Technical Notes:

A. COVERAGE OF INDICES
The quarterly indices are being compiled for the different sectors, which are as follows:
1. Production indices
a. Agriculture, Fishery and Forestry
b. Mining and Quarrying
c. Electricity and Water
2. Production per worker indices
a.   Mining and Quarrying
b.   Electricity and Water            
3. Gross revenue indices
a. Manufacturing
b. Trade
c. Transportation and Communication
d. Finance
e. Real Estate
f. Private Services
4. Employment indices
a. Mining and Quarrying
b. Manufacturing
c. Electricity and Water
d. Trade
e. Transportation and Communication
f. Finance
g. Real Estate
h. Private Services
5. Compensation indices
a. Mining and Quarrying
b. Manufacturing
c. Electricity and Water
d. Trade
e. Transportation and Communication
f. Finance
g. Real Estate
h. Private Services
6. Compensation per employee indices
a. Mining and Quarrying
b. Manufacturing
c. Construction*
d. Electricity and Water
e. Trade
f. Transportation and Communication
g. Finance
h. Real Estate
i. Private Services
 
Table 1 summarizes the types of indices and the different sectors covered.
 
B. LIMITATIONS OF THE QEI:
The sectoral indices are computed based on data from the Quarterly Survey of Philippine Business and Industry and reports from various administrative and regulatory agencies with 1978 as base year.  While quarterly data are available on a sectoral basis, not all data items are generated.  Hence, indices on production are estimated only for agriculture, mining and quarrying and electricity and water, while the indices on gross revenue, employment and compensation are computed for all sectors of industry and services, except for construction.  For the latter, only the indices on compensation per employee are obtained. 
 
C. REVISION POLICY
As a matter of policy, revisions on the estimates for the immediately preceding quarter are undertaken quarterly while revisions for earlier quarters, if any, are made only during the first quarter round of estimates.
 
D. SCOPE AND COVERAGE
The sectoral classification for the compilation of the quarterly indices follows the classification of the National Accounts and represents the industry groupings based on the Philippine Standard Industrial Classification (PSIC).  The following sections present the scope and coverage of the industries, the data sources for the estimation of the quarterly indices as well as the type of indices generated for each sector
1. Agriculture, Fishery, and Forestry
Agriculture includes the production of all agricultural crops such as palay, corn, coconut, sugarcane, banana, and the raising of livestock and poultry including the production of milk and eggs. Services provided to agriculture on a fee or contract basis such as veterinary services, the operation of irrigation systems, and pest control are also included in this subsector.
Fishery covers fishing, fish culture, and the gathering of other marine products such as reptile skins, seaweeds, shells, and sponges. 
Forestry includes logging and the gathering of minor forest products such as firewood, bamboos, etc. and the burning of charcoal in the forest.
For this sector, production indices are estimated for total agriculture, fishery, and forestry; total agricultural crops; palay; corn; coconut; banana; sugarcane; other crops; livestock and poultry; fishery and forestry. 
2. Mining and Quarrying
Mining and quarrying covers the production of all metallic and non-metallic minerals by extraction from nature and its related processes.  Underground and surface mines, quarries and wells and all supplemental activities for beneficiating ores and other crude materials for marketing ores are included.
The indices of production, production per worker, employment, compensation and compensation per employee are compiled for total mining and quarrying, total metallics with indices for the subsectors of gold, copper, nickel, chromium, and other metallic and total non-metallics with indices for the subsectors of coal, stone, clay and sandpits, and other non-metallics.   
3. Manufacturing
Manufacturing is the mechanical or chemical transformation of organic or inorganic substances into new products, whether the work is performed by power driven machines or by hand, whether it is done in a factory or in the worker’s home and whether the products are sold at wholesale or retail.  Activities carried out in connection with the main manufacturing activity such as the production of goods in their workshops, the operation of cafeterias or bakeries, the printing of books, pamphlets and postcards and minor own-account construction are also accounted for in the sector.
Quarterly indices on gross revenue, employment, compensation, and compensation per employee are estimated for total manufacturing sector and for its major subsectors namely: food, beverage, tobacco, textile, footwear and wearing apparel, wood and cork products, furniture and fixtures, paper and paper products, publishing and printing, leather and leather products, rubber products, chemical and chemical products, products of petroleum and coal, non-metallic mineral products, basic metal industries (such as ferrous metals, metals and non-ferrous metals), machines except electrical, electrical machineries (such as  microcircuits, household appliances, batteries, lamps, wires), transport equipment, and miscellaneous manufactures.
4. Construction
Construction, as an industry, covers the activities of putting up of buildings and structures and other land improvements.  It may also undertake other related projects as its secondary activities such as the provision of technical and engineering services as well as the manufacture and trading of construction materials. 
Only the quarterly index on compensation per employee or average earnings is estimated for the total construction sector.
5. Electricity and Water
Electricity and water covers the generation, transmission and distribution of electricity to households, industrial and commercial users as well as the collection, purification and distribution of water.
For the sector, quarterly indices on production, production per worker, employment, compensation, and compensation per employee are estimated separately for electricity subsector and the water subsector.
6. Transportation and Communication
Transport services consist of the transport of passenger and freight by land, water and air including transport related operation like the operation of toll roads, terminal facilities, piers, airports and the like.  It also covers services incidental to transport.  Communication includes mail express service, telephone, radio and related services.
The indices for gross revenue, employment, compensation, and compensation per employee are compiled for total transport and communication sector. The same computations are also done for the major subsectors of transportation, which include: land, water and air.
7. Wholesale and Retail Trade
Trading pertains to the services provided by production units engaged in buying and reselling of goods, without transformation, either in bulk as in wholesaling, or in small quantities as in retailing.
The quarterly indices for gross revenue, employment, compensation, and compensation per employee are estimated for the aggregate wholesale and retail trade.
8. Finance
Finance sector covers the activities of financial institutions such as banks, nonbanks and insurance companies.  Banks include commercial banks, savings and mortgage banks, private development banks, stock savings and loan associations and specialized government banks.  Nonbanks include financing companies, fund managers, investment houses, investment companies, security dealers, security brokers, venture capital corporations, mutual building and loan associations, credit cooperatives, pawnshops and government nonbank financial intermediaries.  Insurance includes  incorporated, mutual and other entities  mainly engaged in providing life, accident, sickness, fire, casualty or  other forms of insurance.
The quarterly indices on gross revenue, employment, compensation, and compensation per employee are compiled for total finance sector and that of banks, non-banks and insurance, which are its major subsectors.
9. Real Estate
Real estate covers the renting, management and operation of residential and non-residential buildings, the subdivision and development of land into building lots, the operation of residential and industrial estates, cemetery development and sale including the activities of real estate agents, brokers and managers engaged in renting, buying, selling, managing and appraisal of real estate on a fee or contract basis.
The estimates of quarterly indices on gross revenue, employment, compensation, and compensation per employee are done for the aggregate sector of real estate.
10. Private Services
Private services sector includes educational, medical and health, personal recreation, hotels and restaurants and other private services.  Producers of these services are the profit-making industries, private non-profit organizations engaged mostly in social and community services and households and own account workers rendering social and community services to others.
For private services, quarterly indices on gross revenue, employment, compensation, and compensation per employee are computed for the total sector and its subsectors namely: educational, medical and health, business, recreational, personal, hotels and restaurants, and other services.
 
E. DATA SOURCES
 
For the compilation of the quarterly QEI, the following are the main sources of data: 
 
1. Sugar Regulatory Administration (SRA)  
 
The volume of production and price data for sugarcane are provided by the SRA.   
 
2. Forest Management Bureau (FMB)  
 
For forestry, data are sourced from the FMB, which generates data on log production and other minor forest products from its field reports of logging companies and foresters.    
 
Price data are taken from the Wholesale Price Survey conducted by the Philippine Statistics Authority (PSA).     
 
3. Mines and Geosciences Bureau (MGB)  
 
Data on volume of metallic mineral production by type are sourced from the Monthly Production Reports of Mining Firms submitted to the MGB.  Data on volume of coal production are provided by the Department of Energy (DoE) while data on volume of production of stone, clay and sandpits and other non-metallic are estimated using the results of the Quarterly Survey of Philippine Business and Industry (QSPBI).  Price data are taken from the Wholesale Price Survey of PSA.  The QSPBI also provides the basic data for the estimation of the indices on employment and compensation.    
 
4. Philippine Statistics Authority (PSA)  
 
The QSPBI of the PSA serves as the main source of data for most of the sectors including: manufacturing, construction, electricity and water, transportation and communication, trade, finance, real estate and private services. From this establishment-based survey, information on compensation, gross revenue and employment are derived.  In the case of the manufacturing, results of the QSPBI are supplemented by the Monthly Integrated Survey of Selected Industries (MISSI).   
 
The PSA is also the source of data on production and prices for palay, corn and other crops (except coconut and sugarcane), livestock, poultry and fishery. Production data are generated based on the results of the Rice and Corn Survey, Survey of Commercial and Backyard Livestock and Poultry Farms, Survey of Commercial and Municipal Fish Landing Centers including the Survey on Aquaculture.  Price data are obtained from the Farm Price Survey except for sugarcane.  
 
Aside from the above-mentioned, the PSA produces the CPI, which is used as deflator to calculate for the constant price estimates of the indices.   
 
5. National Power Corporation (NPC), Manila Electric Company (MERALCO), Manila Water Company, Inc. (MWCI), Maynilad Water Services Inc. (MWSI)   
 
For the production index for electricity data are taken from the National Power Corporation (NPC).  Employment and compensation data are culled from the QSPBI supplemented by data from the (NPC) and the Manila Electric Company (MERALCO).   
 
For water, data on production are obtained from the Metropolitan Waterworks and Sewerage System-Regulatory Office (MWSS-RO) while data on employment and compensation are sourced from the QSPBI of the PSA         
 
 
F. ESTIMATION METHODOLOGY
1. Index on Volume of Production
Quarterly Indices on Volume of Productions are estimated for agriculture, mining and quarrying and electricity and water, using the Laspeyre’s method.  This method represents the ratio of the value of production for the current year priced at base year prices to the value of production during the base year, expressed in percentage.   The year 1978 is used as the base year, which is also the basis of the constant weight adopted for the index estimation.  The formula used is as follows:
 
The computed index for the specific aggregate sector is obtained by summing the value of production of all the subsectors at current prices divided by the total value of production of the same subsectors at base year 1978.  The aggregate sector covers all the subsectors within the sector.  As such the total value of the agriculture sector includes the value of agricultural crops, livestock, poultry and fishery.  
2. Index on Volume of Production Per Worker (Mining and Quarrying
The index on volume of production per worker is estimated by dividing the index on volume of production by the index on employment for the sector, as follows:
 
 
At current prices, the estimate of the value of production is derived as a product of the current quantity of production and the current per unit price of production.  Meanwhile, at constant 1978 prices, the value of production is equal to the quantity of production for the current year multiplied by the 1978 per unit price of production.
3. Index on Gross Revenue, Compensation and Employment
The initial benchmark annual estimates for the aggregate sectoral gross revenue, compensation and employment were computed for the year 1978, using the 1978 Census of Establishments (CE) as major data source. These were supplemented by available data from the National Accounts for sectoral gross value added as well as data from the 1978 Input-Output Industry Tables, which provided the 1978 structure by sector.  
For estimating the quarterly indices on gross revenue, employment, compensation, and compensation per employee, the 1978 Quarterly Survey of Establishment (QSE) (currently known as the QSPBI) were used to come up with the quarterly breakdown of the annual levels.  The corresponding indices for each sector in a given quarter were computed by calculating the ratio of the quarterly levels to the average quarterly values at base year 1978.  For succeeding quarterly estimates, values are derived as the product of the relatives of the matched set of data from responding establishments for the sector, which are obtained from the QSPBI and the corresponding values for the previous quarter or the same quarter in the previous year, for services and industry sectors, respectively.  The indices are derived as the ratio of the estimated values to the base year levels, as follows:
 
3.1  Index on Gross Revenue
 

 
 
3.2  Index on Compensation
 

 
 
3.3  Index on Employment
 

 
 
Total values for the aggregate sector are derived as the summation of the total value estimates of subsectors covered by the sector.  The computed index for the sector is then derived as the ratio to the corresponding base year level aggregates.   
The sectoral estimates at constant prices are computed by dividing the quarterly indices at current prices by the Consumer Price Index (CPI) at 1978 prices, which is used as deflator.
4. Compensation Per Employee Index
Index on Compensation Per Employee at current prices for the sector is derived as the ratio of the Index on Compensation for the given year divided by the Index on Employment for the same period. To arrive at the index at constant prices, the corresponding index at current prices is deflated by the CPI based 1978.
 
At Current Prices
    
 
 
At Constant Price
 
For construction however, the compensation per employee index at current prices is computed as the ratio of total compensation divided by the total employment for the quarter.  Since this is computed on a monthly basis, the index for the quarter is equivalent to the average of the three months of the reference quarter
          
 
DEFINITION OF TERMS
  1. Compensation - refers to remuneration in cash and in kind paid to employees at regular intervals for time work or work done.  Compensation is reported gross before any deductions are made by the employer in respect of taxes, contributions of employees to social security and pension schemes, life insurance premiums, union dues and other obligations of employees.  Compensation consists of total salaries and wages, commissions and other benefits, and employer’s contribution to social security and pension schemes and similar benefits.
     
  2. Economic Activity - is the activity of the establishment as classified under the Philippine Standard Industrial Classification (PSIC).  The main activity of the establishment is the establishment’s principal source of income.
     
  3. Employment - refers to the number of persons who work for a public or private employer and receive renumeration in wages, salary, commissions, tips, piece-rated or pay-in-kind.  Employees consists of paid officials and workers (time-rated, piece-rated, salaried workers), workers paid solely on commission basis, and apprentices and learners.
     
  4. 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 single fixed location.
     
  5. Gross Revenue - refers to the value of receipts from the shipment of goods produced, resale of goods and services rendered.
     
  6. Index Numbers  - are measures, generally expressed as percentage calculated for the purpose of showing average changes in a variable or a group of related variables with respect to some characteristics.
     
  7. Paid Employees - are all persons working in the establishment receiving pay as well as those working away from the establishment when paid by and under the control of the establishment.  Included are persons whether working full time or part-time as well as employees on sick leave, paid vacation or on holiday.  These, however, exclude consultants, home workers and workers receiving commissions only.
     
  8. Production - refers to the quantity of goods produced by an industry during the period.
     
* Used to be the average earning indices.