The Monthly Integrated Survey of Selected Industries (MISSI) is the product of the integration of the Survey of Key Manufacturing Establishments (SKEM) of the National Statistics Office (NSO) and the Monthly Industrial Survey (MIS) of the Department of Trade and Industry (DTI). This was done to rationalize the different surveys undertaken by these government agencies such that an integrated and consistent statistics on the trend of the country’s manufacturing sector can be monitored. The results of the MISSI were first officially released in 1998 and the responsibility of generating the statistics was assigned to NSO.

The SKEM had its inception in 1981. The survey was designed by the Statistical Coordination Office now the National Statistical Coordination Board or NSCB of the National Economic and Development Authority (NEDA) as part of its coordination function and for monitoring the reaction of the economy to the developmental policies and strategies set by the government. The results of the SKEM were published in the Industry Trends, the first issue of which was released in December 1981 and contains indices on employment, compensation and production.

The groundwork for the transfer of SKEM to NSO started in 1983 but it continued to be implemented by NEDA until April 1986. It was only in May 1986 that the SKEM was officially transferred to NSO.

The primary objective of the MISSI is to provide planners and policy-makers in both government and private sectors timely flash indicators on the performance of growth-oriented industries in the agro-based, metallic mining and manufacturing sectors. This report, however, covers only the manufacturing sector. The survey also envisions to complement the Quarterly Survey of Establishments (QSE) for Manufacturing.

The monthly results of the MISSI are made available as press releases in the NSO website. A semestral publication of the Industry Trends shall likewise be produced to contain updated semestral results of the survey.

Selection of sample establishments was done through an iterative procedure. The initial selection of sample establishments was based on the establishments that were covered in the 1994 Census of Establishments (CE). Given a sector as defined by the industry coverage, the selection criterion applied is the contribution of the establishment to the value of production of the sector, or it’s percentage contribution to the value of production.

In this initial selection procedure, the number of establishments to be selected was determined by selecting CE respondents which together would account for at least 50 percent of the sector’s total production. To operationalize this criterion, the 7,793 samples of the 1994 CE for large manufacturing establishments were ranked according to their percentage contribution to the sector they are classified into. Since the major sectors and subsectors can be further disaggregated in terms of specific industries at the 5-digit PSIC, this factor was also considered in selecting the "top ranking" establishments. This implicit stratification by 5-digit PSIC allows for better industry representation.

The initial SKEM samples then underwent the following evaluation and iteration. The sample was assessed in terms of whether or not it includes relevant firms in the top 1000 which is readily available from Business World wherein data is 1995-based. The samples were also assessed in terms of its coverage of firms operating within the economic zones under PEZA and BCDA. To balance the "at least 50% output" criterion and the need to rationalize the total number of samples in the context of timeliness of collection, the number of sample establishments in sectors for which there are many small contributors was reviewed and trimmed down, as needed. This was especially evident in the textile products and the wearing apparel groups.

Since the list from which the samples were selected was based on 1994 information, it did not consider firms that started operation in 1995-1997. These firms were identified and were subsequently included in the updating of samples.

It may be pointed out that although an enterprise is identified as the sampling unit for the survey, information sought is collected on an establishment basis.

In 2002, the number of sample manufacturing establishments covered in the MISSI was updated in order to make the sample establishments more representative of the industry. This was done by including large establishments listed in the top 1000 corporations but were not previously taken as samples in the 2001 MISSI and deleting those that have ceased operation or were on strike during the previous year. Also deleted from the list were establishments found to be ‘small’ in terms of employment size and those considered as delinquent respondents during the previous survey years.

Different forms have been designed over the years to achieve the objective of generating economic indices on employment, compensation and production. All the forms are of the shuttle type. The shuttle questionnaire approach reduces cost and enhances consistency in reporting since the respondent is provided a running account of all past responses for the year.

When the SKEM and DTI’s Monthly Industrial Survey were integrated in 1998, the questionnaire was also revised. The present MISSI form contains six items of information, as follows:

• (Item I) EMPLOYMENT - This portion asks for data on employment by type of worker.

• (Item II) COMPENSATION - This portion asks for data on salaries and wages by type of worker and employer’s contribution to SSS, MEDICARE and others

• (Item IIIA-C) SALES, PRODUCTION AND INVENTORY BY MAJOR PRODUCT - This portion asks for the monthly value and volume of sales, production and inventory of finished products.

• (Item IV) TOTAL NET SALES/REVENUE – This portion asks for the total value of net sales/revenue reported in Item III-A

• (Item V) INVENTORY OF RAW MATERIALS – This portion asks for the monthly value of inventory of raw materials.

• (Item VI) CAPACITY UTILIZATION – This portion asks for the monthly capacity utilization of the establishment.

Items of information are collected by means of the shuttle questionnaire described in the previous section of which a copy is kept in the file of the respondent establishment. Between the 10^th to the 30^th day of each month after the reference month, a field staff of NSO visits the establishment and copies the data from the establishment’s file to his own copy.

Data supplied by the establishment are then furnished the NSO Central Office (Industry Statistics Division). The subject matter specialists then copy the data to their own copy. Altogether, three copies of the questionnaire for each establishment are prepared: one for the establishment, another for the NSO field staff and the other for subject matter specialists.

Editing and validation of entries in the questionnaire are done manually by subject matter specialists of the Industry Statistics Division of NSO. Indices at the sectoral and selected sub-sector levels as well as the computation of the value relatives are done by the use of microcomputer.

For timeliness of dissemination, preliminary indices are released on a predetermined cut-off date, usually 55 days after the reference month. Reports of non-responding establishments are estimated or imputed based on established imputation procedures and other considerations. The indices are continuously being revised upon receipt of late reports of establishments such that the response rate reach as high as 98% for the final results of the indices. Revision is done by replacing the estimates with the actual values submitted by the establishments and the revised indices are incorporated in the succeeding press releases.

The MISSI indices with 1985 as the base year use weights from the 1983 CE with adjustments made for undercoverage in some sectors. The weight of a sector is equivalent to the production concentration ratio, or the ratio of the total production of the sector to total value of production of the entire manufacturing sector. For the 1994 based series, the weight is based on the production concentration ratio of large manufacturing establishments. Separately, the weights for employment, compensation and production are computed using the formula:

	where:	Vi= value of subsector I under sector t Wi= weight of subsector i Vt = value of sector t
The sum of the sub-sectoral weights (Wi) under each sector is equal to 1.

	where:	Wt = weight of sector t Vt = value of sector t Vm = value of Total Manufacturing
The sum of the sectoral weights (Wt ) for manufacturing is equal to 1.

Initially, the base period for all indices was January 1981. Starting with the 1986 indices, the base year was moved to 1985.

The monthly indices on production, employment and compensation are presented by selected industry groups following the 3-digit (sectoral) and 4-digit (sub-sectoral) level of the 1977 PSIC.

For the 1985-based indices, the industry sectors for food, textile, chemicals, non-metallic mineral products, basic metals and electrical machinery have corresponding sub-sectors while the rest have none.

The procedures used in the computation of the indices are as follows:

1. Sub-Sectoral Level and for Sectors with no corresponding sub-sectors
	where:	VaPIi = sub-sectoral index for current month Vi = total value for currentmonth for all sample establishments in the sub-sector Vo= total average monthly value for base year for all sample establishments in the sub-sector
Later, the formula was modified to allow for changes in the composition of the sample establishments under each sub-sector, as follows:
	where:	VaPIim = sub-sectoral index for current month VaPIim-1 = sub-sectoral index for previous month Vm = total value for current month for all sample establishments in sub-sector Vm-1 = total value for previous month for all sample establishments in sub-sector
2. Sectoral Level with corresponding sub-sectors (Food, Textile, Chemicals,Non-Metallic Mineral Products, Basic Metals, Electrical Machinery
	where:	Ij = sectoral index for current month VaPIi = sub-sectoral index for current month Wi = weight for sub-sector i = 1, 2, 3,…, n = number of sub-sectors
3. Manufacturing
	where:	Ik = manufacturing index for current month Ij = sectoral index for current month Wj = sectoral weight j= 1, 2, 3,...,q = number of sectors

Weighted growth rates are computed to show the changes in the index over two points in time; i.e. month-on-month and year-on-year.

	where:	rm = month-on-month Im = current month index Im-1 = previous month index
	where:	rt = year-on-year growth rate It = current month index It-12= index for same month of previous year

Contribution to overall growth rates is computed to show the relative share of increases/decreases of the major sectors to the total manufacturing sector.

	where:	Cm = contribution to overall month-on-month growth rate rm = month-on-month growth rate wi = weight for each major sector n= major sectors with month-on-month increases/decreases
	where:	Ct = contribution to overall year-on-year growth rate rt = year-on-year growth rate wi = weight for each major sector n = major sectors with year-on-year increases/decreases

Enterprise – refers to an economic unit consisting of one or more establishments under a single ownership or control. It may be a single legal entity such as a corporation, partnership, single proprietorship or a complex family of legal entities under common ownership or control. The enterprise owns and manages the property of the organization; enters into contracts; receives and disposes all of its income; and maintains independent profit-and-loss and balance sheet accounts and other records.

Establishment – is an economic unit, which engages, under a single ownership or control, i.e. under a single legal entity, in one or predominantly one kind of economic activity at a fixed single physical location.

Major Products Produced and/or Services Rendered – refers to the principal economic activity the establishment is engaged in. The description of goods produced and services rendered conform to the economic activity as defined in the 1977 PSIC.

Employment – refers to all person who works in or for the establishment during the pay periods nearest the 15^th of each month, including paid employees and working owners and unpaid workers.

Total Compensation – includes wages and salaries before deductions for employees’ social security, withholding taxes, etc and employer’s contribution to SSS/GSIS, MEDICARE and others.

Value of Production – refers to the value of all goods produced during the reference month and valued at producer’s price, that is, at the establishment price charged to the customer. The valuation includes all duties and taxes, which fall on products when they leave the establishment (ex-plant).

Other Income – refers to income from activities other than those reported under principal activities such as sale of scrap or by-product; rental of equipment/machinery, buildings: dividend income; industrial or non-industrial services.

Capacity Utilization – is the ratio of output to the maximum rated capacity.

Rated Capacity – refers to the largest volume of output possible at which the factory can operate with an acceptable degree of efficiency taking into consideration unavoidable losses of productive time (i.e. vacations, holidays and repairs to equipment) and availability of raw materials.

The Producer’s Price Index (1992=100) for Manufacturing is a result of the project "Improvement of the Producer’s Price Index of Selected Manufactured Products" through the Grants-in-aid Program of the National Statistical Coordination Board (NSCB).

Studies on the generation of the Producer’s Price Index (PPI) started in 1980 when the Index of Physical Volume of Production series prepared by the Central Bank was discontinued. This came about because of the transfer of responsibility of operations and processing of the Monthly Survey of Establishments (MSE) for manufacturing from the Central Bank to the National Statistics Office (NSO).

Work on the original PPI started with 1978 as the base year which was later revised to 1985. Since it was felt that the components of the PPI were no longer reflective of the prevailing production structure of the manufacturing sector, the PPI operations were halted.

From 1992 to 1993, the NSO with guidance from the Technical Committee on Price Statistics, NSCB made studies for improvements in the system of the PPI to make it more reflective of the actual situation of the industry.

The Producer’s Price Index (PPI) for Manufacturing is a composite figure of producer’s prices of representative commodities included in the market basket.

The PPI serves various purposes, the most important of which are the following:

a. measures monthly or yearly changes in the producer’s price of key commodities in the manufacturing sector,
b. serves as a deflator to Value of Production Index (VaPI) in the estimation of the Volume of Production Index (VoPI), and
c. serves as deflator in the estimation of manufacturing production in real terms (at constant prices) in the system of national accounts.

The weights used for the computation of the 2000 PPI were based on production concentration ratio from the 1995 Annual Survey of Establishments (ASE) for manufacturing.

Since the PPI is of the Paasche-type, the weights are continuously revised upon availability of the latest data from the ASE or CE. The revision of the weights should, however, be instituted only at the beginning of each year (starting January) and shall be used for the entire year.

For 2002, the PPI market basket consists of 456 commodities which are produced by manufacturing establishments in the country. Classification of these commodities is by industry group (4-digit PSIC)

1. Criteria for Selection of Commodities and Sample Establishments

The major criteria adopted in the initial selection of commodities for the market basket are as follows:

a. the commodity has relatively high market share
b. the commodity was available in the market in 1992, this being the base year
c. the commodity is being produced currently, and
d. the market share of the commodity has been stable for the last three (3) years based on the ASE reports.

In the same manner, criteria were also set for the selection of establishments, as follows:

a. establishment has an ATE of 50 and over
b establishment has relatively high concentration ratio
c. establishment is good respondent in past and current surveys of NSO; that is, it submits prompt reports and provides quality data, and
d. preferably, the establishment is a sample of the MISSI.

The year 1992 was selected as the base year for which the average monthly producer’s prices of commodities were based.

Producer’s prices of commodities are obtained from the Producer’s Price Survey which is conducted monthly by the NSO. For the year 2002, the survey covers 221 manufacturing establishments nationwide.

A shuttle type questionnaire is used in the survey. This approach reduces cost and enhances consistency and accuracy in reporting since the respondent establishment is provided with a running account of all past responses for the year.

The following items of data, appearing in the questionnaire, are gathered from the respondent establishment:

ΠName of product/s

 Brand Name

Ž Product Specification

 Unit of Measure

 Producer’s price/s of selected product/s

Distribution of the questionnaires is done only once at the start of each year by NSO field personnel. On or before the 15^th day after the reference month, the NSO field staff visits the sample establishments and copies the producer’s prices of commodities from the establishment’s file to his own copy.

Editing and validation of data of producer’s prices of commodities are done manually. Computation of the price relatives and indices at the industry and major industry group are done by the use of microcomputer.

For timeliness of dissemination, preliminary indices are generated on a pre-determined cut-off date, usually (six) 6 weeks after the reference month. Data of non-responding establishments are estimated or imputed based on past responses. The indices are continuously being revised upon receipt of late reports of establishments. This process stops only when the collection rate has reached 95 and over percent for a particular month.

The procedures used in the computation of the Producer’s Price Index are as follows:

1. The industry group level (4-digit PSIC)

The PPI at the 4-digit PSIC is simply the unweighted arithmetic mean of the price relatives of the commodities representing the industry and multiplied by 100.

where:

PRij = current month PPI at the ith industry group (4-digit) of the jth major industry group (3-digit) p1h = current month producer’s price of commodity h p0h = average monthly produce’s price at base year of commodity h N = total number of representative commodities at ith industry group n = 1, 2, 3, …, N

The formula for PPI_ij can be modified such as that the average monthly price relative of the commodities in the industry is multiplied by the previous month PPI at the 4-digit PSIC to obtain the current month PPI. That is,

where:

PPIijm = current month PPI PPIijm-1 = previous month PPI = average price relative of commodities phm = current month producer’s price of commodity h phm-1 = previous month producer’s price of commodity h

The latter formula is especially useful when new commodities enter into market basket as replacements/additions. The base year prices of these commodities need not be obtained as the alternative then is to make available the previous month producer prices of the new commodities to permit the computation of the price relative, p_hm / p_hm-1.

2. The industry group and division levels (3-digit and 1-digit PSIC)

The Producer’s Price Index for manufacturing at the 3 and 1 digit PSIC is obtained as the weighted harmonic mean of the component price indices.

	where:	Ij = PPI at the jth major industry group (3-digit) wij = weight of the ith industry group PPIij = PPI of the ith industry of the jth major industry group i = 1,2,3,…,p = number of industry groups at the jth major industry group
	where:	Ik = PPI for manufacturing (1-digit) wj = weight of the jth major industry Ij = PPI at the jth major industry j = 1, 2, 3, …, q = number of major industry groups

Growth rates are computed to show the changes in the index over two points in time, i.e. month-on-month and year-on-year.

	where:	rm = month-on-month growth rate Im = current month index Im-1 = previous month index
	where:	rt = year- on-year growth rate It = current month index It-12 = index for same month of previous year

Contributions to overall growth rates are computed to show the relative share of increases/decreases of the major sectors to the total manufacturing sector.

	where:	Cm = contribution to overall month-on-month growth rate rm = month-on-month growth rate wi = weight for each major sector n = major sectors with month-on-month increases/decreases
	where:	Ct = contribution to overall year-on-year growth rate rt = year-on-year growth rate wi = weight for each major sector i = major sectors with year-on-year increases/decreases

The users of data are advised to be particularly cautious in interpreting and analyzing the PPI results. A careful understanding of the methodology and concepts used is necessary to avoid undue misinterpretation of the data.

The PPI is a Paasche-type index, that is, weights used in the computation are revised yearly by making use of the latest available results. For the 2000 PPI, weights utilized are from the 1995 ASE.

Base year is the year chosen as reference on which the movement in prices of the current year to movement in the previous years are compared and at which the index is taken is equal to 100.

Commodities are goods normally intended for sale in the market at a price that is designed to cover the cost of production.

Market Basket for the PPI refers to sample commodities produced by the manufacturing establishments.

Paasche Index is an index number using weights, usually of the current period.

Price relative is the ratio of current price to the base year.

Producer’s price is the unit price (ex-plant) of the commodity as it leaves the establishment of the producer. It includes any indirect tax or subsidy levied/received on the commodity before it leaves the establishment.

Value of products sold refers to value of products sold (sales and inter-plant transfers), whether paid in cash or receivables by the establishments.

1. Shifting of base year from 1985 to 1992 for Value of Production Index

The Volume of Production Index (VoPI) is derived from Value of Production Index (VaPI) and Producer’s Price Index (PPI) with 1992 as the base year. It is important that the VaPI and PPI should have the same base year. The VaPI figures were shifted to the 1992 base year by dividing the current month index at 1985 base by the average index for 1992 (same base year) and multiplied by 100.

where:

VaPIi(1992=100 = current month index with 1992 as the base year VaPIi(1985=100) = current month index with 1985 as the base year VaPIave92(1985=100) = 1992 average VaPI

2. Computation of Volume of Production Index (1992=100)

The monthly indices on volume of production are presented by industry major groups following the 3-digit (sectoral) level of the 1977 PSIC.

The formula used in the computation of indices is shown below:

where:

VoPIi = current month index on volume of production VaPIi = current month index on value of production PPIi = current month index on producer’s price

3. Computation of Growth Rates

Growth rates are computed to show the changes in the index over two points in time; i.e. month-on-month and year-on-year.

	where:	rm = month-on-month growth rate Im = current month index Im-1 = previous month index
	where:	rt = year-on-year growth rate It = current month index It-12 = index for same month of previous year

4. Computation of Contribution to Overall Growth Rates

Contribution to overall growth rates are computed to show the relative share of increases/decreases of the major sectors to the total manufacturing sector.

	where:	Cm = contribution to overall month-on-month growth rate rm = unweighted month-on-month growth rate wi = weights for each major sector n = major sectors with month-on-month increases/decreases
	where:	Ct = contribution to overall year-on-year growth rate rt = unweighted year-on-year growth rate wi = weights for each major sector n = major sectors with year-on-year increases/decreases

Net sales is the volume and value of shipments sales of products manufactured by the establishments whether or not they were produced during the reference month. Interplant transfer and goods transferred from one establishment to another of the same enterprise are valued as though sold. Valuation of goods shipped is at ex-establishment price (including indirect taxes) and net of discounts, allowances and returned goods.

Unweighted growth rates are computed to show the changes over two points in time, i.e. month-on-month and year-on-year.

	where:	rm = unweighted month-on-month growth rate Vm = value/volume of current month Vm-1 = value/volume of previous month
	where:	rt = unweighted year-on-year growth rate Vt = value/volume of current year Vt-12 = value/volume of same month of previous year

Contribution to overall growth rates is computed to show the relative share of increases/decreases of the major sectors to the total manufacturing sector.

	where:	Cm = contribution to overall month-on-month growth rate rm = unweighted month-on-month growth rate wi = weights for each major sector n = major sectors with month-on-month increases/decreases i = 1, 2, 3, …, n
	where:	Ct = contribution to overall year-on-year growth rate rt = unweighted year-on-year growth rate wi = weight for each major sector n = major sectors with year-on-year increases/decreases i = 1, 2, 3, …, n

In compliance with the NSCB Resolution No. 6, series of 1994 to synchronize base year of indices to 1994, the NSO has come up with the 1994 rebased VaPI, VoPI and PPI. The main objective of rebasing is to update the base year to a more current year. Specifically, it is aimed to update the industry coverage to be reflective of current structures of the manufacturing sector and update the sample establishments to include the major trend-setters of the industry.

The Value of Production Index (VaPI) was rebased from 1985 to 1994 while the Volume of Production Index (VoPI) was rebased from 1992 to 1994. The earliest available 1994-based series of the indices are for 1998.

While the 1994-based series retained the sectors of the 1985-based series, additional major sectors were included, namely:

• leather products
• footwear (merged with wearing apparel)
• printing and publishing
• machinery excluding electrical
• fabricated metals.

The bases for including the industries in the coverage were primarily their classification as emerging or sunrise industries and their being the industries producing the export winners of the country.

Another feature of the 1994-based series was the addition of subsectors to the petrochemical and wood and wood products industries.

The 1994-based PPI for the 2002 series, on the other hand, use weights based on the production concentration ratio of manufacturing establishments from the 1998 Annual Survey of Establishments.