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Statistical bulletin: Index of Production, December 2011 This product is designated as National Statistics

Released: 09 February 2012 Download PDF

Key points

  • The seasonally adjusted Index of Production fell by 3.3 per cent in December 2011 compared with December 2010.
  • The seasonally adjusted Index of Manufacturing rose by 0.8 per cent in December 2011 compared with December 2010.
  • The seasonally adjusted Index of Production rose by 0.5 per cent between November 2011 and December 2011.
  • The seasonally adjusted Index of Manufacturing rose by 1.0 per cent between November 2011 and December 2011.
  • The seasonally adjusted Index of Production in 2011 as a whole fell by 1.3 per cent compared with 2010.
  • The seasonally adjusted Index of Manufacturing in 2011 as a whole rose by 2.1 per cent compared with 2010.

Key figures

Percentage change

  Index number (2008=100) Month on a year earlier 3 months on a year earlier Month on previous month 3 months on previous 3 months
Production 90.4 -3.3 -3.2 0.5 -1.4
Manufacturing 95.6 0.8 -0.2 1.0 -0.8

Table source: Office for National Statistics

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Supplementary analysis

The seasonally adjusted index of production fell by 1.4 per cent in the fourth quarter of 2011 compared with the third quarter of 2011, the largest quarter on quarter fall since the first quarter of 2009. Manufacturing output fell by 0.8 per cent, the energy sector fell 5.1 per cent, mining and quarrying fell by 2.0 per cent and water and waste management fell by 1.3 per cent on the quarter.

In 2011 production output fell by 1.3 per cent compared with 2010. The mining and quarrying sector fell by 15.5 per cent, the largest year on year fall since 1974. The energy sector fell by 5.7 per cent, the largest year on year fall since 1984. The manufacturing and water and waste management sectors rose in 2011 compared with 2010 by 2.1 per cent and 3.1 per cent respectively. 

The seasonally adjusted index of production rose by 0.5 per cent between November 2011 and December 2011. The manufacturing sector rose by 1.0 per cent and the energy sector rose by 0.4 per cent. Partially offsetting these rises were falls in the mining and quarrying and water and waste sectors of 2.1 per cent and 0.1 per cent respectively. 

Manufacturing

Manufacturing output fell by 0.8 per cent in the fourth quarter of 2011 compared with third quarter of 2011, the second consecutive quarter on quarter decrease. Of the 13 manufacturing sub sectors 11 fell with two rising. The largest contributions to the fourth quarter fall were; the manufacture of basic metals industries which fell by 2.4 per cent, the manufacture of basic pharmaceutical products and preparations industries which fell by 4.4 per cent and manufacturing of computer, electronic and optical equipment industries which fell by 3.1 per cent.

In 2011 manufacturing output rose by 2.1 per cent compared with 2010. The largest contributions to the year on year rise were from the manufacture of food, beverages and tobacco industries and the manufacture of transport equipment industries which rose by 6.6 per cent and 8.9 per cent respectively. The year on year rise in the manufacture of food, beverages and tobacco industries is the strongest rise since records began for this series in 1948. The main driver behind the growth was the manufacture of alcoholic beverages which rose by 33.6 per cent in 2011 with evidence from companies suggesting an increase in exports is the main reason for the rise.

Seasonally adjusted manufacturing output rose by 1.0 per cent in December 2011 compared with November 2011, the strongest month on month growth since May 2011. Nine manufacturing sub sectors rose with four falling. The largest contributions to the month on month rise in manufacturing output were the manufacture of transport equipment industries which rose by 3.0 per cent, followed by the manufacture of food, beverages and tobacco industries which rose by 1.3 per cent. In contrast manufacture of rubber and plastic products industries fell by 2.5 per cent.

Mining and quarrying

Mining & quarrying output fell by 2.0 per cent in the fourth quarter of 2011 compared with third quarter of 2011, the sixth consecutive quarter on quarter decrease. The biggest decrease was in the extraction of oil and gas which fell by 2.1 per cent between periods.

In 2011 mining and quarrying output fell by 15.5 per cent compared with 2010. Oil and gas extraction was the main downwards driver falling by 18.6 per cent, the largest year on year decrease since records began for this series in 1997.

Between November 2011 and December 2011 mining and quarrying fell by 2.1 per cent, with oil and gas extraction falling by 2.7 per cent.

Energy supply

Output of the energy sector fell by 5.1 per cent in the fourth quarter of 2011 compared with third quarter of 2011. Gas supply output was the main downwards driver falling by 14.0 per cent, with the comparatively mild weather in 2011 Q4 and reduced demand for gas in the generation of electricity factors in the fall.

In 2011 energy supply output fell by 5.7 per cent compared with 2010, this was the largest year on year decrease since 1984, with gas supply output falling by 18.9 per cent.

Between November 2011 and December 2011 energy supply rose by 0.4 per cent. Electricity supply increased by 0.6 per cent.

Water and waste management

Water and waste management output fell by 1.3 per cent in the fourth quarter of 2011 compared with third quarter of 2011. Sewerage was the main downwards driver falling by 3.6 per cent.

In 2011 water and waste management output rose by 3.1 per cent compared with 2010. Sewerage was the main contributor to the rise increasing by 8.5 per cent.

Between November 2011 and December 2011 water and waste management fell by 0.1 per cent.

GDP Impact

In this release of index of production data all four quarters of 2011 have been open for revision. Revisions to these quarters are estimated to have a minimal impact on GDP (less than 0.05 percentage points).

Production in detail

The Index of Production (IoP) measures the output of the production industries in the United Kingdom. Figures are adjusted for seasonal variations unless otherwise stated and the reference year is 2008 = 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.

Headline growth rates and contributions to the Index of Production December 2011

Description % of production Year on year growth (%) Contribution to production (% points) Month on month growth (%) Contribution to production (% points)
IoP 100.0 -3.3 -3.34 0.5 0.49
Sector B 16.4 -14.6 -2.08 -2.1 -0.27
 Division 06 14.1 -17.2 -2.05 -2.7 -0.28
Sector C 66.6 0.8 0.53 1.0 0.73
Sector D 9.3 -15.5 -1.63 0.4 0.04
Sector E 7.7 -2.0 -0.15 -0.1 -0.01

Table source: Office for National Statistics

Table notes:

  1. Headline figures for the Index of Production are:
    Total Index of Production; Sector B Mining and quarrying; and within this Division 06 Oil and gas extraction; Sector C Manufacturing; Sector D Electricity, gas, steam and air conditioning; and Sector E Water supply, sewerage and 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 and quarrying; Manufacturing; Electricity, gas, steam and air conditioning; and Water supply, sewerage and 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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Manufacturing growth rates and contributions to the Index of Production December 2011

Sub-sector % of production Year on year growth (%) Contribution to production (% points) Month on month growth (%) Contribution to production (% points)
CA 11.2 1.8 0.23 1.3 0.18
CB 2.1 -0.1 0.00 1.1 0.03
CC 5.9 -2.3 -0.13 1.7 0.10
CD 0.4 -2.7 -0.01 -1.3 -0.01
CE 5.5 6.0 0.28 3.0 0.15
CF 4.9 -9.7 -0.46 0.3 0.01
CG 5.0 2.7 0.12 -2.5 -0.12
CH 9.3 -3.4 -0.30 1.4 0.12
CI 4.9 -3.6 -0.16 -1.9 -0.09
CJ 2.2 -9.8 -0.21 -0.5 -0.01
CK 4.4 4.7 0.23 0.4 0.02
CL 5.8 9.4 0.69 3.0 0.25
CM 4.9 4.9 0.25 1.7 0.09

Table source: Office for National Statistics

Table notes:

  1. The 13 manufacturing sub-sectors are:
    CA Manufacture of food products, beverages and tobacco; CB Textiles, wearing apparel and leather products; CC Wood and paper products and printing; CD Coke and refined petroleum products; CE Chemicals and chemical products; CF Basic pharmaceutical products and preparations; CG Rubber and plastic products and non-metallic mineral products; CH Basic metals and metal products; CI Computer, electronic and optical products; CJ Electrical equipment; CK Machinery and equipment not elsewhere classified; CL Transport equipment; CM Other manufacturing and repair.

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

  3. 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 seasonally adjusted index of mining and quarrying in December 2011 fell by 14.6 per cent compared with December 2010. In particular:

  • oil and gas extraction decreased by 17.2 per cent;

  • mining of coal and lignite decreased by 17.6 per cent;

  • the largest contributor to the 14.6 per cent year on year fall in overall mining and quarrying was approximately 14.4 percentage points from oil and gas extraction.

Manufacturing

The seasonally adjusted index of manufacturing in December 2011 rose by 0.8 per cent compared with December 2010. In detail:

  • output rose in six of the 13 manufacturing sub-sectors and decreased in seven sub-sectors;

  • the largest increases in output were in the manufacture of transport equipment industries which rose by 9.4 per cent and in the manufacture of chemicals and chemical products industries which rose by 6.0 per cent;

  • within the manufacture of transport equipment industries the main risers were in air spacecraft and related machinery which increased by 13.0 per cent and the manufacture of motor vehicles, trailers and semi trailers industries which increased by 10.3 per cent;

  • within the manufacture of chemicals and chemical products industries, the main risers were in the manufacture soap detergents and cleaning products which increased by 27.6 per cent and the manufacture of petrochemicals which increased by 8.7 per cent;

  • the largest contributors to the 0.8 per cent year on year rise in overall manufacturing were approximately 1.0 percentage points from the manufacture of transport equipment industries and approximately 0.4 percentage points from the chemicals and chemical products industries.

Energy supply

The seasonally adjusted index of the electricity, gas, steam and air conditioning supply industries in December 2011 fell by 15.5 per cent compared with December 2010. The main movements were:

  • gas, distribution of gaseous fuels through mains, steam and aircon supply decreased by 32.6 per cent;

  • electric power generation, transmission and distribution decreased by 9.8 per cent;

  • the largest contributor to the 15.5 per cent year on year fall in overall electricity, gas, steam and air conditioning supply was approximately 8.1 percentage points from gas, distribution of gaseous fuels through mains, steam and air conditioning supply and approximately 7.4 percentage points from the electric power generation, transmission and distribution.

Water supply and waste management

The seasonally adjusted index of the water supply, sewerage and waste management industries in December 2011 fell by 2.0 per cent compared with December 2010. The main movements were:

  • water collection, treatment and supply industries which decreased by 7.9 per cent;

  • waste collection, treatment and disposal activities which decreased by 0.4 per cent;

  • the largest contributor to the 2.0 per cent year on year fall in was 2.3 percentage points form the water collection, treatment and supply industries.

Revisions

This release conforms to the standard revisions policy for National Accounts. In this release, Periods from January 2011 are open for revision.
Since last month, a number of late responses have been received to the Monthly Business Survey.  The combined impact of these late data and seasonal adjustment factors being re-estimated is the month on month growth rate for the Index of Production for November 2011 to be revised by +0.1

Impact on GDP

Revision to IoP quarters arising from this release of data are estimated to have a minimal impact on GDP (less than 0.05 percentage points) in all periods open to revisions.

Background notes

  1. What's new?

    This release conforms to the standard revisions policy for National Accounts. In this release, Periods from January 2011 are open for revision

    Upcoming changes

    The Index of Production release for January 2012 will have a revisions period back to January 2011.

  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 2008=100 and are classified to the 2007 Standard Industrial Classification (SIC). The production industries, which accounted for 15.4 per cent of gross domestic product in 2008, 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

    A link to 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 indicators 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.

    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
    Common pitfalls in interpreting series: 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 (previously the Monthly Production Inquiry MPI) and (b) revisions to seasonal adjustment factors which are re-estimated every period.

    In the next bulletin, which will contain figures for January 2012 and will be published on 09 March 2012, the period open for revision will be from January 2011.

    National Accounts revision policy 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 table below presents a summary of the differences between the first estimates published between January 2006 and December 2010 and the estimates published 12 months later.

    Revisions December 2011

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

    Growth rates Value in latest period Average revision Absolute average revision
    Production - 3 month -1.4 -0.08 0.26
    Manufacturing - 3 month -0.8 -0.09 0.32
    Production - 1 month 0.5 -0.08 0.26
    Manufacturing - 1 month 1.0 -0.06 0.28

    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 giving revisions triangles (3.09 Mb ZIP) of estimates for all months from December 1997 through to the current month, and the calculations behind the averages in the above table, are available on the National Statistics website.

    A statistical test has been applied to the average revisions to find out if they are statistically significantly different from zero. No such differences have been found.

    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 (39.7 Kb Pdf) 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 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 (previously known as First Release) which present time series. Details can be found on the National Statistics website.

    ONS now publishes revisions triangles for all the main published key indicators on the National Statistics website.

  8. Following ONS

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  9. Next publication:  Friday 09 March 2012
    Issued by : Office for National Statistics, Government Buildings, Cardiff Road, Newport NP10 8XG

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    Statistical contact:
    Name:      Robert Doody
    Tel:          01633 455803
    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
Robert Doody +44 (0)1633 455803 Index of Production robert.doody@ons.gsi.gov.uk
Get all the tables for this publication in the data section of this publication .
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