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Statistical bulletin: Index of Production, February 2013 This product is designated as National Statistics

Released: 09 April 2013 Download PDF

Key points

  • Users are reminded that the figures within this release are estimates and are on a seasonally adjusted basis.
  • Both production and manufacturing fell in February 2013 when compared with February 2012 by 2.2% and 1.4% respectively. There are downward contributions from all sectors with manufacturing and mining & quarrying the most significant.
  • On the month, February 2013 compared with January 2013, both production and manufacturing rose by 1.0% and 0.8% respectively. All sectors rose during this period – this last happened in July 2012. Despite the increase in production the index is still only, though, the same level as in September 2012.
  • These estimates for the production industries are the first of the main components for the output measure of GDP (construction and services are the other components) to be published for February 2013, the second month of quarter one 2013. All the components are already available for January 2013, the service industries (77% of the output measure of GDP) were estimated to have increased by 0.3% between December 2012 and January 2013, compared with a revised fall of 1.3% in production and 6.3% (non-seasonally adjusted) in construction.
  • The February estimates for construction will be published on the 12 April with the estimates for services published on the 25 April alongside the preliminary estimate for quarter one 2013 GDP.

Key figures

Table 1: Percentage changes

Index number Month on the same month a year ago 3 months on the same 3 months a year ago Month on previous month 3 months on previous 3 months
  2009=100        
Production 98.0 -2.2 -2.5 1.0 0.3
Manufacturing 103.1 -1.4 -2.1 0.8 -0.2

Table source: Office for National Statistics

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Supplementary analysis

Figure 1: Seasonally adjusted production and manufacturing

Timeseries graph for Index of Production and Index of Manufacturing
Source: Monthly Business Survey (Production and Services) - Office for National Statistics

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The index of production fell by 2.2% in February 2013 compared with February 2012. The decrease in February 2013 reflects a fall of 8.4% in mining & quarrying, a fall of 1.4% in the manufacturing sector, a fall of 0.6% in the energy supply sector and a fall of 2.6% in the waste management sector.

Between January 2013 and February 2013 the index of production rose by 1.0%. All production sectors saw an increase in February 2013, which last happened in July 2012. Mining and quarrying rose 2.8%; manufacturing rose 0.8%; the energy supply sector rose 1.3% and the waste management sector rose 0.8%.

Manufacturing

The index of manufacturing fell by 1.4% in February 2013 when compared with February 2012. The largest downward contributions in manufacturing output were: the manufacture of coke & refined petroleum products, which fell by 16.0%, followed by the manufacture of rubber & plastic products & other non-metallic mineral products, which fell by 6.9% and the manufacture of basic pharmaceutical products & pharmaceutical preparations, which fell by 13.6%. In contrast, the most significant increases came from the manufacture of transport equipment, which rose by 8.4%; other manufacturing & repair which rose by 1.4% and the manufacture of basic metals & metal products, which rose by 0.3%.

The index of manufacturing rose by 0.8% in February 2013 when compared with January 2013. The largest upward contributions in manufacturing output were: the manufacture of machinery & equipment not elsewhere classified, which rose by 3.3%, the manufacture of transport equipment, which rose by 2.1% and the manufacture of basic metals & metal products, which rose by 1.8%. In contrast, the most significant decreases came from the manufacture of computer, electronic & optical products, which fell by 7.1%; the manufacture of food products, beverages & tobacco, which fell by 0.3% and the manufacture of basic pharmaceutical products & pharmaceutical preparations, which fell by 1.0%.

Mining & quarrying

Output of the mining & quarrying industries fell by 8.4 % in February 2013 compared with February 2012.The downward contribution was due to the extraction of oil & gas, which fell by 16.1% during this period.

Between January 2013 and February 2013 the mining & quarrying sector rose by 2.8%. The main upwards contribution was from other mining & quarrying, which rose by 8.7%.

Energy supply

Energy supply output fell by 0.6% in February 2013 compared with February 2012. Electrical power generation, transmission & distribution fell by 1.2% and, manufacture of gas; distribution of gaseous fuels through mains & steam & air conditioning, rose by 2.5% for the same period.

Between January 2013 and February 2013 energy supply output rose by 1.3%. Electrical power generation, transmission & distribution rose by 0.9% and the manufacture of gas; distribution of gaseous fuels through mains & steam & air conditioning, rose by 3.0%.

The UK average temperature in February was 2.8 degrees celsius, which is 0.9 degrees celsius below the 1981-2010 average; this may be a contributing factor in the increase in demand in energy supply.

Water & waste management

Water & waste management output fell by 2.6% in February 2013 when compared with February 2012.

Between January 2013 and February 2013 water & waste management output rose by 0.8%.

When analysing the information in this bulletin, users should consider the volatility of monthly data.

Production in detail

The Index of Production (IoP) measures the output of the production industries in the UK. Figures are adjusted for seasonal variations unless otherwise stated and the reference year is 2009=100. For an explanation of the terms used in this bulletin, please see the Background Notes section. Care should be taken when using the month on month growth rates due to their volatility. An assessment of the quality of the production statistics is also available in the background notes.

Table 2: Headline growth rates and contributions to the Index of Production February 2013

Description % of production Month on same month a year ago growth (%)  Contribution to production (% points) Month on previous month growth (%) Contribution to production (% points)
IoP 100.0 -2.2 -2.2 1.0 1.0
Sector B 15.4 -8.4 -1.01 2.8 0.31
Division 06 12.6 -16.1 -1.45 0.6 0.05
Sector C 67.0 -1.4 -0.96 0.8 0.54
Sector D 9.6 -0.6 -0.06 1.3 0.12
Sector E 8.0 -2.6 -0.22 0.8 0.07

Table source: Office for National Statistics

Table notes:

  1. Headline figures for the Index of Production are:

    Total Index of Production; Sector B Mining & quarrying; and within this Division 06 Oil & gas extraction; Sector C Manufacturing; Sector D Electricity, gas, steam & air conditioning; and Sector E Water supply, sewerage & waste management.

  2. Individual contributions may not sum to the total due to rounding.

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Table 3: Manufacturing growth rates and contributions to the Index of Production February 2013

Sub-sector Summary Description % of production Month on same month a year ago growth (%)  Contribution to production (% points) Month on previous month growth (%) Contribution to production (% points)
CA Food, beverages and tobacco 11.9 -0.9 -0.12 -0.3 -0.04
CB Textiles and leather products 2.0 -1.3 -0.03 1.7 0.03
CC Wood, paper and printing 5.5 -1.5 -0.08 3.2 0.16
CD Coke and petroleum 0.8 -16.0 -0.13 -0.6 0.00
CE Chemical Products 6.1 -2.0 -0.11 0.0 0.00
CF Pharmaceutical Products 6.1 -13.6 -0.68 -1.0 -0.04
CG Rubber and plastic products 4.7 -6.9 -0.31 1.7 0.07
CH Metal products 8.6 0.3 0.03 1.8 0.17
CI Computer, electronic & optical  4.3 -2.3 -0.09 -7.1 -0.30
CJ Electrical equipment 2.1 -5.2 -0.13 2.1 0.05
CK Machinery and equipment 4.8 -0.5 -0.03 3.3 0.20
CL Transport equipment 5.7 8.4 0.65 2.1 0.18
CM Other manufacturing & repair 4.5 1.4 0.07 1.5 0.07

Table source: Office for National Statistics

Table notes:

  1. Individual contributions may not sum to the total due to rounding.
  2. Manufacturing consists of 13 sub-sectors listed above with the percentage of the total they account for. The larger the percentage contribution, the more likely the impact on the overall manufacturing growth rate will be significant.

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Sector Analysis

Mining and quarrying

The index of mining & quarrying fell by 8.4% between February 2012 and February 2013. Oil & gas extraction fell by 16.1% and other mining & quarrying activity rose 16.2%.

Oil & gas extraction contributed 12.1 percentage points to the 8.4% fall in mining & quarrying, this was partly offset by the 3.8 percentage point contribution from other mining & quarrying activity.

Manufacturing

The index of manufacturing fell by 1.4% between February 2012 and February 2013.

i) basic pharmaceutical products & pharmaceutical preparations contributed 1.0 percentage points to the 1.4% fall. Rubber & plastic products & other non-metallic mineral products contributed 0.4 percentage points;

ii) the manufacture of basic pharmaceutical products & pharmaceutical preparations, fell by 13.6%. The manufacture of rubber & plastic products & other non-metallic mineral products fell by 6.9%;

iii) within the rubber & plastic products, & other non-metallic mineral products industries, the main falls were in cement, lime, plaster & articles of concrete, cement & plaster, which fell by 6.0% and rubber & plastic products, which fell by 9.0%.

Energy supply

The seasonally adjusted index of electricity, gas, steam & air conditioning supply fell by 0.6% between February 2012 and February 2013.

i) electric power generation, transmission & distribution contributed 1.0 percentage points to the 0.6% fall. This was partially offset by an upward contribution of 0.4 percentage points from the manufacture of gas; distribution of gaseous fuels through mains & steam & air conditioning.

ii) electric power generation, transmission & distribution fell by 1.2%, manufacture of gas; distribution of gaseous fuels through mains & steam & air conditioning rose by 2.5%.

Water supply and waste management

The seasonally adjusted index of water supply, sewerage & waste management fell by 2.6% between February 2012 and February 2013. The main movements were:

i) waste collection, treatment & disposal activities, which fell by 9.9%;

ii) remediation activities & other waste management services, which fell by 13.6%;

iii) the largest contributor to the 2.6% fall in water supply & waste management, is approximately 4.3 percentage points from waste collection, treatment & disposal activities.

Revisions

This release conforms to the standard revisions policy for National Accounts. In this release, only January 2013 is open for revision.

Since last month, there have been a number of late responses to the Monthly Business Survey and re-estimation of the seasonal-adjustment factor, therefore the month on month growth rate in January 2013 has been revised by -0.1%.

Background notes

  1. What's new?

    Following consultation with users, ONS are no longer producing the Index of Production summary statistics table. Records of any significance will be highlighted in the main text of the statistical bulletin.

    This release conforms to the standard revisions policy for National Accounts. In this release only January 2013 is open for revision.

    Special Events in 2012

    There were a number of special events in 2012. This commentary is intended to help users to interpret the statistics in the light of events. As explained in ONS's Special Events Policy, it is not possible to make an estimate of the effect of special events on particular series, only on the basis of information collected in those series. 

    The Olympics took place from 27 July to 12 August 2012 (with a few events starting on 25 July), and the Paralympics from 29 August to 9 September. The direct effect of the Olympics and Paralympics was reflected in the estimates for the months of quarter 3 of 2012. More details of how certain series were expected to be affected were given in an information note. Also, detailed articles describing possible effects on GDP and comparing with earlier Olympic Games were published by ONS on 25 October 2012 and January 2013. Wider effects, for example the presence of the Olympics influencing the number of non-Olympics tourist visits, may of course have affected any of the summer months. 

    The result of these special events in 2012 has been to introduce additional uncertainty in the interpretation of movements between Q2 and Q3 and between Q3 and Q4. Users should therefore consider all the information available when interpreting the statistics.

    Upcoming changes

    Periods from January 2013 will be open for revision in next months release.

  2. Code of Practice for Official Statistics

    National Statistics are produced to high professional standards set out in the Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference. © Crown copyright 2013.

  3. Understanding the data

    Short guide to the Index of Production
    This Statistical Bulletin gives details of the index of output of the production industries in the United Kingdom. Index numbers of output in this Statistical Bulletin are on the base 2009=100 and are classified to the 2007 Standard Industrial Classification (SIC). The production industries, which accounted for 15.6% of gross domestic product in 2009, cover mining & quarrying (Sector B), manufacturing (Sector C), gas & electric (Sector D), and water supply & sewerage (Sector E).

    Interpreting the data
    The non-seasonally adjusted series contain elements relating to the impact of the standard reporting period, moving holidays and trading day activity. When making comparisons it is recommended that users focus on seasonally adjusted estimates as these have the seasonal effects and systematic calendar related components removed. 
    Figures for the most recent months are provisional and subject to revision in light of (a) late responses to surveys and administrative sources and (b) revisions to seasonal adjustment factors which are re-estimated every month and reviewed annually (changes from the latest review are included in this release).

    Definitions and explanations
    Definitions found within the main statistical bulletin are listed here:

    • Chained volume measure
      An index number from a chain index of quantity. The index number for the reference period of the index may be set equal to 100 or to the estimated monetary value of the item in the reference period.

    • Index number
      A measure of the average level of prices, quantities or other measured characteristics relative to their level for a defined reference period or location. It is usually expressed as a percentage.

    • Seasonally adjusted
      Seasonal adjustment aids interpretation by removing effects associated with the time of the year or the arrangement of the calendar, which could obscure movements of interest.


    Use of the data

    The IoP is a key economic indicator and one of the earliest short-term measures of economic activity.  The main output is a seasonally adjusted estimate of total production and broad sector groupings of mining & quarrying, manufacturing, energy and water supply & sewerage. The total IoP estimate and various breakdowns are widely used in private and public sector institutions, particularly the Bank of England and Her Majesty’s Treasury, to assist in informed policy and decision making.

  4. Methods

    An article about the Index of Production methodology (147.9 Kb Pdf)  is available on the National Statistics website.

    Composition of the data
    The Index of Production uses a variety of different data from sources which are produced on either a quarterly or monthly basis.

    Most of the series are derived using current price turnover deflated by a suitable price index. This includes the Monthly Business Survey (MBS) data; an ONS short-term survey on different sectors of the economy. It is one of the main data sources used in the compilation of the Index of Production.

    Seasonal adjustment
    The index numbers in this Statistical Bulletin are all seasonally adjusted. This aids interpretation by removing annually recurring fluctuations, for example, due to holidays or other regular seasonal patterns. Unadjusted data are also available.

    Seasonal adjustment removes regular variation from a time series. Regular variation includes effects due to month lengths, different activity near particular events such as shopping activity before Christmas, and regular holidays such as the May bank holiday. Some features of the calendar are not regular each year, but are predictable if we have enough data - for example the number of certain days of the week in a month may have an effect, or the impact of the timing of Easter. As Easter changes between March and April we can estimate its effect on time series and allocate it between March and April depending on where Easter falls. Estimates of the effects of day of the week and Easter are used respectively to make trading day and Easter adjustments prior to seasonal adjustments.

    Although leap years only happen every four years, they are predictable and regular and their impact can be estimated. Hence, if there is a leap year effect, it is removed as part of regular seasonal adjustment. 

    Deflation
    It is common for the value of a group of financial transactions to be measured in several time periods. The values measured will include both the change in the volume sold and the effect of the change of prices over that year. Deflation is the process whereby the effect of price change is removed from a set of values.

    All series, unless otherwise quoted, are measured at constant basic prices. Deflators adjust the value series to take out the effect of price change to give the volume series.

  5. Quality

    Basic quality information
    A common pitfall in interpreting data is that expectations of accuracy and reliability in early estimates are often too high. Revisions are an inevitable consequence of the trade off between timeliness and accuracy. Early estimates are based on incomplete data.

    Very few statistical revisions arise as a result of ‘errors’ in the popular sense of the word. All estimates, by definition, are subject to statistical ‘error’ but in this context the word refers to the uncertainty inherent in any process or calculation that uses sampling, estimation or modelling. Most revisions reflect either the adoption of new statistical techniques, or the incorporation of new information which allows the statistical error of previous estimates to be reduced. Only rarely are there avoidable ‘errors’ such as human or system failures, and such mistakes are made quite clear when they do occur.

    Summary quality report
    A summary quality report (130.1 Kb Pdf) for this Statistical Bulletin can now be found on the Office for National Statistics website.

    The 2005 median annual growth of MPI turnover, their associated standard errors and quality bands can now be found on the Office for National Statistics website.

    National Accounts revisions policy
    Figures for the most recent months are provisional and subject to revision in light of (a) late responses to the Monthly Business Survey MBS and (b) revisions to seasonal adjustment factors which are re-estimated every period.

    Periods from January 2013 will be open for revision in next months release.

    National Accounts revision policy (27.8 Kb Pdf) can be found on the National Statistics website.

    Revision triangles
    One indication of the reliability of the key indicators in this bulletin can be obtained by monitoring the size of revisions. The table below is based on the revisions which have occurred over the last five years. Please note that these indicators only report summary measures for revisions. The revised data may, themselves, be subject to sampling or other sources of error.
    The following table presents a summary of the differences between the first estimates published between March 2007 and February 2012 and the estimates published 12 months later. 

    Table 4: Revisions February 2013

    Revisions between first publication and estimates produced 12 months later (percentage points)

    Growth rates Value in latest period Average   Absolute average
    Production - 3 month 0.3 -0.13 0.30
    Manufacturing - 3 month -0.2 -0.14 0.36
    Production - 1 month 1.0 -0.10 * 0.26
    Manufacturing - 1 month 0.8 -0.09 0.30

    Table source: Office for National Statistics

    Table notes:

    1. Averages shown are over the most recent five years. The absolute average is the average over the most recent five years without regard to sign.

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    Spreadsheets give revisions triangles (3.64 Mb ZIP) of estimates for all months from March 1998 through to the current month.

    A statistical test has been applied to the average revisions to find out if they are statistically significantly different from zero. An asterisk (*) indicates if a figure has been found to be statistically significant from zero.

    The table uses historical data for the most recent 60 months, comparing the estimate at first publication with the estimate as published 12 months later. The numbers which underpin these averages will include normal changes due to late data and re-seasonal adjustment, but also significant methodological changes, the most recent being the introduction of the 2007 Standard Industrial Classification in October 2011.

  6. Publication policy

    Details of the policy governing the release of new data are available from the press office. Also available is a list of those given pre-publication access to the contents of this release (74 Kb Pdf) .
    A complete set of series in the Statistical Bulletin are available to download free of charge on the Data section of the Office for National Statistics website. Alternatively, for low-cost tailored data, call Online Services on 02075335675 or email tailored@statistics.gov.uk.

  7. Accessing data

    The complete run of data in the tables of this Statistical Bulletin is also available to view and download in electronic format free of charge using the ONS Time Series Data service. Users can download the complete bulletin in a choice of zipped formats, or view and download their own selections of individual series.

    ONS provides an analysis of past revisions in the IoP and other Statistical Bulletins (244.6 Kb Pdf) (previously known as First Release) which present time series. Details can be found on the Office for National Statistics website.

    ONS publishes revisions triangles (65.8 Kb Pdf) for all the main published key indicators on the Office for National Statistics website.

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  9. Next publication:  Thursday 09 May 2013
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    Email:       Indexofproduction@ons.gsi.gov.uk

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  10. Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gsi.gov.uk

    These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority.

Statistical contacts

Name Phone Department Email
Alaa Al-Hamad +44 (0)1633 455648 ONS alaa.al-hamad@ons.gsi.gov.uk
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