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Statistical bulletin: Index of Production, November 2012 This product is designated as National Statistics

Released: 11 January 2013 Download PDF

Key points

  • Production on a seasonally adjusted basis fell by 2.4% in November 2012 compared with November 2011.
  • Manufacturing on a seasonally adjusted basis fell by 2.1% in November 2012 compared with November 2011.
  • Production on a seasonally adjusted basis rose by 0.3% between October 2012 and November 2012. A rise of 8.7% in mining & quarrying was partially offset by falls of 0.3% in manufacturing and 4.1% in energy supply.
  • Only October 2012 is open for revision in this release of data.
  • Users are reminded that all figures contained within this release are estimates.

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 97.3 -2.4 -2.9 0.3 -1.9
Manufacturing 102.4 -2.1 -1.9 -0.3 -0.7

Table source: Office for National Statistics

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Supplementary analysis

The seasonally adjusted index of production fell by 2.4% in November 2012 compared with November 2011. This is the 20th consecutive monthly fall on the same month a year ago.

Between October 2012 and November 2012 this index increased by 0.3%. The main upwards contribution was from the mining & quarrying sector where there was an increase of 8.7%. There was also an increase of 0.6% in the water & waste management sector. These rises were partially offset by a decrease in the manufacturing sector of 0.3% and a decrease of 4.1% in the energy supply sector.

Manufacturing

The seasonally adjusted index of manufacturing fell by 2.1% in November 2012 when compared with November 2011. The largest downward contributions came from the manufacture of food products, beverages & tobacco, which fell by 4.6%, the manufacture of chemicals & chemical products, which fell by 6.8% and the manufacture of wood & paper products, which fell by 7.5%. In contrast, the largest increases came from the manufacture of transport equipment, which rose by 6.8% and the manufacture of basic metals & metal products, which rose by 3.4%.

Seasonally adjusted manufacturing output fell by 0.3% in November 2012 compared with October 2012. The largest contributions came from the manufacture of basic metals & metal products, which fell by 2.7%, the manufacture of electrical equipment, which fell by 6.4% and the manufacture of computer, electronic & optical products which fell by 3.4%. In contrast, the largest increases came from the manufacture of transport equipment, which rose by 3.1% and the manufacture of machinery & equipment, which rose by 3.6%.

The large month on month increase in the manufacture of transport equipment was largely due to an increase in the manufacture of motor vehicles.

Mining and quarrying  

Output of the mining & quarrying industries fell by 13% in November 2012 compared with November 2011. The main downward contribution was from the extraction of oil & gas, which fell by 17.8% during this period.

Between October 2012 and November 2012 the mining & quarrying sector increased by 8.7%. The main upward contribution was from the extraction of oil & gas, which increased by 11.3%, mainly due to a rise in crude oil production in November when compared with October. During November the extraction of oil & gas recommenced in a North Sea oil field after a longer than usual maintenance shutdown. Figure 1 shows the pattern of non-seasonally adjusted oil and gas extraction over the last five years.  It shows two aspects to changes in the oil & gas extraction series: (1) the year on year decreases in the level of extraction; and (2) in 2012 the increased length of maintenance period, which normally occurs only in September.

Mining of coal & lignite production increased by 45.4% between October 2012 and November 2012, this may be due to the increased use of coal in the production of electricity.

Figure 1, Non Seasonally adjusted Oil & Gas Extraction Index

Timeseries graph for Non Seasonally adjusted Oil & Gas Extraction Index
Source: Office for National Statistics

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Energy supply 

Energy supply output rose by 4.4% in November 2012 compared with November 2011. Electrical power generation, transmission & distribution rose by 3.4% and, gas supply rose by 9.9% for the same period.

Between October 2012 and November 2012 energy output fell by 4.1%. The main contribution was a 2% decrease in gas output. This fall follows a relatively strong October, where there was increased demand in gas in the production of electricity and it was also the coldest October since 2003. 

Water & waste management

Water & waste management rose by 2.4% in November 2012 when compared with November 2011. Between October 2012 and November 2012 water & waste management output rose by 0.6%. 

GDP Impact

In this release of Index of Production data only October 2012 is open for revision. There is therefore no impact on previously released Gross Domestic Product quarterly growth rates.

Figure 2, Seasonally adjusted production and manufacturing

Timeseries graph for Index of Production and Index of Manufacturing
Source: Office for National Statistics

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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 available in the background notes. 

Table 2, Headline growth rates and contributions to the Index of Production November 2012

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 -2.4 -2.4 0.3 0.3
Sector B 15.4 -13.0 -1.58 8.7 0.87
 Division 06 12.6 -17.8 -1.63 11.3 0.79
Sector C 67.0 -2.1 -1.46 -0.3 -0.23
Sector D 9.6 4.4 0.41 -4.1 -0.43
Sector E 8.0 2.4 0.20 0.6 0.06

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.

  3. The Index of Production is made up of four sectors: Mining & quarrying; Manufacturing; Electricity, gas, steam & air conditioning; and Water supply, sewerage & waste management. The larger the percentage contribution, the more likely the impact on the overall manufacturing growth rate will be significant.

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Table 3, Manufacturing growth rates and contributions to the Index of Production November 2012

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 -4.6 -0.60 -1.1 -0.13
CB Textiles and leather products 2.0 -4.6 -0.09 -4.1 -0.09
CC Wood, paper and printing 5.5 -7.5 -0.38 -0.6 -0.03
CD Coke and petroleum 0.8 -21.7 -0.16 14.3 0.08
CE Chemical Products 6.1 -6.8 -0.41 -0.7 -0.04
CF Pharmaceutical Products 6.1 -5.3 -0.25 -0.4 -0.02
CG Rubber and plastic products 4.7 -6.1 -0.29 2.2 0.10
CH Metal products 8.6 3.4 0.31 -2.7 -0.27
CI Computer, electronic & optical  4.3 3.2 0.13 -3.4 -0.15
CJ Electrical equipment 2.1 6.6 0.14 -6.4 -0.16
CK Machinery and equipment 4.8 -1.2 -0.08 3.6 0.22
CL Transport equipment 5.7 6.8 0.54 3.1 0.26
CM Other manufacturing & repair 4.5 -6.6 -0.32 -0.3 -0.01

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 & quarrying

The seasonally adjusted index of mining & quarrying in November 2012 fell by 13.0% compared with November 2011. Oil & gas extraction decreased by 17.8% contributing 13.4 percentage points to the fall in mining & quarrying.

Manufacturing

The seasonally adjusted index of manufacturing in November 2012 fell by 2.1% compared with November 2011. In detail:

i) the largest contributions to the decrease in output came from the manufacture of food products, beverages & tobacco, which fell by 4.6%, and in the manufacture of chemicals & chemical products, which fell by 6.8%.

ii) within the manufacture of food products, beverages & tobacco industries, the main falls were in alcoholic beverages, which fell by 20.9% and other food products, which fell by 2.8%.

iii) within the manufacture of chemicals & chemical products industries, the main falls were in petrochemicals, which fell by 23.3% and paints, varnishes & similar coatings, which fell by 9.0%.

iv) the largest contributors to the 2.1% month on same month a year ago fall in overall manufacturing were approximately 0.9 percentage points from food products, beverages & tobacco and approximately 0.6 percentage points from chemicals & chemical products. 

Energy supply

The seasonally adjusted index of the electricity, gas, steam & air conditioning supply industries in November 2012 rose by 4.4% compared with November 2011. The main movements were:

i) electric power generation, transmission & distribution, which rose by 3.4%, and contributed 2.9 percentage points to the 4.4% month on same month a year ago rise.

ii) manufacture of gas & gas distribution, which rose by 9.9%, and contributed 1.5 percentage points to the 4.4% month on same month a year ago rise.

Water supply & waste management

The seasonally adjusted index of the water supply, sewerage & waste management industries in November 2012 rose by 2.4% compared with November 2011. The main movements were:

i) sewerage, which rose by 5.8%.

ii) water collection, treatment & supply, which rose by 3.0%.

iii) the largest contributor to the 2.4% month on same month a year ago rise was 1.9 percentage points from sewerage.

Revisions

This release conforms to the standard revisions policy for National Accounts (27.8 Kb Pdf) . In this release only October 2012 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 factors. This has resulted in a downwards revision of 0.1 percentage points for the month on month growth rate in October 2012.

Summary statistics

The monthly United Kingdom (UK) Index of Production (IoP) provides a timely indicator of growth in the output of production industries at constant prices. The IoP is a key economic indicator and one of the earliest short-term measures of economic activity, sharing exactly the same industry coverage as the corresponding quarterly series within UK Gross Domestic Product (GDP).
The main output is a seasonally adjusted estimate of total production and broad sector groupings of mining & quarrying, manufacturing, energy and water supply & sewerage. In general, seasonally adjusted output estimates are available down to the National Accounts Supply Use Table (SUT) level.
Output estimates are calculated by taking value estimates and adjusting them to remove the impact of price changes, or by using direct volume estimates. 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. 
Summary statistic tables (29.5 Kb Excel sheet) showing current growth rates compared with historical information for the IoP and the Index of Manufacturing (IoM) are available as part of this release.

Background notes

  1. Improvements to be introduced next month

    For the release of January 2013 data, ONS plan to stop producing the summary statistics table (29.5 Kb Excel sheet) . If these data are essential to you, please notify ONS at the e-mail address in the 'Contact us' section below and we will reconsider our plans.

    What's new?

    This release conforms to the standard revisions policy for National Accounts. In this release period only October 2012 is open for revision.

    Special Events in 2012

    There have been 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 Diamond Jubilee celebrations saw changes to the normal pattern of bank holidays in May and June, and an additional days holiday in June; all of these changes affected estimates for quarter 2 of 2012, and an article gave more information on how the estimates were compiled over this period. 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. A detailed article (229 Kb Pdf)  describing possible effects on GDP and comparing with earlier Olympic Games was published by ONS on 25 October. 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

    The Index of Production release for December 2012 will have a revisions period back to January 2012.

  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 2012.

  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 per cent of gross domestic product in 2009, cover mining and quarrying (Sector B), manufacturing (Sector C), gas and electric (Sector D), and water supply and 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 National Statistics website.

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

    The Index of Production release for December 2012 will have a revisions period back to January 2012. 

    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 December 2006 and November 2011 and the estimates published 12 months later. 

    Table 4, Revisions November 2012

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

    Growth rates Value in latest period Average   Absolute average
    Production - 3 month -1.9 -0.15 0.31
    Manufacturing - 3 month -0.7 -0.15 0.37
    Production - 1 month 0.3 -0.11 * 0.27
    Manufacturing - 1 month -0.3 -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 (3.52 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 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 National Statistics website.

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

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  9. Next publication:  Thursday 7 February 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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