Arthur Berger

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Estimation of Changes in Inventory in the
Canadian SNA
Arthur Berger
GDP by Final Expenditure, Shenzhen, China, 25-29
April 2011
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Outline

1. Accounts that include changes in inventory in the
   Canadian SNA
2. Revision cycle
3. Quarterly estimation in nominal terms
4. Annual estimation in nominal terms
5. Deflation

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Accounts that include changes in inventory in the
Canadian SNA

• Supply-Use accounts (annual)
• Expenditure based GDP in the Income and
  Expenditure accounts (quarterly)

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Revision cycle

• Annual revisions
• Once a year, quarterly IEA are revised going back
  3 years to align with the most recent supply-use
  tables
• Sub-annual revisions
• Between annual revisions, quarterly IEA is
  revised within the most recent reference year only

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Revision cycle GDP by final expenditure
  Quarterly IEA annual supply-use
Jan-11    
Feb-11 Q1/2010 - Q4/2010  
Mar-11    
Apr-11   2008 GDP C
May-11 Q1/2008 - Q1/2011  
Jun-11    
Jul-11    
Aug-11 Q1/2011 - Q2/2011 2008 GDP K
Sep-11    
Oct-11   2008 detail
Nov-11 Q1/2011 - Q3/2011  
Dec-11    
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Revision cycle GDP by final expenditure
2010 2009 2008
Feb-2011 1st annual estimate    
May-2011 2nd annual estimate 3rd annual estimate final annual estimate
May-2012 3rd annual estimate final annual estimate  
May-2013 final annual estimate    
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Quarterly estimation in nominal terms

• Businesses
• Farms
• Other businesses
• Government (very small inventories)

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Quarterly estimation Farm

• Grain held on farms (8 categories)
• Other inventories held on farms (8 categories)
• Grain in commercial channels (1 category)

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Quarterly estimation Farm

• Data sources
• Surveys market prices and farm-held inventories
  (tonnes or head count)
• Canadian Wheat Board and the Canadian Grain
  Commission prices and level of inventories
  (tonnes) for grain in commercial channels

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Quarterly estimationNon-farm businesses

• categories
• 23 manufacturing industries x 4 types
• 19 retail industries
• 16 wholesale industries
• 7 other

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Quarterly estimation Non-farm businesses

• Data sources inventory book values
• manufacturing, retail, wholesale monthly surveys
• Mining, transportation, telecom Quarterly survey
  of financial statements
• Utilities survey of utilities
• Gold, logging production, exports, imports, (
  reserves for gold)
• Construction, finance projection of annual data

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Quarterly estimation Non-farm businesses

• Data sources prices
• Manufacturing Industrial Product Price Indices
• Retail Consumer Price Indices
• Wholesale IPPI and import price indices
• Utilities Uranium, coal, natural gas prices
  machinery equipment price index electrical
  utilities

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Quarterly estimation Non-farm businesses
The 6 steps for calculating investment in non-farm inventories The 6 steps for calculating investment in non-farm inventories
1. CBVe Reported current dollar book values of inventories at the end of the period.
2. DEFe Deflator of book values at the end of the period.
3. KBVe CBVe DEFe Constant dollar book values of inventories at the end of the period.
4. KVPCt KBVe - KBVe-1 Constant dollar value of physical change for period t.
5. REVt Revaluer of the value of physical change for period t.
6. VPCt KVPCt REVt Current dollar value of physical change for period t.
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Annual estimation in nominal terms

• For most industries annual figures are derived
  by adding up the sub annual estimates.
• Logging mining annual industry surveys
• Supply-Use accounts
• a model is used to allocate industry inventories
  to commodities
• change in inventory may be adjusted to help
  balance supply versus use
• IEA is benchmarked to annual supply use accounts

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Deflation
The 2 steps for revaluing book value of inventories before applying deflators The 2 steps for revaluing book value of inventories before applying deflators
1. RBVe KBVe REVt Value of inventories at the end of the period, in current dollars, estimated at average prices of the period.
2. RBVb RBVe - VPCt Value of inventories at the beginning of the period, in current dollars, estimated at average prices of the period.