Balancing Supply Use tables THE CONTRACTOR IS ACTING UNDER A FRAMEWORK CONTRACT CONCLUDED WITH THE COMMISSION

Balancing supply-use tables There are two main balances that have to be struck in compiling supply-use tables 1. Supply of products = use of products 2. Value added, the difference between gross industry output less intermediate consumption = sum of compensation of employees and operating surplus (incluing D.29 net taxes) for that industry

Balancing supply-use tables When there are different sources for Compensation of Employees, and operating surplus (profits) Business surveys will collect wages and salaries of employees, and sufficient other information of sales and costs to allow operating surplus to be calculated There will also be industry estimates of income from employment, and corporatte profits, through the tax system

Balancing supply-use tables The common practice is to accept the estimates on Compensation of Employees from business surveys, supplemented by statistics by industry from national insurance schemes For profits, tax records are compared with industry estimates and judgements made on which of the two are most plausible. Accepting the tax story will usually cause a balance change to the estimate of gross output

Balancing supply-use tables The balance between supply and use of products at current and constant prices is achieved by altering components of the supply and use estimates The compilation fo supply use tables at a detailed product level greatly helps the quality of decisions in deciding where to make adjustments

Balancing supply-use tables A special role is played by the margin industries, as this is an area of data uncertainty, and fluctuation from year to year. By altering the margins on goods sold, but maintaining the identity that totoal margins = output of the margin industries, allows small imbalances to be reconciled

Balancing supply-use tables Where large imbalances arise between supply and use, then a project is carried out to make an in-depth study of previous balances, changes in components over time, and general suggestions on how to achieve a balance The results will be studied by the SUT compilation team, and the effects of the balance on other industries measured and presented to national accounts experts for discussion and resolution

Balancing supply-use tables Where does the balance of reliability lie? 1. Business records collected through survey are usuallyb trusted, especially if time serioes are plausible 2. Totals by functional category on the use side are relatively reliable, although product breakdown may be subject to change

Balancing supply-use tables Once new balances are struck, the whole system must be recalculated to generate new estimates of key national accounts aggregates, to consider overall credibility of key emasures These are value added in nominal; terms, GDP growth in volume terms, Balance of payments in nominal terms, government official statistics on tax revenue, and so on