TECHNICAL NOTE 2 DATA RELIABILITY


INTRODUCTION

1 The Economic Activity Survey is, in part, a sample survey designed primarily to deliver national estimates for all industry divisions within the scope of the collection. Estimates at the state and territory level for industry divisions are also produced, but the sample survey was not specifically designed for these purposes.


SAMPLING ERROR

2 The majority of data contained in this publication have been obtained from a sample of businesses. As such, these data are subject to sampling variability; that is, they may differ from the figures that would have been produced if the data had been obtained from all businesses in the population. The measure of the likely difference as used by the ABS is given by the standard error, which indicates the extent to which an estimate might have varied by chance because the data were obtained from only a sample of units. There are about two chances in three that a sample estimate will differ by less than one standard error from the figure that would have been obtained if all units had been included in the collection, and about nineteen chances in twenty that the difference will be less than two standard errors.

3 The standard error can also be expressed as a percentage of the estimate, and this is known as the relative standard error (RSE). Selected data item RSEs at the industry division level for Australia are shown in the table below. Detailed relative standard errors can be made available on request.

Relative Standard Errors
	Total income	Total expenses	Industry value added	Sales and service income	Wages and salaries
	%	%	%	%	%
Agriculture, forestry and fishing	4.5	4.2	8.6	4.7	4.0
Mining	1.2	1.4	1.8	1.3	1.5
Manufacturing	0.7	0.7	1.1	0.7	1.2
Electricity, gas, water and waste services	1.6	1.5	3.4	1.8	1.0
Construction	3.6	3.8	5.2	3.7	5.6
Wholesale trade	3.1	3.1	3.3	3.1	2.7
Retail trade	3.5	3.5	4.5	3.5	4.1
Accommodation and food services	4.5	4.4	3.7	4.4	3.0
Transport, postal and warehousing	2.7	2.7	3.2	2.7	2.9
Information Media and Telecommunications	1.0	1.0	1.3	1.1	1.6
Rental, hiring and real estate services	5.3	5.3	4.5	3.9	5.8
Professional, scientific and technical services	2.4	2.6	3.3	2.6	2.2
Administrative and support services	4.1	3.6	3.4	3.9	2.6
Public administration and safety (private)	7.2	7.2	9.0	7.3	9.6
Education and training (private)	5.9	4.9	5.0	7.2	6.7
Health care and social assistance (private)	3.1	3.2	3.5	4.0	2.8
Arts and recreation services	2.1	2.0	4.6	2.5	4.8
Other services	2.7	2.7	4.6	3.1	3.2
Total selected industries(a)	0.9	1.0	1.0	1.0	0.9
(a) Excludes Division K Financial and insurance services. See the Glossary for the full definition.

4 To illustrate the above, the estimate of total income for Transport, postal and warehousing in 2007-08 was $134,601m. The RSE of this estimate is shown as 2.7%, giving a standard error of approximately $3,634m (rounded). This implies that there are two chances in three that, if all units had been included in the survey, an estimate in the range of $130,967m to $138,235m would have been obtained. Similarly, it implies that there are nineteen chances in twenty (i.e., a confidence interval of 95%) that the estimate would have been within the range of $127,333m to $141,869m.

5 The size of the RSE may be a misleading indicator of the reliability of some of the estimates for OPBT, EBITDA and IVA. It is possible for an estimate to legitimately include positive and negative values, reflecting the financial performance of individual businesses. In this case, the aggregated estimate can be small relative to the contribution of individual businesses, resulting in a standard error which is large relative to the estimate.


NON-SAMPLING ERROR

6 All data presented in this publication are subject to non-sampling error.

7 The imprecision due to sampling variability, is measured by the standard error and should not be confused with non-sampling error. Non-sampling error may be due to inadequacies in available sources from which the population frame was compiled, imperfections in reporting by providers, errors made in collection such as in recording and coding data, and errors made in processing data. Inaccuracies of this kind may occur in any enumeration, whether a full census or a sample.

8 Although it is not possible to quantify non-sampling error, every effort is made to reduce it to a minimum. Collection forms are designed to be easy to complete and assist businesses to report accurately. Efficient and effective operating procedures and systems are used to compile the statistics. The ABS compares data from different ABS (and non-ABS) sources relating to the one industry, to ensure consistency and coherence.

9 Differences in accounting policy and practices across businesses and industries can also lead to some inconsistencies in the data used to compile the estimates. Although much of the accounting process is subject to standards, there remains a great deal of flexibility available to individual businesses in the accounting policies and practices that they adopt.

10 The above limitations are not meant to imply that analysis based on these data should be avoided, only that the limitations should be borne in mind when interpreting the data presented in this publication. This publication presents a wide range of data that can be used to analyse business and industry performance. It is important that any analysis be based upon the range of data presented rather than focusing on one variable.