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Revision of TANKAN1 in the March 2004 Survey

Comparison between the pre- and post-revision in the December 2003 Survey

  1. "TANKAN" is an abbreviation of "TANKI KEIZAI KANSOKU CHOUSA" (the Short-term Economic Survey of Enterprises in Japan). Unless otherwise noted, TANKAN indicates "All Enterprises TANKAN," in which sample enterprises are selected from the population.

March 8, 2004
Bank of Japan
Research and Statistics Department

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Click on nttk13.pdf (124KB) to download the full text.

To see "Data comparison between pre- and post- revision of TANKAN in the December 2003 Survey" (released on March 8, 2004) for details, click on nttk13a.pdf (35KB) or nttk13a.zip (50KB [MS-Excel]).

1. Introduction

TANKAN will be revised from the March 2004 Survey (to be released on April 1, 2004). In addition to the regular revision of sample enterprises which is conducted every 5 years, the revision includes some changes in the framework of the survey. The fundamental revision aims at improving the statistical accuracy by reflecting the industrial structure of the economy and incorporating the recent accounting system.

This paper introduces the main points of the revision and primary changes in the sample design of TANKAN. It also reveals the difference between the pre- and post-revision surveys in terms of aggregation results.

2. Revision of TANKAN in the March 2004 Survey

The five major changes will be introduced in this section.

(1) Revising the Surveyed Industries

The surveyed industries will be revised to reflect the recent structural changes in industries. We select the surveyed industry if it is related to the trend in business conditions and is profit-making. The classification of industries is decided in accordance with the Japan Standard Industrial Classification (Rev.11) released by the Ministry of Public Management, Home Affairs, Posts and Telecommunications in March 2002. Details of the revision in TANKAN are as follows (See Figure 1).

  1. i) Reclassifying Industries:
    "Information communication" and "Restaurants & Accommodations" will be separated from "Services," following the Japan Standard Industrial Classification. The remaining industries in "Services" will be divided into two categories, "Services for businesses" and "Services for personals" to respond to users' needs.
    "Shipbuilding & Heavy machinery" and "Other transportation machinery" will be unified since the number of population enterprises may be too small to recognize the condition of these industries individually.
  2. ii) Expanding the Industrial Coverage:
    "Industrial waste disposal business," "Instruction services for arts, culture and technical skills," "Welfare services for the aged and care services" and so on will be added in "Services" as they may be profit-making and may be related to the trend in business conditions.

(2) Revising Criteria of Enterprise Size

While the pre-revision TANKAN adopts the number of employees as the criteria for enterprise size, the revised TANKAN will adopt enterprises' capital as its criteria.2 This revision is to reflect the rapid diversification of employment styles in enterprises. For instance, there appear to be some enterprises with a small number of employees but large capital, such as holding companies and Internet-related companies.

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(3) Revising Survey Items

Survey items are designed to reflect changes of economic conditions. On the other hand, we have to avoid duplication against other statistics and to decrease the burden on respondents. To accomplish these objectives, we will revise several items. Some examples are shown below (See Figures 2 and 3 for all revised points).

  1. i) "Domestic sales" will be abolished as it can be calculated by deducting "Exports" from "Sales."
  2. ii) "Land purchasing expenses" will be added in response to strong users' needs.
  3. iii) "Net income" will be added to grasp the condition of business activities that cannot be recognized only by current profits.

(4) Abolishing "Principal Enterprises TANKAN"

"Principal Enterprise TANKAN" will be abolished from the revised TANKAN. Since the surveyed enterprises3 are basically fixed and simple aggregates are used in "Principal Enterprises TANKAN," the results may diverge from the actual economic conditions due to the changes in the industrial structure. Because of this reason, "Principal Enterprises TANKAN" has been treated as a reference survey since the March 1999 Survey. As a result, a majority of TANKAN users have come to focus mainly on "All Enterprises TANKAN." Under this situation, we have decided to abolish "Principal Enterprises TANKAN" (sample enterprises of "Principal Enterprises TANKAN" will continue to be surveyed in "All Enterprises TANKAN").

(5) Introducing Missing-value Supplement

Unanswered responses (missing value) have been treated simply: the responses were excluded from the aggregation. For the quantitative items, in which the population estimation method is taken for aggregation, this treatment corresponds to substituting the average figures of the stratum,4 to which the unanswered respondent belongs, for the unanswered items. This is because the population estimation method calculates the aggregated figure by multiplying the average figure by the number of the population.

In order to decrease non-sampling errors, we are making efforts to keep a high response rate by asking for the understanding and cooperation of responding enterprises. With these efforts, the current response rates for all quantitative question items are basically at a high level, so we have not had any problems with the current measure. However, we have been searching for a better measure for unanswered responses, in the event of lower response rates.

After the revision, we will introduce a new measure for unanswered responses for all annual projection items such as Sales, Current Profits, and Fixed Investment. This substitutes the most recent response of the corresponding enterprise to the unanswered items. According to our analysis, the new measure enhances the accuracy more than the current one as a whole.

  1. 2For reference, for some time, we will continue to release four figures (Business Conditions Diffusion Index, Sales, Current Profits, and Fixed Investment) based on the number of employees on the following day of the release day.
  2. 3They are selected from "stock exchange listed companies with capital of one billion yen and over, excluding the financial and insurance industries" under the condition that they are "principal enterprises deemed to generally reflect the trends in their industries" (about 700).
  3. 4There are 377 strata by industry and scale (capital and employee) for population estimation.

3. New Sample Enterprises

To revise the survey, we have chosen new sample enterprises from the updated population based on the 2001 Establishment and Enterprise Census of Japan.5 We have adopted the sampling method described below. The method aims at achieving statistical accuracy with less burden on respondents and less staff members when compiling data.

  1. i) Maintaining the current surveyed enterprises as sample enterprises. (Note that the current surveyed enterprises with less than 20 million capital are to be excluded from the population of the new survey.)
  2. ii) Adding the minimum number of enterprises at random to achieve the statistical accuracy such as the error ratio of sales and the consistency of the sample distribution with the population distribution.

In consequence of sampling, 3,831 sample enterprises are added and 1,187 are eliminated. As a result, there are 10,848 sample enterprises in the new TANKAN (Figures 4 and 5).

  1. 5The survey was conducted as of October 1, 2001.

4. December 2003 Survey on a New Basis

(1) Discontinuity between the Pre- and Post-Revision Surveys

Changes in the survey framework and sample enterprises create a discontinuity between the time series data up to the December 2003 Survey and data of the March 2004 Survey. To recognize this discontinuity, we have conducted a preliminary survey for all sample enterprises of the new survey. With the survey, we reaggregated the December 2003 Survey on the new basis. There seemed to be no large differences between the pre- and post-revision surveys in both judgement items and year-to-year changes of the annual projection items such as Sales and Fixed Investment. Note that there are some gaps in several items such as Business Conditions DI for large nonmanufacturing. See "Data comparison between pre- and post- revision of TANKAN in the December 2003 Survey" (released on March 8, 2004) (nttk13a.pdf [35KB] or nttk13a.zip [46KB, MS-Excel]) for details.

(2) Factors of Discontinuity

The discontinuity between the pre- and post-revision of TANKAN is caused by the following three factors (Figure 6):

  1. i) Eliminating sample enterprises:
    Sample enterprises with less than 20 million yen in capital are to be excluded from the survey.
  2. ii) Changing criteria:
    The criteria of enterprise size are to be changed from the number of employees to capital amount.
  3. iii) Adding sample enterprises:
    New enterprises are to be added to meet the criteria for the statistical accuracy.

(3) Discontinuity in the Business Conditions DI

As for the Business Conditions DI, there is an upward discontinuity in all mainly due to adding new sample enterprises which exerted upward pressure on the DI.6 On the other hand, a discontinuity differs in each category, because changing criteria contributes both positively and negatively to the DI.

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Let us look at how three factors mentioned above affect business conditions DI concretely.

At first, the eliminating sample enterprises factor contributes positively to the new DI. As a whole, the eliminated enterprises, which employ 50 and over but have less than 20 million yen capital, are the ones with lower DIs than other sample enterprises (See Figure 7). Secondly, the changing criteria factor does not have any general implications on the Business Conditions DI. It contributes both positively and negatively to the new DI (See Figure 8). Finally, the adding sample enterprises factor contributes positively to the new DI, except for large manufacturing, in which a few are added to sample enterprises. As a whole, new sample enterprises, especially those newly established, have higher DIs than older ones. New enterprises have become samples of TANKAN, since the population of the survey was updated. To put it another way, the updated population may include some newly established enterprises with outstanding performance among all enterprises and thus have positive effects on the new DI (See Figures 9 and 10). TANKAN on the new basis accurately reflects business conditions in this way. In other words, the old population may cause bias to the survey with the course of time.7

Now, let us look at categories such as large or small, and manufacturing or nonmanufacturing in detail.

  1. i) Large manufacturing enterprises
    Eliminating sample enterprises does not have any significant effects on the DI, because only a few enterprises are eliminated.
    Changing criteria has negative effects on the DI, because some previous medium-sized enterprises with lower DIs shift to large enterprises mainly in "Chemicals," "Industrial machinery," and "Electrical machinery".
    Adding sample enteprises does not have any significant effects on the DI, because only a few enterprises are added.
  2. ii) Large nonmanufacturing enterprises
    Eliminating sample enterprises does not have any significant effects on the DI, because only a few enterprises are eliminated.
    Changing criteria has positive effects on the DI, because some previous medium-sized enterprises with higher DIs shift to large enterprises mainly in "Wholesaling" and "Transportation".
    Adding sample enterprises has positive effects on the DI, because some newly established enterprises with higher DIs are added mainly in "Services for Businesses" and "Services for Personals."
  3. iii) Small manufacturing enterprises
    Eliminating sample enterprises has positive effects on the DI, because some enterprises with lower DIs are eliminated.
    Changing criteria does not have any significant effects on the DI, because there are few enterprises which are reclassified from other categories.
    Adding sample enterprises has positive effects on the DI, because some newly established enterprises with higher DIs are added mainly in "Iron & Steel" and "Industrial machinery".
  4. iv) Small nonmanufacturing enterprises
    Eliminating sample enterprises has positive effects on the DI, because some enterprises with lower DIs are eliminated.
    Changing criteria has negative effects on the DI, because some previous medium-sized enterprises with lower DIs shift to small enterprises mainly in "Retailing" and "Restaurants & Accommodations".
    Adding sample enterprises has positive effects on the DI, because some newly established enterprises with higher DIs are added mainly in "Wholesaling" and "Transportation."

(4) Discontinuity in Annual Projection Items

We analyzed the discontinuity in fixed investment among annual projection items in the same way as we did in the Business Conditions DI. Eliminating sample enterprises and changing criteria do not have any significant effects on fixed investment. On the other hand, adding sample enterprises has some positive effects on the year-to-year change of fixed investment of small enterprises in both manufacturing and nonmanufacturing (Figure 11).

  1. 6The business conditions DI was also revised upward in the past two revisions of sample enterprises (by all industries and all enterprises basis; December 1998 survey: old basis -49, new basis -47; August 1993 survey: old basis -34, new basis -29).
  2. 7Among all 3,831 new sample enterprises, 2,193 could not be included in the population unless the criteria of enterprise size changed. These 2,193 enterprises include some Internet-related enterprises, which do not have many employees but large capital and which we have intended to incorporate.

5. Conclusion - Towards Further Improvement of TANKAN

To sum up the analysis described above, significant discontinuities are not observed between the pre- and post-revision surveys. Note, however, that there are some discontinuities which may be caused by the bias in the pre-revision survey, because five years have passed since the last revision. The discontinuities may reflect the various structural changes of the Japanese economy which occurred in the last five years.

Recently, the structure of the Japanese economy and industry has been changing rapidly. In order for TANKAN to capture the actual business conditions, a more frequent revision may be required. As such, we will shorten the interval between the revisions of sample enterprises from every 5 years to every 2 or 3 years.

Even after the revision, there are still several issues we have to deal with. For example, although the procedure for responding mergers and spin-offs is partly changed from the revision, we think it incomplete even after the revision. We will continue to examine this issue from a wide perspective including the framework of the survey. Another example would be that we should consider collecting survey forms on-line, as they are still collected by mail. Considering the recent IT innovation, an online survey may bring certain benefits to the respondents.

The Bank of Japan will continue to enhance the accuracy of its statistics by incorporating the changes in economic structures and conditions. Moreover, we will also make efforts to overcome the various problems to meet users' needs and to alleviate the burden on respondents.

For further information, please contact:

Economic Statistics Division,
Research and Statistics Department
Bank of Japan

Email:post.rsd5@boj.or.jp