METHODOLOGY

This paper describes a methodology developed with the aim of measuring and removing the impact of off-June reporting on estimates published in Australian Industry (cat. no. 8155.0). The experimental estimates presented in the Appendix of this paper were derived in a two step process. First, for each within scope ANZSIC subdivision, off-June factors were determined for each data item and each of the off-June reporting types. Then, the appropriate off-June factors were applied to data reported by individual EAS businesses within each respective ANZSIC subdivision. This enabled the calculation of new values for these businesses, representing an estimate of how the business would have reported for the standard financial year (that is, 1 July to 30 June). By aggregating these values, new estimates were produced on a standard financial year basis.


Creating off-June year factors

It was necessary to create twenty-one separate factors for each in scope ANZSIC subdivision, as demonstrated in Table 2.

TABLE 2. THE 21 OFF-JUNE YEAR MODELLING FACTORS REQUIRED, FOR EACH ANZSIC SUBDIVISION
	Sales and service income	Wages and salaries	Other expenses	Closing inventories of raw materials	Opening inventories of raw materials	Closing inventories of finished goods	Opening inventories of finished goods
ANZSIC SUBDIVISION	Dec-09	Dec-09	Dec-09	Dec-09	Dec-09	Dec-09	Dec-09
	Mar-10	Mar-10	Mar-10	Mar-10	Mar-10	Mar-10	Mar-10
	Sep-10	Sep-10	Sep-10	Sep-10	Sep-10	Sep-10	Sep-10

The factors were formulated from a subset of businesses sampled in the QBIS. In order to be included in the derivation of the factors, businesses must have met the following criteria:

• For sales and service income, wages and salaries and other expenses factors: Reported a non-zero value for sales and service income, wages and salaries, and other expenses for the seven relevant quarters which cover all possible types of reporting period. For example, for 2009-10 the relevant quarters are March 2009 through September 2010. This condition eliminated businesses which either started up or closed down during the period.
• For inventories factors: Reported a non-zero value for sales and service income and inventories for eight relevant quarters (December 2008 through September 2010). This is because a value for opening inventories was required, which was sourced from the inventories reported in previous quarter.
• Not reported a value for the above items in one quarter greater than 10 times that of an adjacent quarter. This condition eliminated businesses with extreme values.
• Had an employment size of 20 or more. This removed small businesses, whose data are not expected to be impacted by off-June reporting in the EAS.

Sales and service income and other expenses factors were not generated for Education and training and Health care and social assistance (Divisions P and Q respectively), as the information is not collected by QBIS (see Scope and Population above).

For each data item, quarterly QBIS data reported by the subset of businesses established above were summed to give an aggregate value for each in scope ANZSIC subdivision. These aggregate quarterly values were then used to create factors that model the impact of off-June reporting for each of the four data items by each in scope subdivision. To calculate each factor, a ratio of the data reported during the standard financial year and the relevant off-June time-period was generated, by summing data from the four quarters of the standard financial year and dividing this by the summed annualised data from the four quarters of the relevant off-June reporting period, as described by Equation 1.

EQUATION 1. CALCULATING OFF-JUNE FACTORS



where Q is quarterly QBIS data aggregated by industry subdivision for the subset of businesses identified above.

Since inventories are stock variables (that is, represent a quantity existing at a particular point in time) the formulae for deriving inventories factors differed slightly, as described by Equation 2.

EQUATION 2. CALCULATING OFF-JUNE INVENTORIES FACTORS



Factors were produced for opening and closing inventories, by type of inventory. The types of inventories specified were raw materials inventories and finished goods inventories (including work-in-progress).

The factors generated give an indication of the variability in trading conditions between off-June reporting periods and the standard Australian financial year. A factor of 1 indicates no variability, implying there is no effect of off-June reporting on estimates published in Australian Industry (cat. no. 8155.0). Conversely, the further a factor lies from 1, the greater the impact of off-June reporting on industry estimates.

Where there were five or less contributing QBIS businesses in an ANZSIC subdivision, it was considered that data was of insufficient quality to model accurately.

An example of the calculation of factors for Subdivision 14, Wood product manufacturing is provided below. Quarterly sales and service income estimates derived from in-scope QBIS data (see Table 3) were utilised to produce 'off-June' factors (see Equation 3) to be applied to EAS estimates of sales and service income.

TABLE 3. CALCULATING FACTORS - EXAMPLE: SALES OF GOODS AND SERVICES, SUBDIVISION 14 WOOD PRODUCT MANUFACTURING
	Sales and service income estimates derived from in scope QBIS data(a)
Quarter	$m
Mar-09	777
Jun-09	825
Sep-09	909
Dec-09	894
Mar-10	858
Jun-10	968
Sep-10	1 009
(a) Due to the scoping criteria listed above, these estimates represent a subset of the QBIS data, and so the estimates given here differ from those published in Business Indicators (cat. no. 5676.0).

EQUATION 3. CALCULATING FACTORS - EXAMPLE: SALES OF GOODS AND SERVICES, SUBDIVISION 14 WOOD PRODUCT MANUFACTURING




Applying factors to EAS Data

Once the off-June year factors were established for each subdivision, they were applied to selected data items from the EAS. The adjusted items are shown in Table 4, as well as the factors which were used to adjust them. Note that not all components of the published items have been adjusted, due to a lack of available QBIS data from which to create factors.

Businesses were identified as either 'on-June reporters' or one of the three types of 'off-June reporters' described above based on the reporting period they indicated on the EAS form. Factors were only applied to in scope businesses eligible for selection in EAS with an employment size of at least 20. For 2009-10, the following four categories were created:

• December year end reporting businesses: Businesses which reported data for the 12 months ended November or December 2009, or January 2010. Reported EAS data was adjusted using the December off-June factors.
• March year end reporting businesses: Businesses which reported data for the 12 months ended February, March or April 2010. Reported EAS data was adjusted using the March off-June factors.
• June year end reporting businesses: Businesses which reported data for the 12 months ended May, June or July 2010. The vast majority of businesses fall into this category, and their data are not adjusted.
• September year end reporting businesses: Businesses which reported data for the 12 months ended August or September 2010. Reported EAS data was adjusted using the September off-June factors.

Calculating off-June year adjusted estimates

Following the application of off-June year factors to EAS data reported by off-June year businesses, estimates were recalculated using the standard EAS methodology described in Technical Note 1 of Australian Industry (cat. no. 8155.0). Estimates were generated for the four published data items wages and salaries, total income, total expenses and IVA, for all in scope ANZSIC divisions and subdivisions.

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