Economics 101: How to read national accounts
October 22, 2013 6:40 AM
I'm trying to reconcile two numbers from the same national statistical agency. I'm looking for a dummy's guide for what defines the difference between the two numbers and how to use one to estimate the other.
I'm looking at retail sales in South Africa.
According to national accounts, the GDP contribution in current prices in 2012 for retail, wholesale, the motor trade, catering and hotel accommodation is (in millions Rand): 452,717 (Source, p 10).
According to Stats SA's statistical releases, the value of the retail market alone (current prices, 2012, millions Rand) is 654,135 (Source, p 7). Wholesale retail is worth 1,356,722 (Source), the motor trade is worth 479,634 (Source), catering is worth 40,698 (Source) and hotel accommodation is worth 14,266 (Source).
This totals 2,545,455.
I'm aware the larger number includes taxes. The smaller number from national accounts does not. I believe the smaller number from national accounts does not double count, so a good being passed through from manufacturer to wholesaler to retailer will not be valued all through that chain discretely within the national accounts.
Nonetheless, I'm struggling to understand how an aggregate national accounts number for the whole retail/wholesale/motor trade/foodservice/hotel sectors would be less than a fifth of the actual industry size.
And specifically, I'm trying to work out for other countries where I only have the national accounts number how I can work back to an estimation of the actual market size.
I'm looking at retail sales in South Africa.
According to national accounts, the GDP contribution in current prices in 2012 for retail, wholesale, the motor trade, catering and hotel accommodation is (in millions Rand): 452,717 (Source, p 10).
According to Stats SA's statistical releases, the value of the retail market alone (current prices, 2012, millions Rand) is 654,135 (Source, p 7). Wholesale retail is worth 1,356,722 (Source), the motor trade is worth 479,634 (Source), catering is worth 40,698 (Source) and hotel accommodation is worth 14,266 (Source).
This totals 2,545,455.
I'm aware the larger number includes taxes. The smaller number from national accounts does not. I believe the smaller number from national accounts does not double count, so a good being passed through from manufacturer to wholesaler to retailer will not be valued all through that chain discretely within the national accounts.
Nonetheless, I'm struggling to understand how an aggregate national accounts number for the whole retail/wholesale/motor trade/foodservice/hotel sectors would be less than a fifth of the actual industry size.
And specifically, I'm trying to work out for other countries where I only have the national accounts number how I can work back to an estimation of the actual market size.
Its because of the inputs. Most of them are coming from outside of that group - like Steel for Vehicles for example. Selling imported steel in car form counts as motor trade in one data set, while its actually a negative item to GDP, if the steel is produced locally the GDP impact is going to be captured in a different category.
Actually looking at the data itself it seems the value added of the car manufacturing is also falling into a different group.
Basically you can't really look at these two data sets and compare them - but I'd call Stats SA and speak with someone. I've never spoken with them but I have lots of experience
(In this case "Value of the retail market" = annual sales.)
posted by JPD at 6:55 AM on October 22, 2013
Actually looking at the data itself it seems the value added of the car manufacturing is also falling into a different group.
Basically you can't really look at these two data sets and compare them - but I'd call Stats SA and speak with someone. I've never spoken with them but I have lots of experience
(In this case "Value of the retail market" = annual sales.)
posted by JPD at 6:55 AM on October 22, 2013
The "retail trade" from your second link is total sales, the "value added" in your first link is sales less input costs.
And specifically, I'm trying to work out for other countries where I only have the national accounts number how I can work back to an estimation of the actual market size.
I dont understand what you mean by market size. Do you mean the total sales in a year? If so for what industries? All retail industries? What countries? National accounts data is not necessarily comparable.
posted by shothotbot at 6:56 AM on October 22, 2013
And specifically, I'm trying to work out for other countries where I only have the national accounts number how I can work back to an estimation of the actual market size.
I dont understand what you mean by market size. Do you mean the total sales in a year? If so for what industries? All retail industries? What countries? National accounts data is not necessarily comparable.
posted by shothotbot at 6:56 AM on October 22, 2013
By market size I mean the value of the retail market, with or without taxes, such that in theory one could say x% was from clothing retailer, y% was supermarkets etc. I.e. spend on retail within the country.
posted by MuffinMan at 7:04 AM on October 22, 2013
posted by MuffinMan at 7:04 AM on October 22, 2013
By market size I mean the value of the retail market, with or without taxes, such that in theory one could say x% was from clothing retailer, y% was supermarkets etc. I.e. spend on retail within the country.
If you want the proportion of retail sales from a given sector I would look at something like page 2 of your second link, the "weight" column. If you want to generalize to other countries, however, I would suggest limiting yourself to those with a similar GDP per capita, say within USD 5,000 as people buy different things at different stages of development.
posted by shothotbot at 7:24 AM on October 22, 2013
If you want the proportion of retail sales from a given sector I would look at something like page 2 of your second link, the "weight" column. If you want to generalize to other countries, however, I would suggest limiting yourself to those with a similar GDP per capita, say within USD 5,000 as people buy different things at different stages of development.
posted by shothotbot at 7:24 AM on October 22, 2013
So it's the difference between value added and total sales you're after.
GDP from the expenditure side is C + I + G + (X-M).
GDP from the income side is Labour income + Capital Income + Land Income + Indirect Taxes.
When you see the value of retail sales, only some of this counts as GDP: the cost of goods and services purchased by a retailer (could be 90% of selling price) doesn't add to GDP because it's already been counted. It's only the value added in the sector that adds to GDP. If you look at the Input Output accounts, you'll see the total value of transactions vastly exceeds GDP. It's only when you net out the costs of produced inputs to sectors that you get value added.
In general, it's not easy at all to figure out how important a sector of an economy is. And looking at industry or sectoral turnover doesn't necessarily tell you much.
posted by hawthorne at 6:36 AM on October 23, 2013
GDP from the expenditure side is C + I + G + (X-M).
GDP from the income side is Labour income + Capital Income + Land Income + Indirect Taxes.
When you see the value of retail sales, only some of this counts as GDP: the cost of goods and services purchased by a retailer (could be 90% of selling price) doesn't add to GDP because it's already been counted. It's only the value added in the sector that adds to GDP. If you look at the Input Output accounts, you'll see the total value of transactions vastly exceeds GDP. It's only when you net out the costs of produced inputs to sectors that you get value added.
In general, it's not easy at all to figure out how important a sector of an economy is. And looking at industry or sectoral turnover doesn't necessarily tell you much.
posted by hawthorne at 6:36 AM on October 23, 2013
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posted by Chocolate Pickle at 6:49 AM on October 22, 2013