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

Released: 11 June 2013 Download PDF

Key points

  • Users are reminded that all figures contained within this release are seasonally adjusted estimates;
  • Production output fell by 0.6% between April 2012 and April 2013. All the main sectors except for electricity, gas & air conditioning, were lower than they were a year ago. Manufacturing fell by 0.5% over the same period;
  • The main manufacturing components contributing to the fall between April 2012 and April 2013 were chemicals & chemical products; rubber & plastic products and food products, beverages & tobacco;
  • Production rose 0.1% between March 2013 and April 2013. Manufacturing fell by 0.2% over the same period following two consecutive increases during February and March 2013;
  • The main manufacturing components contributing to the fall between March 2013 and April 2013 were transport equipment; wood & paper products and basis metal & metal products:
  • 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 April 2013. Details of the data already published can be found in table 2;
  • No previous periods are open for revisions.

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 98.6 -0.6 -1.5 0.1 0.8
Manufacturing 103.8 -0.5 -1.2 -0.2 0.5

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Historical context

As Figure 1 shows, between 2003 and 2007, manufacturing output increased at a faster rate than total production, mainly due to declines in oil and gas extraction. While both series then fell by a similar amount during the downturn in 2008-09, the growth of manufacturing was again greater between mid-2009 and 2011. Since then, both manufacturing and production have contracted, falling by 2.3% and 2.1% respectively, when comparing 2013 Q1 with a year earlier.

Figure 1: Quarterly sasonally adjusted production and manufacturing

Figure 1: Quarterly sasonally adjusted production and manufacturing
Source: Monthly Business Survey (Production and Services) - Office for National Statistics

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Looking across the main components of the production industries there is a degree of volatility month-on-month. The long term series for each component tell different stories. Manufacturing, electricity, steam & air conditioning supply and the water supply & waste management components have remained broadly flat since 2005. There has been a long term decline in mining & quarrying  due to extraction of oil & gas which makes up the bulk of this industry. This particular industry has declined over the past 13 years as many of the North Sea oil and gas reserves have become more difficult to extract. Additionally, the extraction equipment has aged such that rigs have required more extensive repairs and maintenance in recent years.

The stagnation in the other sub-sectors coupled with this decline has led to a subdued long-term decline in the IoP which pre-dates the 2008-09 downturn.

Looking at the main industrial groupings there has been a steady decline in energy supply from 2000 onwards. However, this was to a lesser degree than that witnessed in oil & gas extraction. Capital goods, on the other hand, were stable up until the financial crisis and between 2008 Q1 and 2013 Q1 they have increased by 4.5%.

GDP components

Table 2 shows the components of the output approach to measuring GDP. The estimates for the production industries for April are the first of the main components (construction and services are the other components).

Table 2: GDP component tables (Quarter 1 2013)

constant price seasonally adjusted

          Percentage change  
Publication % of GDP Release date Month of GDP Most recent 3 months on a year earlier  Most recent 3 months on 3 months earlier  Most recent month on the same month a year ago Most recent month on the previous month
             
    11-Jun Apr -1.5 0.8 -0.6 0.1
Index of Production 1 15.6   Mar -2.3 0.2 -1.4 0.7
      Feb -2.6 0.2 -2.5 0.9
      Jan -2.7 -1.0 -3.1 -1.4
               
               
Construction output 2 6.8 10-May Q1 -6.5 -2.4    
               
               
               
    23-May Mar 1.5 0.6 1.6 0.2
Index of Services 77.0   Feb 1.1 0.1 2.1 0.9
      Jan 0.8 -0.3 0.7 0.2
               
    22-May Apr 0.7 0.7 0.5 -1.3
      Mar 0.3 0.4 -0.5 -0.6
Retail Sales     Feb 0.6 -0.3 2.4 2.1
      Jan 0.1 -0.8 -0.6 -0.7
             
 
Agriculture 0.6 23-May Q1   -3.7    
               
1 The data for the index of production reflects the latest revisions published as part of this release.  
2 Construction output is non-seasonally adjusted.          

Table notes:

  1. The data for the index of production reflect the latest revisions published as part of this release.

  2. Construction output is non-seasonally adjusted.

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Supplementary analysis

Figure 2: Seasonally adjusted production and manufacturing

Figure 2: Seasonally adjusted production and manufacturing
Source: Monthly Business Survey (Production and Services) - Office for National Statistics

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Production fell 0.6% between April 2012 and April 2013. The decrease reflects falls of 3.8% in mining & quarrying, 0.5% in manufacturing and 0.4% in the water, sewerage & waste management sector. These falls were partially offset by a rise of 1.8% in the electricity, gas steam & air conditioning sector.

Production rose by 0.1% between March 2013 and April 2013. The increase reflects rises of 0.9% in mining & quarrying and 1.5% in the water, sewerage & waste management sector. These rises are partially offset by falls of 0.2% in manufacturing and 0.2% in the electricity, gas steam & air conditioning sector.

Manufacturing

Manufacturing fell 0.5% between April 2012 and April 2013. The largest downward contributions in manufacturing output were: the manufacture of chemicals & chemical products and the manufacture of rubber & plastic products, both fell by 6.4%; and the manufacture of food products, beverages & tobacco, which fell by 1.9%. In contrast, the largest upward contributions came from the manufacture of transport equipment, which rose 5.5%; other manufacturing & repair, which rose 7.4%; and the manufacture of basic pharmaceutical products & preparations, which rose 7.0%.

Manufacturing fell by 0.2% between March 2013 and April 2013. The largest downward contributions in manufacturing output were: the manufacture of transport equipment, which fell 2.0%; the manufacture of wood & paper products, which fell 3.2%; and the manufacture of basic metals & metal products, which fell 1.4%. In contrast, the largest upward contributions came from the manufacture of basic pharmaceutical products & preparations, which rose 13.8%; other manufacturing & repair, which rose 1.8%; and the manufacture of coke & refined petroleum products which rose 2.2%.

Mining & quarrying

Mining & quarrying output fell 3.8% between April 2012 and April 2013. Oil & gas extraction fell 9.4% and the mining of coal & lignite fell 20.8%. These falls were partially offset by a rise of 13.4% in other mining & quarrying.

Mining & quarrying output rose 0.9% between March 2013 and April 2013. Other mining & quarrying rose 1.7% and oil & gas extraction rose by 0.6%. These rises were partially offset by a fall of 1.7% in the mining of coal & lignite.

Electricity, gas ,steam & air conditioning

Electricity, gas steam & air conditioning output rose 1.8% between April 2012 and April 2013. Electrical power generation, transmission & distribution rose 2.5% but was partially offset by a fall of 1.5% in the supply of electricity, gas, steam & air conditioning.

Electricity, gas, steam & air conditioning output fell by 0.2% between March 2013 and April 2013. The manufacture of gas & disribution of fuel fell by 8.8% but was partially offset by a rise of 1.7% in electrical power generation, transmission & distribution.

Water & waste management

Water supply, sewerage & waste management output fell 0.4% between April 2012 and April 2013. Waste collection, treatment & disposal activities fell 3.5%, remediation activities & other waste management services fell 1.6%. Offsetting this fall was a rise in water collection, treatment & supply, rising 2.9%, and sewerage, rising 1.5%.

Water supply, sewerage & waste management output rose 1.5% between March 2013 and April 2013. Sewerage rose 2.4%, waste & recycling rose 1.6% and water collection, treatment & supply rose 0.1%.

GDP Impact

There is no impact on previously published estimates of GDP as no previous periods were open for revisions.

Revision Period

In this release of the Index of Production there are no revisions to previous periods.

Users should consider the overall trend when using the data as monthly data can be volatile.

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 3: Headline growth rates and contributions to the Index of Production April 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 -0.6 -0.6 0.1 0.1
Sector B 15.4 -3.8 -0.43 0.9 0.09
Division 06 12.6 -9.4 -0.78 0.6 0.04
Sector C 67.0 -0.5 -0.35 -0.2 -0.14
Sector D 9.6 1.8 0.18 -0.2 -0.02
Sector E 8.0 -0.4 -0.03 1.5 0.12

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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Figure 3: Contribution to Production growth Month on same month a year ago

Growth rates can be found in the chart download or in the attached IoP 5 tables

Figure 3: Contribution to Production growth Month on same month a year ago
Source: Monthly Business Survey (Production and Services) - Office for National Statistics

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Figure 4: Contribution to Production growth Month on Month

Growth rates can be found in the chart download or in the attached IoP 5 tables

Figure 4: Contribution to Production growth Month on Month
Source: Monthly Business Survey (Production and Services) - Office for National Statistics

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Sector Analysis

Mining & quarrying

Mining & quarrying fell by 3.8% between April 2012 and April 2013:

i) Oil and gas extraction fell by 9.4% and contributed 6.8 percentage points to the fall. This reflects the continued volatility of this industry following longer than usual maintenance periods and temporary shutdowns to some of the North Sea Oil and Gas fields during the past few months.  

ii) The mining of coal & lignite fell by 20.8% and contributed 0.3 percentage points to the fall, reflecting the downward trend seen in this industry over the recent months.

Mining & quarrying rose by 0.9% between March 2013 and April 2013:

i) Other mining & quarrying rose by 1.7% and the extraction of crude petroleum rose by 0.6%.

ii) Offsetting the rise in mining & quarrying was a fall in the mining of coal & lignite by 1.7%.

M anufacturing

Manufacturing fell by 0.5% between April 2012 and April 2013:

i) Output decreased in ten of the 13 manufacturing sub-sectors and rose in three.

ii) The manufacture of chemicals & chemical products fell by 6.4% and contributed 0.4 percentage points to the fall.

iii) This was largely offset by the manufacture of transport equipment, which rose by 5.5% and contributed 0.4 percentage points. This rise was driven by the manufacture of motor vehicles, trailers & semi trailers, which rose by 7.7%.

Manufacturing fell by 0.2% between March 2013 and April 2013:

i) Output decreased in ten of the 13 manufacturing sub-sectors and rose in three.

ii) The manufacture of transport equipment fell by 2% and contributed 0.2 percentage points to the fall.

iii) This was largely offset by the manufacture of basic pharmaceutical products, which rose by 13.8% and contributed 0.6 percentage points.

Energy supply

Electricity, gas, steam & air conditioning supply rose by 1.8% between April 2012 and April 2013:

i) Electric power generation, transmission & distribution rose by 2.5% and contributed 2.1 percentage points. This was due to increased demand as a result of the colder weather, reflected by the upward trend in this index since January 2013.

Electricity, gas, steam & air conditioning supply fell by 0.2 % between March 2013 and April 2013:

i) The manufacture of gas & distribution of gaseous fuel fell by 8.8% and contributed -1.6 percentage points. The increase in temperature in April and the use of coal since November 2011 for the generation of electricity have contributed to the fall.

Water supply and waste management

Water supply, sewerage & waste management fell by 0.4% between April 2012 and April 2013:

i) Water collection, treatment & disposal activities fell by 3.5% and contributed 1.5 percentage points to the fall.

 Water supply, sewerage & waste management rose by 1.5 % between March 2013 and April 2013:

i) Sewerage rose by 2.4% and contributed 0.8 percentage points to the rise.  

Economic Context

The second estimate of GDP growth for 2013 Q1 was unrevised at 0.3%. Production growth was largely in line with this at 0.2%. New information from the expenditure approach to the measurement of GDP indicated that while household expenditure increased slightly, gross fixed capital formation (capital investment) and exports both fell.

UK price inflation eased somewhat in April, the Consumer Prices Index rising by 2.4% compared with a year ago. Producer output prices in April fell by 0.1% from March, after increasing by 0.2% between February and March. The rate of year-on-year producer price increases continued to slow, with output prices being 1.1% higher in April 2013 compared with April 2012 after year-on-year growth of 1.9% in March. Input prices for all manufactured goods fell by 2.3% month-on-month in April, and fell by 0.1% compared with April 2012. This suggests that price pressures eased somewhat for the production industries in April.

Economic conditions in the euro area remain difficult. The second estimate of euro area GDP confirmed that output fell by 0.2% in 2013 Q1 compared with 2012 Q4, continuing the trend from 2012 of slight falls in quarterly GDP. The unemployment rate increased slightly to 12.2% in April from 12.1% in March and markets remain wary of developments among member states. Economic growth in the US picked up in 2013 Q1 compared with 2012 Q4. The US labour market continues to show signs of improvement, where the unemployment rate fell by 0.1 percentage points in April from March to 7.5% (source: US Bureau of Labor Statistics). The UK also continued to have the highest annual rate of CPI inflation across the G7 (source OECD) in April, reducing the international competitiveness of the economy somewhat.

Background notes

  1. What's new?

    This release conforms to the standard revisions policy for National Accounts (27.8 Kb Pdf) . In this release, there are no periods open for revision.

    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.

    Special Events in 2012

    The Diamond Jubilee and the London 2012 Olympic and Paralympic Games made 2012 an unusual and difficult year for policymakers and anybody interested in understanding the behaviour of the UK economy. ONS designated both events as 'special events' under the ONS Special Events policy as they had a potentially significant effect on many key economic statistics. An article published by ONS on 17 May 2013 took a retrospective look at each event and considered the impact on a range of published economic indicators, including GDP. 

    Upcoming changes

    The index of production release for May 2013, to be published on 8 July 2013, will have a revisions period back to January 1997. The data be will be reweighted to 2010, from 2005 and have a 2010 reference year, instead of 2009. This will be in line with the open revision period for the 2013 Blue Book publication on 31 July 2013. The estimates will also be consistent with the Quarterly National Accounts published on 27 June 2013. 

  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. An article about the Index of Production methodology (78.4 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.

    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 May 2007 and April 2012 and the estimates published 12 months later. 

    Table 4: Revisions April 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 0.8 -0.13 0.31
    Manufacturing - 3 month 0.5 -0.14 0.36
    Production - 1 month 0.1 -0.12 * 0.26
    Manufacturing - 1 month -0.2 -0.11 * 0.29

    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 (3.72 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.
    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:  Tuesday 09 July 2013
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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

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