The Production Index
What does the indicator describe?
The production index measures the monthly performance of the industry in Germany. Due to its periodicity, its rapid availability and detailed breakdown by branches of economic activity, it is a central and up-to-date indicator of the development of business activity.
How is the indicator calculated?
Every month, the statistical offices of the Länder conduct a nationwide survey at local units of manufacturing with 50 employees or more. This survey collects quantity and value information on the monthly production of more than 6,000 industrial products ("updating series") according to the delimitation of the German "Product Classification for Production Statistics, Edition 2009 (GP 2009)". Around the 25th day of the following month, the data collected are transmitted to the Federal Statistical Office. At the national level, the total number of local units reporting every month accounts for just under 80% of the value of German industrial production.
First of all, the reported production data are used to construct relatives of production (based on the monthly average of the base year 2005). The value data are subjected to a price adjustment using the indices of producer prices of industrial products. These relatives are then aggregated with the respective shares in the gross production value to construct indices for each branch of economic activity as defined by the German "Classification of Economic Activities, Edition 2008 (WZ 2008)".
In order to aggregate the indices for the four-digit branches of economic activity to indices for higher WZ 2008 levels - three-digit and two-digit levels, major groups - and finally to the overall production index, each branch's share of gross value added at factor costs in the total value of the industry in the base year 2005 is used. The required value added quantities are derived from the annual cost structure survey in manufacturing. To apply these figures in the production indices, they are raised by the estimated share of gross value added of enterprises with less than 20 employees.
According to the same concept, the Federal Statistical Office additionally calculates a quarterly production index by aggregating the data reported for three months by the local units of manufacturing with 50 employees or more and the production data of the other local units of enterprises with generally 20 employees and more in industry which are obliged to report quarterly. To improve the quality of the monthly production indices, the index for each branch of economic activity is adjusted to the level of the respective quarterly production index.
The Federal Statistical Office computes the production indices in the form of non-adjusted values, working-day adjusted values and seasonally adjusted values (using the Census X-12-ARIMA method). The trend cycle component contained in the monthly production indices is additionally determined using the "Berlin method for time series analysis, Version 4 (BV 4)".
When is the indicator released?
The result of the provisional calculations of the monthly production index is released about 38 days after the end of the reference month. At the same time, the Federal Ministry of Economics and Technology (BMWi) publishes a press release commenting on the current economic situation. This release is available at http://www.bmwi.de. The results can also be found on the Federal Statistical Office's website.
The results are published under Publications, Specialized publications Indizes der Produktion und Arbeitsproduktivität im Produzierenden Gewerb, Fachserie 4, Reihe 2.1 (Indices of production and labour productivity in industry) and in other cross-section publications of the Federal Statistical Office.
Four weeks later, revised production indices are calculated, taking into account subsequently received production data and possible corrections. The revised indices are published together with the preliminary results of the following month.
After the results of the quarterly production survey have become available, each of the monthly indices is revised up to the current end of the index series. An annual revision of the indices is undertaken after the production survey for the fourth quarter has been concluded.
How accurate is the indicator?
The topical monthly production indices are provisional and still comprise just under 10% of estimated data. To improve the quality of the information value of the indices at the current end, the expected need for correction is integrated in the calculation of provisional results.
The estimate is based on the preceding month's values still contained in the current statistical data reported; basically, they are replaced by the rate of change of the data received within the deadlines, which is then included in the index calculation.
It is expected that this will markedly improve the accuracy especially in months with larger need for revision.
The corrections resulting from the adjustment of the monthly to the quarterly production index at present account for less than 0.5% on an annual average.
As the production index measures economic performance through updating gross production, the development of gross value added is approximately reflected only if the ratios of intermediate consumption to output do not change over time. There exist additional conceptual discrepancies to the calculation of gross value added within the framework of national accounts.
The production index only covers the output of local units of enterprises in the industry with, in general, 20 employees or more. The production of local units below that cut-off threshold is not taken into account. Apart from that, the production index represents only that share of the local units' output which is covered by the Product Classification. This means that the output of non-industrial activities such as trade, transport and services is excluded as well as those parts of physical production which are not covered by the current Product Classification.
Further information
Frau Dr. Christiane Bald-Herbel
Phone: +49 611 75 2192
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