The earliest version of the MISSI is the SKEM (Survey of Key Enterprises in Manufacturing), which had its inception in 1981 as a project of the National Accounts Staff of National Economic and Development Authority (NEDA). Initially, indicators/indices generated by the SKEM had 1981 as the base period. In 1986, the responsibility for the SKEM was transferred to the Economic Census Division of the National Census and Statistics Office (now the National Statistics Office-NSO). At NSO, the management of the survey was transferred from one different divisions to another when sometime in early 1988 the SKEM was reassigned to the Manufacturing Division. Work on the rebasing the MISSI series to 1985 was completed during this period. The 1986 index series was the first to have 1985 as the base year.

With the restructuring of the NSO in 1997, responsibility of the SKEM was again transferred to the newly created Economic Indices and Indicators Division (EIID). Under its leadership, arrangement for the integration of the SKEM and Department of Trade and Industry’s Monthly Industrial Survey (MIS) materialized. The new survey was thus called MISSI and expanded to include additional information on inventory, capacity utilization, etc. Work on the rebasing of the MISSI indicators to 1994 base year also started, but was completed at a few years after.

It was later felt that to effectively monitor the performance of the manufacturing industries, the samples for the Annual Survey of Establishments (ASE) and MISSI for the manufacturing sector be managed by one statistical group. Management again decided in 2001 to return the MISSI to the Industry Statistics Division (Manufacturing Section), which handles the ASE for manufacturing. In that same year, the rebased MISSI series with 1994 as the base year was officially released.

The release of the 1985-based series continued on until December 2001 and was permanently discontinued in 2002.

True to the objectives of the SKEM, the MISSI continues to regularly provide timely flash indicators that monitor the performance of growth- oriented industries in the manufacturing sector.

The MISSI is a non-probability sample survey of manufacturing establishments. Selection of sample units for this survey is done purposively so as to include only the large establishments or the so-called industry leaders.

The survey is conducted monthly nationwide using a shuttle questionnaire that provides the respondents with a running account of the previous months’ data for one year.

For the year 2004, the survey covered some 521sample establishments, of which about 62 percent were located in Metro-Manila.

The 1994 rebasing of the MISSI involves the following activities:

• Determination of the sector coverage
  
• Section of sample establishments under each sector and sub-sector
  
• Computation of sector and sub-sector weights.

1.4.1 Sector Coverage

There are 20 major sector groupings in the 1994 rebased MISSI, and eight (8) of these are presented by sub-sectors, totaling 34 sub-sectors.

These industry groupings were so selected in conformance to the National Income Accounts groupings. Data on total value of products sold of large manufacturing establishments (average total employment of 10 and over) were used to compute the concentration ratio of each sector/sub-sector. Data on value of products sold were based on the results of the 1994 Census of Establishments (CE).

1.4.2 Selection of Samples

The procedures followed in the selection of samples were as follows:

• Establishments in each sector/sub-sector were ranked from highest to lowest according to their contribution to value of products sold, based on the 1994 CE results.

• Establishments that accounted for at least 50 percent of the sector/sub-sector’s value of products sold were selected as samples in each sector/sub-sector.

• For those industries where there are many small contributors like textile and wearing apparel, the number of samples was trimmed so as to make the total number of samples manageable.

• To assure complete coverage of the large establishments, the list of samples was compared with list of top corporations and those firms not included in the list of selected samples were automatically included as samples.

Refer to Table 7 for number of samples for the years 2001 to 2004.

1.4.3  Sector/Sub-sector Weights

The weight of each sector/sub-sector is equivalent to the proportion of that sector/sub-sector’s contribution to value of production of the major sector/sector where it belongs. Data of value of production were derived from the results of the 1994 CE for manufacturing. Thus, weight (Wi) of sub-sector (i) is computed as follows:

The number of sample manufacturing establishments covered in the MISSI are updated at the start of each survey year in order to make the sample establishments more representative of the industry. This is done by including large establishments that were not previously taken as samples but found in the latest available NSO List of Establishments (LE). Other secondary sources include the list of top 1000 corporations, among others. The lists of ASPBI and QSPBI samples are also sources of obtaining the list of new samples and/or replacements. The basis for replacement or inclusion as new samples is the similarity in industrial activity.

Those sample establishments that have ceased operation and were strike during the previous year’s survey were deleted from the survey. Also deleted from the list were establishments found to be ‘small’ in terms of employment size and those considered as entirely delinquent respondents.

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.

The questionnaire is a shuttle type and contains the establishment information for all months of the year. Items of information collected from the establishments include the following:

• Employment by type
  
• Compensation by type
  
• Production value
  
• Net sales value
  
• Finished goods inventory
  
• Capacity utilization

Since some of the MISSI samples are also samples in the quarterly survey or QSPBI, the items on employment, compensation and net sales are included in the MISSI questionnaire to suit the requirements of the QSPBI.

Each month, the Statistical Researcher visits the establishments bringing with him a copy of the MISSI questionnaire and copies the data appearing in the establishments’ copy of the questionnaire.

From the items of data collected in the questionnaire, the following are the indicators derived for the MISSI:

• Value of Production Index (VaPI), yearly and monthly growth rates
  
• Volume of Production Index (VoPI), yearly and monthly growth rates
  
• Yearly and monthly growth rate of Value of Net sales
  
• Yearly and monthly growth rate of Volume of Net sales
  
• Capacity Utilization.

1.8.1. Methodology for the Computation of VaPI

Initially, the base period for all indices was January 1981. Starting with the 1986 indices, the base year was moved to 1985. The latest series of the indices have been adjusted to 1994 as the base year, having the 1998 indices as its earliest series.

The monthly indices on production are presented by selected industry groups following the 3-digit (sectoral) and 4-digit (sub-sectoral) levels of the 1994 PSIC.

Of the 20 major sectors in MISSI, eight (8) industry sectors, namely, food, textile, wood and wood products, chemicals, petroleum products, 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:

Sub-Sectoral Level and for Sectors with no corresponding sub-sectors

1.8.2. Computation of Sector Growth Rates for VaPI

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.

1.8.3. Methodology for Computation of VOPI

The VoPI for each industry group is derived indirectly by dividing VaPI by PPI, that is, VoPI = VaPI / PPI x 100. The VoPI for total manufacturing is derived as the weighted VoPI for all industry groups. Refer to Section 2.11 for PPI methodology.

1.8.4. Capacity Utilization Rate

Average Capacity utilization rate (CUj) by sector is obtained by the following formula:

Average capacity utilization rate for total manufacturing (C.U.k) is obtained by:

Imputation of missing values in a particular month is resorted to only for cases of non-responses. Data for these non-responding samples are estimated based on established imputation methods, i.e. historical imputation (with or without trend adjustment), etc. Establishments that are reported as on strike, temporarily out of business, or stopped operation are given zero production values for the month/s reported, when verified to be so.

Preliminary results of the MISSI are made available 55 days after each reference month at the NSO website: http://www.census.gov.ph. Copies of the data series are also available in floppy disks, CDs or in printed copies upon request. Revisions to the preliminary figures are reflected in the succeeding monthly issue.

The following policies on the revision of the monthly data series are being adopted as follows:

• Preliminary data for a particular month are released 55 days after the reference month as press release at the NSO website. Reports of establishments not received by NSO on this date are estimated based on established imputation methods. Revisions to the preliminary estimates are done upon receipt of actual reports.

• The 1st revision of the data is reflected on the succeeding monthly issue of the press release. The particular month’s response rate for the 1st revision is relatively higher.

• The 2nd revision is again reflected in the next monthly issue of the press release, after that of the 1st revision. In many cases, the 2nd revision gives the final data and its difference from the 1st revision is insignificantly minimal, if none at all.

The National Statistics Office generates the monthly Producer’s Price Index (PPI) for Manufacturing simultaneously with other indicators generated from the MISSI such as the Value of Production Index (VaPI), Volume of Production Index (VoPI), capacity utilization rate, among others, to better measure the performance of the industry.

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 then Central Bank of the Philippines (now the Bangko Sentral ng Pilipinas) 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 Census and Statistics Office (now 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.

The compilation of the PPI with 1992 as the base year was revived in a 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). From 1992 to 1993, the NSO with guidance from the Technical Committee on Price Statistics of NSCB worked for further improvements to the PPI to make it more reflective of the actual situation of the industry. Later in 2001, the office released the rebased series of PPI with 1994 as the new base year.

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. to measure monthly or yearly changes in the producer’s price of key commodities in the manufacturing sector
b. to serve as deflator to Value of Production Index (VaPI) in the estimation of the Volume of Production Index (VoPI), and
c. to serve 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 2004 PPI were based on Value of Production from the 2000 Census of Philippine Business and Industry for Manufacturing (reference year 1999).

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

The PPI market basket consists of selected representative commodities which are produced by sample (large) manufacturing establishments in the country. Classification of these commodities is by industry group (4-digit PSIC).

2.4.1. 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 1994, this being the base year
c. the commodity is currently being produced, and
d. the market share of the commodity has been stable for the last three (3) years.

The number of sample commodities covered in the PPI are updated at the start of each survey year in order to make the commodities more representative of the industry. This is done by including new commodities not previously in the market basket and deleting those whose manufacturers have ceased operation or were on strike during the previous year. Also deleted from the list are commodities whose manufacturers are considered as delinquent respondents during the previous survey year.

The latest series of the PPI has 1994 as the new base year in which the average monthly producer’s prices of commodities are based.

The earlier series had 1992 as the base year and was continued until December 2001, then permanently discontinued in 2002.

A Producer’s Price Survey (PPS) is conducted monthly by the NSO to collect monthly producer’s prices of sample commodities. For the year 2004, the survey covered 551 sample commodities produced by 237 manufacturing establishments nationwide.

A shuttle type questionnaire is used to collect data on producer’s prices of commodities. This approach reduces cost and enhances consistency and accuracy in reporting since the respondent establishment is provided with a running account of all monthly responses for the year.

The following items of data, appearing in the questionnaire shown in Attachment 1, are gathered from the respondent establishment:

• Name of Product/s
  
• Brand Name
  
• Product Specification
  
• Unit of Measure
  
• Producer’s Price/s of Selected Product/s

Distribution of the PPS questionnaires, as well as the MISSI questionnaires, to sample respondents is done only once at the start of each year by NSO field personnel. Between the 10th to the 30th day of each month after the reference month, a field staff of NSO visits the sample establishments and copies the data from the establishments’ file to his own copy.

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

Editing and validation of producer’s price data of commodities are done manually. Computation of the price relatives and indices at the industry class and industry group (4-digit and 3-digit 1994 PSIC) are computer generated.

For timeliness of dissemination, preliminary indices are generated on a pre-determined cut-off date, usually (eight) 8 weeks after the reference month. Data of non-responding establishments are estimated based on established imputation methods, i.e. historical imputation. The imputed figures are revised upon receipt of late reports of establishments. In many instances, the final data corresponds to a collection rate of over 95 percent.

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

The industry class 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 class and multiplied by 100.

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

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 allow the computation of the price relative, p_hm / p_hm-1.

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.

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.

Computation of Contribution to Overall Growth Rates

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

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.

Base year is the year chosen as reference on which the movement in values of the current year is compared and at which the index is taken to be 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 the list of sample commodities produced by the manufacturing establishments.

Laspeyre's Index is an index number using weights of the base period.

Paasche's Index Index is an index number using weights of the current period.

Price relative is the ratio of price during current period to the price during base period.

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.

Net sales/revenue refers to the value of shipments of products manufactured by the establishment, net of discounts, allowances and returned goods. Inter-plant transfer and goods transferred from one establishment to another establishment are valued as though sold.

Value of Production refers to the value of products manufactured. Valuation is at producer’s price, that is, the establishment price charged to the customer. It includes all duties and taxes on the products when they leave the establishment.

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. vacation, holiday and repair to equipment) and availability of raw materials.