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Latest Developments in the Canadian Economic Accounts
The 2011 to 2013 revisions of the Income and Expenditure Accounts
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Introduction
This article describes the revisions to the Gross Domestic Product by Income and by Expenditure Accounts for the period from 2011 to 2013. These data are released at the same time as the 2013 Provincial and Territorial Economic Accounts estimates, which include revisions to the 2011 and 2012 period.
The first two quarters of 2014 are also revised. However, since these estimates will continue to be revised during upcoming cycles, in accordance with our standard revision practice, they are not included in the analysis presented in this article.
Revision process
Estimates for the Gross Domestic Product by Income and by Expenditure Accounts are subject to three types of revisions. The first type involves incorporating the latest benchmark from the input-output tables. The second type involves incorporating data from the latest annual surveys and administrative data. The third type of revision, which is performed less frequently, refers to the incorporation of new concepts, methods, accounting standards and classification systems.
The 2011 to 2013 revisions to the Gross Domestic Product by Income and by Expenditure Accounts include only the first two types of revisions. In general, these two types of revisions, which are statistical in nature, are carried out annually and impact only the last three years of the time series.
The statistical revisions to gross domestic product (GDP) reflect the incorporation of the most current data sources, including survey results, administrative data, public accounts and the annual input-output tables. These tables incorporate the highest-quality data sources available to Statistics Canada in a rigorous, detailed accounting framework. Consequently, they represent the most detailed, coherent accounting system for the structure of the Canadian economy and are considered the most accurate benchmarks on which to base estimates. In this release, new benchmark values from the input-output tables for the 2011 reference year have been incorporated into the GDP by Income and by Expenditure Accounts. New benchmark information (from annual surveys and administrative data) is also included for the last two years (2012 and 2013).
This article briefly describes and explains the impact of the 2011 to 2013 revisions on annual and quarterly GDP, on both a nominal and a real basis. It also examines the revisions to the various components of GDP by income and by expenditure.
Revisions to the growth of nominal GDP
The revision to the annual growth rate of nominal GDP pushed the rate up slightly by 0.1 percentage points for 2012, while leaving the estimate for 2013 unchanged. However, the largest annual revision in the three-year period was to the 2011 estimate, as the growth of nominal GDP was revised upward by 0.7 percentage points. This is due to the incorporation of new benchmark data from the 2011 input-output tables. More precisely, the revision is mainly due to revised estimates of gross operating surplus which were significantly higher than the previous estimates.
For the period 2011 to 2013, the mean absolute percentage point revision to the annual growth rate in nominal GDP was 0.3 percentage points (see Table 1).
On a quarterly basis, the revisions to the growth rates of nominal GDP resulted in little change relative to the previous estimates, with the exception of the first quarter of 2011. For that particular quarter, the growth rate of nominal GDP was revised upward by 0.5 percentage points, mainly because of the incorporation of new benchmark data from the 2011 input-output tables.
The magnitude of the revisions for the other 11 quarters covered by the revision period ranged between an upward revision of 0.2 percentage points to a downward revision of 0.1 percentage points. These revisions are consistent with historical averages. Overall, there are upward revisions for five quarters, downward revisions for three quarters, and no changes for four quarters. Over the revision period, the quarterly trend remained similar to the trend based on the previously published estimates.
Revisions to the growth of real GDP
The annual growth rate of real GDP was revised upward by 0.5 percentage points for 2011 and by 0.2 percentage points for 2012. For 2013, the annual growth rate of real GDP remained unchanged.
The mean absolute percentage point revision to the annual growth rate in real GDP for the 2011 to 2013 revision period was 0.2 (see Table 2).
Due to changes in the commodity composition, the aggregated chained price indexes were revised upward by 0.2 percentage points for 2011 and downward by 0.2 percentage points for 2012.On the other hand, prices were almost unchanged for 2013 compared with the previously published estimates.
On a quarterly basis, the movement of real GDP between 2011 and 2013 was slightly different from the previously published estimates (see Chart 2).
The quarterly growth rates of real GDP for 2011 were higher than the previous estimates, as the rate was revised upward by 0.3 percentage points for the first quarter, by 0.2 percentage points for the second quarter, and by 0.1 percentage points for each of the last two quarters.
For 2012, the estimates for the four quarters were unchanged.
For 2013, real GDP growth for the first quarter was revised up by 0.1 percentage points, while the estimates for the last three quarters were unchanged.
Overall, the mean absolute percentage point revision to the quarterly growth rate in real GDP for the revision period was 0.1.
Revisions to the level of annual GDP
For the period from 2011 to 2013, the revisions to the GDP by income and by expenditure accounts were mainly attributable to the new input-output benchmarks for the 2011 reference year and to the incorporation of updated source data.
These statistical revisions resulted in an upward movement of the GDP level for the revision period. Overall, the level of nominal GDP was revised upward by $10 billion for 2011, by $11.3 billion for 2012, and by $12.6 billion for 2013, which constitute increases of 0.6%, 0.6% and 0.7% respectively, relative to the previously estimated GDP values.
In each of these three years, substantial revisions were made to various components of GDP. The main contributors were increases in the value of gross operating surplus on the income side and business gross fixed capital formation on the expenditure side, as the input-output tables exploited the detailed information contained in the annual business surveys and the final estimates of the capital repairs and expenditure survey.
Revisions to the components of the GDP by income account
Table 5 shows the impact of revisions to the components of the GDP by income account.
The main source of the revisions for the three years is the revision to the value of gross operating surplus. This value was adjusted upward by $9.6 billion for 2011, by $10.8 billion for 2012, and by $12.9 billion for 2013. These large revisions are mainly due to the new input-output system benchmarks in 2011 and the incorporation of operating surplus estimates for the financial or non-financial corporations sector based on 2012 tax data. The estimate of the consumption of fixed capital for government and non-profit institutions serving households remained unchanged, while the estimate for corporations was revised downward slightly for 2012 and 2013.
Gross mixed income was revised downward by $0.9 billion for 2011, by $2.1 billion for 2012, and by $3.1 billion for 2013. These downward revisions were mainly attributable to the incorporation of new data from the Canada Revenue Agency.
The incorporation of estimates of employee compensation based on tax data for 2011 and 2012 resulted in an upward adjustment of the level of compensation of employees for each of the three revision years. The levels for 2011, 2012 and 2013 were revised upward by $1.4 billion, $2.8 billion and $3 billion respectively.
Revisions to the components of the GDP by expenditure account
Table 6 provides a summary of the revisions to the main components of the GDP by expenditure account. The estimates for household final consumption expenditure were revised slightly downward for 2011 and 2012, and upward for 2013. In each of the three years, expenditure on goods was adjusted downward, and expenditure on services was revised upward.
Government final consumption expenditure was about $1 billion higher than the previously published estimates for each of the three revision years. These revisions reflect new data from the new input-output benchmarks for 2011 and new public accounts data for provincial, territorial and local governments.
Final expenditure of non-profit institutions serving households was revised upward by about $1.3 billion for each of the last three years (2011 to 2013). These revisions reflect new tax benchmarks.
Business gross fixed capital formation was revised upward for every year in the 2011 to 2013 period. The largest revisions were for 2012 (+$8.4 billion) and 2013 (+$10.6 billion). The main factor in these upward revisions was non-residential construction. The revisions reflect final estimates of capital investment data from the input-output tables.
The estimates of government gross fixed capital formation were revised downward for 2011, 2012 and 2013. The revisions were larger for 2012 (-$4.2 billion) and 2013 (-$4.6 billion). These estimates now incorporate new data from the Capital and Repair Expenditures Survey released in February 2014.
The revisions to the estimates of business inventories are up for the three revision years. The largest upward revision was for 2011 (+$5.5 billion). These revisions reflect new data from the Annual Survey of Manufacturing, the Annual Wholesale Trade Survey and the Annual Retail Trade Survey.
Exports of goods and services were revised upward for each of the last three years (2011 to 2013). The revisions were larger for 2012 (+$6.5 billion) and 2013 (+$5.9 billion). Revisions to exports of goods are minimal, while revisions to exports of services are substantial for 2012 and 2013, as data from the annual survey of international trade in services were incorporated into the GDP by expenditure accounts. Exports of services were revised upward by $5.9 billion for 2012 and $6 billion for 2013. These upward revisions are almost entirely due to the revision of exports of commercial services.
Imports of goods and services were revised downward slightly for 2011 and upward for 2012 and 2013. As in the case of exports, the revisions to imports of goods are minor, while the revisions to imports of services are significant for 2012 and 2013. They were revised upward by $4.4 billion for 2012 and $4.6 billion for 2013.
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