Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697810812895.pdf (Mauritius)
Quarterly Index of Industrial Production (QIIP) Third Quarter 2010 1.

Introduction The Index of Industrial Production shows the evolution of the volume of output of the Industrial Sector which covers “Mining and quarrying”, “Manufacturing” and “Electricity, gas and water supply” and accounts for around 21% of Gross Domestic Product (GDP).
The index compiled on a quarterly basis is one of the most important industrial short-term indicators, which aims at measuring, on a quarterly basis, the changes in the volume of industrial output.

This issue of “Economic and Social Indicators” presents the quarterly indices for the first quarter of 2008 to third quarter of 2010 with weights based on the results of the 2007 Census of Economic Activities.
The indices are given separately for the three sections, namely, “Mining and quarrying”, “Manufacturing” and “Electricity, gas and water supply”.

Within “Manufacturing”, estimates by broad group, namely EOE, Non-EOE and “Sugar milling” as well as by main industrial grouping are given.

Wherever possible, the annual averages of the quarterly indices have been worked out and included in the tables.
It is to be noted that, due to incomplete data, indices for the third quarter of 2010 are provisional and published at section and broad group level only.

They are therefore subject to revision in future issues of the Economic and Social Indicator of QIIP.

The published indices are not seasonally adjusted.

The user is therefore advised to base comparisons for a particular quarter of a year on the corresponding quarter of the previous year.
The objectives of the QIIP, data sources and methodology used in the compilation of the index as well as the limitations of the index are given at annex.

2.

Changes in compilation practices The indices are presented using 2007 as the reference year, based on the results of the 2007 Census of Economic Activities (CEA) compared to base year 2002 used previously.
The new indices have been calculated using the annual overlap technique resulting in chain linked indices compared to indices based on fixed weights compiled previously according to the UN manual “International Recommendations for the Index of Industrial Production-2009”.

The weights obtained from the 2007CEA have been adjusted by the amount of Financial Services Indirectly Measured (FISIM) consumed by the different industry groups in the production process.
It is to be noted that indices worked out for the Non-EOE now includes both small and large establishments compared to only large ones previously.

Thus the new index series is not strictly comparable with the previous one.

More details are given at Section 10 of the ANNEX 3.
The overall index - Industrial Sector In the third quarter of 2010 the overall index of industrial production decreased by 3.4% compared to the previous quarter, and increased by 4.9% when compared to the corresponding quarter of 2009.

In the year ending third quarter 2010, i.e.

fourth quarter 2009 to third quarter 2010, real industrial output went up by 8.2% compared to the corresponding 2 period a year before.
This is explained mainly by increases in the real output of “Sugar Milling” (+5.4%), “EOE” (+11.4%), “Non-EOE” (+2.2%) and “Electricity, gas and water supply” (+2.8%) partly offset by a decrease of 2.7% in “Mining and quarrying” (Table 1).

The long-term trend (4-quarter moving average), as shown graphically by chart 1, shows that the upward tendency is maintained during the whole period.

4.
4.

Changes by section 4.1 Mining and quarrying Chart 1 “Mining and quarrying”, is restricted to activities relating to quarrying of decorative stones, sand and salt extraction and represents only 0.2% of the output of the industrial sector.

In the third quarter of 2010, real output decreased by 13.2% compared to the previous quarter and increased by 3.0% when compared to the corresponding quarter of 2009.

In the year ending third quarter 2010, real output went down by 2.7% (Table 1).
Chart 2 3 4.2 Manufacturing Manufacturing output, which covers the production of a wide range of goods, represents 92% of the output of the industrial sector.
For analysis purposes, “Manufacturing” is broken down into the following broad groups:  Sugar milling representing around 3% of manufacturing output  EOE (43%)  Non–EOE (54%) Chart 3 Chart 4 Manufacturing output in the third quarter of 2010 increased by 0.1% compared to the previous quarter, and increased 5.2 % when compared to the corresponding quarter of 2009 (Table1).

In the year ending third quarter 2010, real output went up by 5.8%.
This is explained by increases of 5.4%, 11.4% and 2.2% in “Sugar Milling”, “EOE” and “Non-EOE” respectively.

The performances of the EOE and the Non-EOE excluding “Sugar milling” by detailed industry group up to second quarter 2010 are analysed separately in Section 5.

As mentioned in the introduction, due to incomplete data, indices for the third quarter of 2010 are provisional and published at section and broad group level only.
4.3 Electricity, gas and water supply “Electricity, gas and water supply” accounts for around 7.4% of the output of the industrial sector.

In the third quarter of 2010, real output of this sector decreased by 28.6% when compared to the previous quarter and went up by 3.7% when compared to the corresponding quarter of 2009.

In the year ending third quarter 2010, it is estimated to have moved up by 2.8% (Table 1).

4 Chart 5 5.
4 Chart 5 5.

Changes by broad group 5.1 EOE Real output of the EOE increased by 3.7% in the third quarter of 2010 compared to the second quarter of 2010 and increased by 17.1% when compared to the corresponding quarter of 2009.

In the year ending third quarter 2010, output in the EOE went up by 11.4% (Table1).

Indices by main industrial grouping for the third quarter of 2010 are not available.
However, an indication of the annual performance at this level can be obtained by comparing the detailed quarterly indices available for year ending second quarter of 2010 to those for year ending second quarter 2009 (Table 3).

Real output of “Wearing apparel”, the most important industrial grouping within the EOE, decreased by 4.7% and that of “Textiles” went down by 2.9%.

These two sub-groups account for 75.6% of the total weight allocated to the EOE.
The production of “Food products”, “Chemicals and man-made fibres” and “Jewellery” increased by 16.8%, 114.8% and 79.8% respectively, whereas that of “Optical instruments, watches and clocks” receded by 19.2%.

A positive growth of 14.3% in the production of “Other manufacturing” has also been noted.

Details of changes at sub-group level are shown in Chart 7.
Chart 6 Chart 7 5 5.2 Non-EOE excluding “Sugar milling” The index for the Non-EOE refers to large and small establishments (see methodology at annex).

Provisional estimate of the real output of Non-EOE establishments shows a decrease of 2.2% in the third quarter of 2010 compared to the previous quarter and of 1.4% compared to the corresponding quarter of 2009.

In the year ending third quarter 2010, the index went up by 2.2% (Table 1).
An indication of the annual performance at sub-group level is obtained by comparing the detailed quarterly indices available for year ending second quarter 2010 to those for year ending second quarter 2009 (Table 4).

Decreases were registered in “Food products excluding sugar” (-4.0%), “Chemicals and man-made fibres” (-50.3) and “Other manufacturing” (-0.8%).
Increases were noted in “Beverages” (+0.6%), “Textiles” (+10.6%), “Wearing Apparel” (4.8%), “Publishing and printing” (+9.7%), “Non-metallic mineral products” (+3.0%), “Basic metals and metal products” (+5.5%) and “Furniture” (+17.7%) as illustrated in chart 9.

Chart 8 Chart 9 Central Statistics Office Ministry of Finance and Economic Development PORT LOUIS December 2010 Contact Person: 1.

Mr. M. Dawoonauth (Statistician) 2.


Mrs. J. Rambojun (Senior Statistical Officer) National Accounts Unit 5th Floor Central Statistics Office Ministry of Finance and Economic Development Tel.

: 208 0781, 208 0859 E-mail: cso_naccounts@mail.gov.mu Table 1: Index of industrial production by section - annual and quarterly indices, Q1 2008 to Q3 2010 Year 2007 = 100 Industrial sector 10 - 37, 40, 41 Mining and quarrying 10 - 14 Total exc.

Total sugar milling 15 - 37 15-37 exc.
1542 Sugar milling 1 1542 1000 2 924 898 26 EOE 15 - 37 397 Non-EOE 15 - 37 501 Manufacturing 100.3 100.4 93.1 107.7 100.8 111.8 81.0 109.6 102.8 119.9 99.0 111.6 107.8 -3.4 4.9 107.6 100.9 134.5 144.2 109.4 100.8 122.8 109.5 101.9 95.1 102.2 120.9 104.9 - -10.4 4.0 103.5 118.9 72.7 114.4 114.0 112.8 83.5 131.5 131.0 129.7 85.5 134.5 134.0 - -2.2 -1.4 Electricity, gas and water supply 40, 41 74 106.1 106.2 112.1 125.6 90.6 96.1 112.2 125.5 90.1 96.9 114.8 130.9 93.5 -28.6 3.7 - 6 - NSIC Rev.
3 Weight Annual Quarterly 2008 2009 2008 Q1 Q2 Q3 Q4 2009 Q1 Q2 Q3 Q4 2010 Q1 Q2 Q3 % change, latest quarter over: 1 previous quarter same quarter a year ago % growth in output in the year ending: 1 3rd quarter 2010 8.2 -2.7 5.8 1.9 5.4 11.4 2.2 2.8 1 provisional Table 2: Index of industrial production by main industrial grouping - manufacturing, Q1 2008 to Q22010 Year 2007 = 100 Total manufacturing 15 - 37 Food products inc. sugar 151 - 154 1000 213 Beverages 155 111 Textiles 17 59 Wearing apparel 18 Publishing and printing 22 Chemicals and man-made fibres 23 - 25 Non-metallic mineral products 26 Basic metals and metal products 27, 28 Other 19 - 21, 29 - 37 296 42 60 43 49 127 Main industrial grouping NSIC Rev.
3 Weight Annual Quarterly 2008 2009 2008 Q1 Q2 Q3 Q4 2009 Q1 Q2 Q3 Q4 2010 Q1 Q2 % change, latest quarter over: previous quarter same quarter a year ago - - 7 - 99.7 107.2 88.0 106.1 100.3 104.5 77.0 110.7 114.4 127.2 92.6 107.5 16.1 -2.9 % growth in output in the year ending: 2nd Quarter 2010 5.2 6.8 1.5 -1.0 -5.5 12.0 15.2 3.0 5.6 12.5 Table 3: Index of industrial production by main industrial grouping - EOE, Q1 2008 to Q2 2010 EOE, manufacturing Food products Textiles Wearing apparel Main industrial grouping Chemicals and man- made fibres Optical instruments, watches & clocks Year 2007 = 100 Jewellery Other NSIC Rev.
3 Weight Annual Quarterly 2008 2009 2008 Q1 Q2 Q3 Q4 2009 Q1 Q2 Q3 Q4 2010 Q1 Q2 % change, latest quarter over: previous quarter same quarter a year ago 15 - 37 1000 151 - -14.7 23 - - 22, 26 - 32, 34, 35,36 (Excl.
3691), 37 - 8 - 52 89.3 72.2 94.7 94.4 87.7 80.3 61.5 68.4 67.6 91.3 69.2 112.3 62.4 64.1 % growth in output in the year ending: 2nd Quarter 2010 7.2 16.8 -2.9 -4.7 114.8 -19.2 79.8 14.3 Table 4: Index of industrial production by main industrial grouping - Non-EOE (exc.

Sugar), Q1 2008 to Q2 2010 Main industrial grouping Year 2007 = 100 Non-EOE, manufacturing Food products exc.
sugar Beverages Textiles Wearing apparel Publishing and printing Chemicals and man-made fibres; Rubber & plastic Products Non-metallic mineral products Basic metals and metal products Furniture Other NSIC Rev.
3 Weight Annual Quarterly 2008 2009 2008 Q1 Q2 Q3 Q4 2009 Q1 Q2 Q3 Q4 2010 Q1 Q2 % change, latest quarter over: previous quarter same quarter a year ago 15-37 1000 104.2 108.4 87.5 101.1 102.8 125.6 90.4 107.4 105.4 130.3 97.8 106.3 8.6 -1.0 151- -10.7 27.3 -29.7 22 70 109.9 116.6 83.9 112.4 104.5 138.7 99.4 115.5 118.7 133.0 121.0 129.8 7.3 12.5 24 & - 21, 29 - 37 82 85 91 117.5 120.8 97.2 126.8 120.7 125.1 102.2 118.2 122.6 140.1 111.2 118.1 6.2 -0.1 92.2 102.3 86.6 95.8 87.4 98.8 86.5 90.9 112.1 121.0 97.0 98.1 1.2 8.0 - 9 - 102.5 118.1 84.0 106.4 104.9 114.8 77.4 145.9 120.5 128.6 82.9 107.5 29.6 -26.3 110.2 99.6 94.7 99.3 115.8 131.4 84.9 101.7 99.6 112.1 102.2 102.7 0.5 1.0 % growth in output in the year ending : 2nd quarter 2010 3.2 -4.0 0.6 10.6 4.8 9.7 -50.3 3.0 5.5 17.7 -0.8 ANNEX Quarterly Index of Industrial Production (QIIP) - Methodology 1 Introduction The Index of Industrial Production shows the movement of the volume of output of the Industrial Sector.
This index was calculated annually and published in the Digest of Industrial Statistics.

Following the needs expressed by various institutions, both public and private, the Central Statistics Office decided to compile and disseminate the index on a quarterly basis.

The compilation and dissemination of the Quarterly Index of Industrial Production is also one of the requirements of the International Monetary Fund (IMF) towards graduation to the Special Data Dissemination Standard (SDDS).
2 Objectives The Quarterly Index of Industrial Production (QIIP) is one of the most important industrial short-term indicators which aim at measuring, on a quarterly basis, the ups and downs of the volume of industrial output with a special focus on detecting, as early as possible, the turning points of the business cycle.
This enables planners, decision makers and the business community at large to be aware of any sign of change in the progress of the economy in order to take appropriate and timely policy measures.

At the office level, the index based on “hard” data, provides useful and reliable inputs for the improvement of the annual production estimates and forecasts as well as estimates of quarterly value added for the Industrial Sector.
3 Concept/Definition The basic concept of the Index of Industrial Production is the measurement of the change in real value added at basic prices.

Given that value added is defined as the difference between output and input, the compilation of the index, on a quarterly basis, is faced with practical difficulties in obtaining the data required on inputs and outputs within a reasonable period.
In the absence of detailed data for most of the different industrial groups, an approximation of the index is based on change in deflated turnover, physical output or other indicators of change in real value added generated by industrial enterprises.
The indicators used by main industrial grouping/sector are as follows: Sector/Industrial grouping Indicators used Mining and quarrying Value added deflated by appropriate deflators Industry (excluding sugar milling) groups within manufacturing Use of proxy indicators i.

Volume of production ii.

iii.

Employment Turnover data deflated by appropriate deflators (for most of the industry groups) iv.
Consumption of raw materials ii Sector/Industrial grouping Sugar milling Electricity, gas and water supply Indicators used Value added deflated using the double deflation method.

However, until final data are obtained quarterly changes are based on annual the proportions estimate/forecast.

The are computed from the latest quarterly cost structure of milling activities (see sections 7 and 8).

Volume of sales as proxy indicator.


deflated proportions of The deflators used are the following price indices at detailed level, wherever possible: i.

Producer Price Index (PPI) ii.

Export Price Index (EPI) iii.

Consumers Price Index (CPI) iv.


Import Price Index (IPI) v. Wage Rate Index (WRI) 4 Scope/Classification The Quarterly Index of Industrial Production covers the Industrial Sector, which comprises: Mining and quarrying (NSIC Section C), Manufacturing (NSIC Section D), and Electricity, Gas and Water Supply (NSIC Section E) The activity classification used is the National Standard Industrial Classification of Economic Activities (NSIC) which is compatible to ISIC Rev.

3 recommended by the United Nations.


As regards Manufacturing, the index is compiled separately for the EOE and Non-EOE sectors.

Non EOE sectors now comprises small and large establishments, while previous series covered only large establishments.

Therefore the new series is not strictly comparable with those compiled previously.

Output of small manufacturing establishments accounts for around 25% of total Non-EOE output.
5 Compilation practices The weights have been derived (separately for EOE and Non-EOE within the manufacturing sector) from value added at basic prices by detailed industry group (mostly at 5-digit level of activity classification) compiled from the 2007 Census of Economic Activities.

A representative sample has been selected from the CEA 2007 data which covers the whole manufacturing sector.

The VAT turnover for the selected establishments is used to derive the index.
The index is calculated for each of the lowest level of activity classification and aggregation to the broader level is done as a weighted arithmetic average of the lowest level indices.

Under the new methodology the weights will be revised every year.

6 Data sources As mentioned previously, use is extensively made of proxy indicators for the calculation of the index and one such indicator is deflated turnover data.
Turnover data are mainly obtained iii from the VAT (Value Added Tax) Department, which is a very important source of secondary data.
The sources of data by industry are as follows: Sector/Industrial grouping Data sources Mining and quarrying Industry (excluding sugar milling) groups within manufacturing  Survey of establishments  Deflators used: CPI  Turnover data from VAT Department  Trade statistics  Quarterly Stock Survey  Quarterly Survey of Employment among EOE  Sales of excisable goods from the Mauritius Revenue Authority  Continuous Multipurpose Household Survey  Building permits statistics  Deflators used: PPI, EPI and IPI Sugar milling Electricity, gas and water supply  Survey of establishments  Deflators used: PPI and CPI Returns from CEB, CWA and Independent Power Producers (IPPs) 7 Problems/Constraints/Data quality The practical difficulties in compiling an ideal index showing the evolution of value added at constant prices lead to the use of a number of approximation methods which are listed at section 3.
Each of the methods has a number of constraints, the main ones being: Deflated turnover:  quality of data from VAT Department.

The data refer to a mix of formal “large” responding enterprises/establishments.
The output of secondary activities of an enterprise are included in turnover data corresponding to the main activity of the enterprise;    time-lag between production and sales may lead to a late identification of a turning point in the business cycle; ignorance of changes in stocks gives a false picture of true production.
However, based on available information from the Quarterly Stock Survey, adjustments are made, wherever possible, to take account of changes in stocks; the quality of the index is subject to the precision and relevance of the different price indices used for deflation.
 assumption based on a fixed ratio of value added to gross output when, in fact, the ratio may change as a result of technological changes, productivity changes as well as seasonal variation in the production structure Consumption of raw materials:  involves the assumption that output is constant per unit of materials used.

iv Employment:  does not take account of changes in labour productivity.
Although, in the short term, it is reasonable to assume that labour productivity is relatively constant, this is not true in the long term; Volume of production:  does not take account of quality changes Indirect Indicators  Indirect indicators such as household consumption and building permits have been used to estimate volume changes for certain activities of small establishments.
The volume changes may be revised when more appropriate data sources are obtained or the next Census of Economic Activities is carried out.

8 Appropriateness of the QIIP In spite of the above constraints/weaknesses, it is observed that the index shows relative consistency and is of reliable quality for the measurement of quarterly and other changes.

However, great care should be taken when interpreting small changes that may be insignificant at the more detailed level.
9 Index calculation The QIIP is calculated according to a modified Laspeyre's index and the formula is:  Wi (Qit/Qio) It = X 100  Wi with It Wi = index for quarter t = weight for activity i (Qit/Qio) = is the growth in real value added of activity i in quarter t relative to the base year as estimated by an appropriate proxy indicator 10.

Main changes from the index compiled previously a. Indices were calculated for Manufacturing, Electricity, gas and water supply and Mining and Quarrying.
Within Manufacturing sub indices were compiled for Sugar milling, EPZ and Non EPZ (large establishments only).

Now indices will still be calculated for the same industry groups except that the coverage of Non EPZ will be increased to include small establishments as well.

Export Oriented Enterprises consist of all enterprises, previously operating with an EPZ certificate, and those enterprises manufacturing goods for exports and holding a registration certificate issued by the Board of Investment.
Indices for EOE sector can be considered as being the same as for EPZ since the latter constitutes more than 95% of EOE.

Thus appellations of EPZ and Non EPZ have been changed to EOE and Non EOE respectively.

b.

A fixed base Laspeyre's index system was used and the weight was from the 2002CEA.

Now a chain base index is compiled using the Annual Overlap technique to derive the index based on previous year weights.
In this method the weight is v updated every year and indices are first compiled based on the change in a given quarter compared to the previous year, then the indices are chain linked to produce a series with the same reference year.

Thus in the formula given at 9 above the weights will refer to previous year weights.