Archive for the 'Industry' Category

New Statistics Will Provide More Timely Snapshot of How Industries are Performing

Want to know how much manufacturing contributed to U.S. economic growth in a given quarter? How about educational services?

For the first time, the Bureau of Economic Analysis (BEA) will soon start producing on a regular basis quarterly estimates of economic activity generated by 22 industries.

The first quarterly gross domestic product (GDP) by industry report will be released April 25 and will provide information on how these industries fared in the fourth quarter of 2013 as well as how they performed in previous quarters back to the first quarter of 2005. The report will also provide annual statistics for 2013. Previously, BEA published GDP by industry statistics only on an annual basis, so businesses and policymakers had a much longer wait for such information.

The new quarterly statistics will provide a different look at quarterly economic growth.  For instance, on February 28, BEA reported that the U.S. economy grew at a 2.4 percent pace in the fourth quarter of 2013. While that GDP report provides a lot of crucial information, the new quarterly GDP by industry report will shed light on whether most industries contributed to the nation’s economic growth or whether just a handful of industries accounted for most of it.

The new quarterly statistics also will serve as a better barometer for potential turning points in the U.S. economy and give businesses and policymakers a better understanding of the strengths and weaknesses of the overall economy. For instance, in 2005—during the run up to the great recession—the U.S. economy grew 3.4 percent. Finance, insurance, real estate, rental, and leasing accounted for 1.3 percentage points of that growth—more than a third. Providing regular, timely updates on how economic growth is distributed across the industries can help policymakers and business leaders identify potential trouble spots in the economy.

BEA officials will discuss these new GDP by industry statistics at a data user conference March 11 at BEA.

These new estimates are just one way that BEA is innovating to better measure the 21st Century economy. This year, BEA also will introduce real (inflation-adjusted) estimates of personal income for states and metropolitan areas, along with prototype estimates of quarterly GDP by state and annual consumer spending by state. Providing businesses and individuals with new data tools like these is a priority of the Commerce Department’s “Open for Business Agenda.”

BEA’s Industry Economic Accounts to Hit Major Milestone

Roughly every 5 years, the Bureau of Economic Analysis (BEA) releases comprehensive revisions of its major economic accounts. These revisions are generally more detailed than annual revisions, implementing changes in methods, statistics and definitions to better reflect an ever-evolving economy. In December, BEA will release the 2013 comprehensive revision of the Industry Economic Accounts (IEAs), which includes two main sets of statistics, the annual industry accounts and the benchmark input-output (I-O) accounts. That will follow the release in July of a comprehensive revision of the National Income and Product Accounts (NIPAs), or GDP accounts.

The upcoming comprehensive IEA revision will mark a significant milestone: the full integration of the IEAs with the NIPAs, which was first suggested in a March 2004 article in the Survey of Current Business and later amplified in other articles. This enhanced integration, which has long been recommended by economists, will allow for a higher degree of consistency among these widely followed accounts, offering a more consistent view of industry dynamics within the overall economy.

A preview of the 2013 comprehensive revision of the IEAs was published in the June 2013 issue of the Survey.

Quarterly GDP by Industry Data Improves Understanding of the Economy

In 2009, annual gross domestic product (GDP) for durable goods manufacturing showed a double-digit decline. The industry was the leading annual contributor to the bottoming out of the U.S. economy for that year. But looking at the results through a new experimental quarterly data series reveals a more nuanced and complete picture of what was happening in durable goods manufacturing. It shows that the decline in 2009 largely came from big drops in the fourth quarter of 2008 and the first quarter of 2009. After that durable goods actually increased for seven straight quarters.

This is an example of how BEA’s experimental quarterly GDP by industry statistics can provide a more detailed and precise view of how various industries are contributing to overall economic activity in the country, particularly around turning points. The recent recession and recovery illustrated the need for data that track how industries respond quarter to quarter, rather than year to year, to recessions and to various stimulus programs and other factors during a recovery.

While annual statistics on GDP by industry can be used to describe the leading contributors to business cycle dynamics over a full recession and recovery period, they are less useful in providing a picture of the dynamic U.S. economy as it is evolving. Annual data aren’t sufficient when trying to fully analyze the response of industries to changes in economic conditions and public policy, and they aren’t sufficient for gauging the economic impact and effectiveness of specific programs.

Quarterly data are not only important for improving our long-term understanding of the national economy, but also for more quickly assessing, monitoring, and adjusting decisions as the economy evolves. These statistics supplement other timely quarterly data—such as employment, wages and salaries, consumer spending, business investment, industrial production, and price statistics—allowing for a more complete analysis of business cycle dynamics and the sources of U.S. economic growth. Quarterly GDP by industry statistics also enhance the existing quarterly national income and product accounts statistics by providing a comprehensive accounting of consumer spending, investment, international trade, and industry performance on a quarterly basis.

BEA’s recently issued prototype of quarterly GDP by industry statistics updated an earlier prototype of estimates for 2007–2009 to include data for 2010–2011. It also presented quarterly estimates for gross output (that is, sales) for the first time. Adding a comprehensive set of statistics on quarterly gross output provides analysts with important information on industry-level performance. For example, coming out of the recession in 2009, GDP for the manufacturing sector grew even faster than total output for the manufacturing industry. That was a sign that productivity at factories had increased over the same period. Gross output also provides an industry breakdown of total sales, regardless of whether or not these sales are part of that industry’s contribution to GDP.

BEA plans to release one more set of prototype quarterly estimates as part of its annual revision of the industry accounts and to begin regularly producing quarterly GDP by industry statistics in 2014. Quarterly GDP by industry statistics would be available within 30 days of BEA’s third release of quarterly GDP. The quarterly data will provide industry by industry detail. As the quality of these statistics improves, BEA plans to expand the industry detail from the current 22 industries to the 65 industries now shown in the published annual statistics.

While progress continues on developing the quarterly GDP by industry statistics, more work remains before they are ready for regular production. In the meantime, BEA welcomes comments on the proposal. They can be emailed to IndustryEconomicAccounts@bea.gov. You can address comments to Carol Moylan, Associate Director for Industry Economic Accounts.