international
recommendations to establish a coherent and
uniform measurement of distributive trade activity
IRDTS 2008 adopted by the 39th session of the UN
Statistical Commission
 Harmonized with:
 ISIC, Rev.4, and CPC, Ver.2
 System of National Accounts 2008 (2008 SNA)
 International Recommendations for Industrial Statistics 2008 (IRIS
2008)
 Consistent with concepts, definitions and terminology used
in statistical publications and regulations of other
international organizations (OECD, ILO, Eurostat)

Creates the necessary link between the production of
a good in the economy and its final consumption
 Trade turnover/sales
 Final household consumption


Wholesalers and retailers - considered as supplying
services rather than goods to their customers by
storing and making a selection of goods readily
available
Output of trade services – measured by the trade
margins realized on goods purchased for resale

The scope of distributive trade sector of an
economy should be defined in terms of ISIC
or a national classification of activities
All resident entities recognised as statistical units and
classifiable in section G “Wholesale and retail trade;
repair of motor vehicles and motorcycles”

In conformity with the 2008 SNA production
boundary all units engaged in economic
activities within the scope should be covered
All units irrespective of their size (with and without
fixed location), form of economic and legal
organization and ownership

Consists of:
Provision of a service to various types of customers
(retailers and other commercial users or general
public) by storing and displaying a selection of goods
and making them available for buying
Provision of other services incidental to the sale of
those goods or subordinated to the selling such as the
delivery, after-sale repair and installation service

What makes distributive trade different from
other economic activities?
Specificity of the production process referred to as
“Resale”
 Economically significant change takes place
 Goods remain unchanged


2008 SNA recommends establishment as the most
appropriate statistical unit for production and
employment data in order to ensure homogeneous
and geographically distributed data
Can the enterprise also be a statistical unit for
distributive trade?
 In majority of cases establishment and enterprise are the
same except in the case of multi-establishment enterprises
 Choice may be guided by factors such as the purpose of
study, the availability and quality of data, etc.
 Choice of establishment vs. enterprise reflects balancing of
data availability against the homogeneity of economic
activity

Retail Chains
Result of vertical integration of retail trade in one and
the same activity class

Department stores
Identification of local units needs special attention

Franchising
Franchisees should be considered as separate units

Market places, street markets
Treated similarly to department stores

General principles for determining the kind of activity
of (any) unit
 It is determined by the kind of its principal activity;
secondary and ancillary activities are to be disregarded
 If a unit is engaged in several types of independent
activities, but the unit itself cannot be segregated into
separate statistical units - the largest share of value added
by using the “top-down” method
 If value added cannot be determined, classification has to be
done by using substitute criteria

Why is the correct identification of the principal
activity so important?
 Impacts on the structure of the economy and contribution of
different activities to GDP
 Proper estimation of output
Division 47
Retail trade in
stores
471-477
Specialized
472-477
472
473
474
475
Non
specialized
471
476
477
Further subdivided according to the
range of products sold
Retail trade
not in stores
478-479
Via stalls and
markets
478
Others
479

Statistical surveys
 Economic censuses – enumeration of all units in the population; basis for the
establishment of BR; sampling frame for surveys
 Sample surveys – collect responses from a few representative units
scientifically selected from the population

Administrative data sources
 Set up in response to legislation and/or regulation – VAT and other tax
registers, social security, etc.

Administrative data sources vs. statistical surveys
 Advantages





Complete coverage of units and perceived as low non-response
Avoidance of response burden
Cheaper to acquire data from an ADS than to conduct a survey
Suitable for covering the smallest segment of units’ population
Smaller sampling errors than in survey, better accuracy
 Disadvantages





Discrepancy between administrative and statistical concepts
Poor integration with other data of the statistical system
Risks with respect to stability
Data may become available with unacceptable delay
Legal constraints with respect to access and confidentiality
1. Demography
7. Taxes and subsidies
2. Employment
8. Output
3. Compensation of
employees
9. Intermediate
consumption
4. Other expenditures
10. Value added
5. Turnover
11. Gross fixed capital
formation
6. Inventories
Derived data items


Difference between the actual or imputed price realized on a good
purchased for resale and the price that would have to be paid by the
distributor to replace the good at the time it is sold or otherwise
disposed of
Trade Margin =
+ The value of sales (turnover), incl. sales at reduced prices
+ The value of other uses of goods purchased for resale (IC or compensation
of employees)
- Purchases of goods and services for resale in the same condition as
received
+ Change in inventories of goods purchased for resale in the same
condition as received
- The value of recurrent losses due to normal rates of wastage
T-3
Product
A
bought at 100
T-2
was
T-1
T
Product A was sold at 120
Market value if the product
sold is to be restocked: 110
In theory: output at basic price = trade margin = 120 – 110 = 10
In practice: trade margin = 120 – 100 = 20 if inventories are not
properly valued
The difference of 10 is holding gain, which is not part of output

Financial services may be paid implicitly or
explicitly
 Financial services provided in return for explicit charges
 Charges for arrangement of loans, manage of investment portfolio,
credit card charges (% from the sale, annual fee)
 Financial services provided in association with interest charges
on loans and deposits
 FISIM
 Financial services associated with the acquisition and disposal
of financial assets and liabilities in financial markets
 Debt securities that give rise to interest payments
 Output is a margin between different prices
 Financial services associated with insurance and pension
schemes (treated as a loan)
 Service charge - life and non-life insurance, social insurance
schemes

Services of the Central Bank
Monetary policy services (collective in nature, nonmarket output)
Financial Intermediation (market output)
Borderline cases – supervisory services, overseeing the
financial corporations in the country (could be both
market and non-market)
Hint: If not possible to separate market from
non-market output, the whole output of the
central bank should be treated as nonmarket and valued at the sum of costs


Output = FISIM + explicit service charges
Financial Intermediation Services Indirectly
Measured (FISIM)
 Services for which FI do not charge explicitly
 Measured as a difference between the rate paid to banks by
borrowers and the reference rate plus the difference
between the reference rate and the rate actually paid to
depositors

Statistical data required
Average stocks of loans and deposits for the period
and the accrued interest

Total FISIM = FISIM (loans) + FISIM (deposits)
FISIM =
(Interest Rate on Loans – Reference Rate) x
Stock of Loans
+
(Reference Rate - Interest Rate on Deposits) x
Stock of Deposits

Reference Rate
 A rate between bank interest rates on deposits and loans
 The rate prevailing for inter-bank borrowing and lending may
be a suitable choice
 Different RRs may be needed for resident/non-resident
lending and borrowing
 Midpoint rate between the interests on loans and deposits may
be used for simplification

Basic data:
Interest rate on loans
Loans
Reference rate (RR)
Interest rate on deposits
Deposits
12 %
1,250
4%
3%
7,500
Loans
Deposits
Actual interests paid
150
Interest to be paid at RR 50
FISIM
100
Actual interests received
300
Interest to be received at RR 225
FISIM
75
Total FISIM 175




Non-life insurance - provides cover to the policy
holder against loss or damage suffered as a result of
an accident
Life insurance - many small payments are made over
a period of time and either a single lump sum or a
stream of payments is made at some pre-agreed time
in the future
Reinsurance – insurance services between two
insurance corporations
Social insurance schemes – employer or the
government operates and provides benefits for a
number of identified circumstances
Non-life Insurance Output =
Life Insurance Output =
Total actual premiums earned
(excl. prepayments of
premiums)
Total actual premiums
earned (excl. prepayments of
premiums)
+
Adjusted premium
supplements (equal to the
income gained from the
investment of the insurance
technical reserves)
Adjusted claims incurred
(incl. outstanding claims that
are not yet paid)
+
-
Premium supplements (equal
investment income earned on
the reserves of the
policyholders)
Total benefits due
+/- Change in life insurance
technical reserves
-
Thank You