Data Sources
For each industry an index is created representing the volume of Gross Value Added (GVA) created by that industry over time.
It can be difficult to get value added figures on a quarterly basis so proxy indicators are used where value added data are not available. Examples of proxies used include: deflated turnover, deflated production, the volume of a good or service sold or produced and, for the public sector, a number of direct measures of output (e.g. Number of pupils adjusted by attendence and attainment) and for some public services, employee numbers.
These data come from a range of sources including monthly and quarterly turnover inquiries carried out by the Office for National Statistics; published data sources (e.g. on employment levels or activity levels in certain industries); and data received directly from companies and other organisations.
Methodology
The index for each industry represents the volume of GVA created by that industry compared to the 'base' year (currently 2004). Figures are deflated to remove the effect of price changes over time to produce an estimate of real terms (or constant price) growth in that industry. The figures are seasonally adjusted to remove the effect of seasonality in certain industries.
The GVA indices for individual industries are then aggregated to form an overall index of GVA (or GDP at basic prices) for Scotland. From February 2004, a new methodology was adopted for aggregating industries to form the estimate for total Scottish GDP. Annual Chainlinking - a method of annually weighted and chained estimates of volume measures - was recommended by the System of National Accounts 1993 (SNA 1993).
The main change introduced by the chainlinking methodology is that where the previous fixed base methodology involved weighting industries together based on their contribution to GDP in the based year (latterly 1995), now weights are recalculated every year, rebasing to the latest year for which weights are available (currently 2004) and linking on the fourth quarter of each year.
As proxy indicators are used in many industries to represent change in the volume of value added, under the previous methodology the movement of these proxy measures may have related less closely to changes in value added due to efficiency and price changes. For example, if prices in a particular industry fall over time (e.g. in electronics), despite high growth in the volume of output (as measured by the GDP index), the industry's relative value can decrease, and hence the weight will fall. However, with the chainlinking methodology this issue is less significant as the weights are updated every year and therefore the chainlinked index provides a more accurate representation of economic growth.
For more detail on chainlinking and its effects on GDP estimates, refer to the article "Annual Chain-linking of the Scottish GDP Index" published in Scottish Economic Statistics 2004.
Industry Classification
The quarterly GDP estimate is aggregated from indices for over 300 separate industries.
The indices published on this site are grouped according to the 2003 revised Standard Industrial Classification (SIC 2003). The four broad groupings of industries are:
(a) agriculture, hunting, forestry and fishing
(b) production
which comprises: mining and quarrying industries; energy and water supply; and manufacturing, which includes: refined petroleum products and nuclear fuel; chemical and man-made fibres; metal and metal products; engineering and allied industries; food, drink and tobacco industries; textiles, footwear, leather and clothing; other manufacturing.
(c) construction
(d) services
which includes: retail and wholesale; hotels and catering; transport, storage and communication; financial services; real estate and business services; public administration, education and health; other services.
Revisions
The figures in the latest publication incorporate revisions to previously published estimates. Tables 8 - 13 identify the extent of revisions since the last publication in January 2008. Revisions are shown to one decimal place for total GVA and GVA excluding oil & gas. Revisions are shown to zero decimal places for all other sectors.
The series most affected by revisions this quarter are:
- Other services - due to revisions to company level data for a small number of companies and receipt of revised data from the Office for National Statistics;
- Real Estate and Business Services - due to receipt of revised data for real estate activities and some revisions to company-level data within business services;
- Electricity gas and water supply - due to revisions to seasonal adjustment factors.
A number of other series are affected by revisions to a lesser extent. These are mainly due to revisions to input data, deflators and seasonal adjustment factors.
Financial Services Adjustment
An index for the financial services adjustment is shown in Table 3. The output of many financial intermediation services is paid for not by charges, but by an interest rate differential i.e. the difference between interest rates offered to borrowers and investors. The value added of these industries is shown including their interest receipts less payments, in effect imputing charges for their services. However, GDP in total takes no account of this, and an adjustment is necessary to reconcile the two.