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PRODUCTION – SNA

Statistics Directorate    
French Equivalent: Production - SCN

Definition:
Production is an activity carried out under the control and responsibility of an institutional unit that uses inputs of labour, capital, and goods and services to produce outputs of goods or services. There must be an institutional unit that assumes responsibility for the process and owns any goods produced as outputs or is entitled to be paid, or otherwise compensated, for the services provided. A purely natural process without any human involvement or direction is not production in an economic sense.

Context:
Production indices are normally compiled at monthly or quarterly frequency to measure increases and decreases in production output. Indices of industrial production that are compiled in all OECD Member countries which are used as a main short-term economic indicator in their own right because of the impact that fluctuations in the level of industrial activity have on the remainder of the economy. The availability of such indices on a monthly basis and the strong relationship between changes in the level of industrial production and economic cyclical behaviour facilitates the use of production indices as a reference series in the compilation of cyclical or leading indicators in a number of countries and by the OECD.

The Eurostat Manual of Business Statistics identifies two possible meanings for the concept of “production” in the context of manufacturing, the:

- activity of manufacturing, i.e. the transforming of goods; or

- result of this activity, i.e. the output of manufactured goods in a fixed period.

The sub-aggregates indices of industrial production compiled by the OECD reflect these dual meanings. Most countries compile their sub-aggregate indices both on an activity basis (e.g. manufacturing, mining, electricity gas and water) or by type of end-use of the output (e.g. finished investment goods, finished consumer durable goods, finished consumer non-durable goods, finished intermediate goods). The problem of identifying the “outputs” for many service activities has resulted in the adoption of turnover as a proxy measure of output for services.
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Source Publication:
SNA (SNA 6.15 [1.20 5.4, 6.6].

Cross References:
Output
Production – ESA/NACE
Turnover

Hyperlink:
http://esa.un.org/unsd/sna1993/introduction.asp

Version Indicator: SNA

Statistical Theme: National accounts

Created on Tuesday, September 25, 2001

Last updated on Friday, July 19, 2002