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

Released: 09 May 2013 Download PDF

Key points

  • Users are reminded that all figures contained within this release are seasonally adjusted estimates.
  • Production output rose by 0.2% between Q4 2012 and Q1 2013. Manufacturing fell by 0.3% over the same period.
  • By far the largest contribution to the quarterly growth in production came from mining & quarrying, which increased by 4.0% following a weak Q4 2012 when extended maintenance in the North Sea reduced output.
  • The preliminary estimate of GDP, published on 25 April 2013, contained a forecasted rise of 0.2% for production in Q1 2013. This release of data also estimates production rose by 0.2% between Q4 2012 and Q1 2013 and therefore has no impact on the previously published Q1 2013 GDP estimate.
  • Looking at the broader picture, production ouput was 1.4% lower in March 2013 compared with March 2012. All the main sectors, except for electricity, gas steam & air conditioning, were lower than they were a year ago.
  • Production rose by 0.7% between February 2013 and March 2013, reflecting a 1.1% rise in manufacturing and a 2.4% rise in electricity, gas steam & air conditioning, where the coldest March since 1962 helped boost demand.
  • 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 March 2013, the third month of quarter one 2013. All the components are already available for January 2013 and February 2013. Details of the data already published can be found in table 2. The March estimate for construction will be published on 10 May with the estimates for services published on 23 May alongside the second estimate of GDP for Q1 2013.
  • The earliest period open for revision is January 2013.

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 98.5 -1.4 -2.3 0.7 0.2
Manufacturing 104.0 -1.4 -2.1 1.1 -0.3

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Economic background

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 March 2013, the third month of Q1 2013. All components are already available for January 2013 and February 2013. The March estimate for construction will be published on 10 May 2013 with the estimates for services published on 23 May 2013 alongside the Second Estimate of Gross Domestic Product for Q1 2013.

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

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
             
    09-May Mar -2.3 0.2 -1.4 0.7
Index of Production 1 15.6 Feb -2.6 0.2 -2.5 0.9
    Jan -2.7 -1.0 -3.1 -1.4
               
               
    10-May Mar        
Construction output 2 6.8 12-Apr Feb -8.9 -16 -7.0 5.5
    08-Mar Jan -8.7 -1.5 -7.9 -6.3
               
               
    23-May Mar        
Index of Services 77.0 25-Apr Feb 1.2 0.1 2.2 0.8
    28-Mar Jan 0.9 -0.2 0.8 0.3
               
    18-Apr Mar 0.4 0.4 -0.5 -0.7
Retail Sales   21-Mar Feb 0.8 -0.2 2.6 2.1
    15-Feb Jan 0.2 -0.6 -0.5 -0.7
             
 
Agriculture 0.6       Not available monthly
               

Table notes:

  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.

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Supplementary analysis

Figure 1: Seasonally adjusted production and manufacturing

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

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Production rose by 0.2% in Q1 2013 when compared with quarter four 2012. The increase in Q1 2013 reflects rises of 4.0% in mining & quarrying, 0.6% in electricity, gas steam & air conditioning, partially offset by falls of 0.3% in manufacturing and 1.0% in the water, sewerage and waste management sector.

Between March 2012 and March 2013 production fell by 1.4%. This decrease reflects falls of 9.0% in mining & quarrying; 1.4% in manufacturing and 3.1% in the water, sewerage & waste management sector. These falls were partially offset by a 10.9% rise in the electricity, gas steam & air conditioning sector.

Between February 2013 and March 2013 production rose by 0.7%. This increase reflects rises of 1.1% in manufacturing and 2.4% in the electricity, gas steam & air conditioning sector. These rises were partially offset by falls of 2.0% in mining & quarrying and 0.4% in the water, sewerage & waste management sector.

Manufacturing

Manufacturing fell by 0.3% in quarter one 2013 when compared with quarter four 2012. The largest downward contributions in manufacturing output were the manufacture of machinery & equipment not elsewhere classified, which fell by 5.5%; the manufacture of rubber & plastic products, which fell by 4.5%, and the manufacture of basic pharmaceuticals products which fell by 4.1%. In contrast, the most significant increases were in the manufacture of wood & paper products & printing which rose by 6.7%; the manufacture of transport equipment, which rose by 2.0% and other manufacture and repair which rose by 3.7%.

Between March 2012 and March 2013 manufacturing fell by 1.4%. The largest downward contributions in manufacturing output were: the manufacture of basic pharmaceutical products & pharmaceutical preparations, which fell by 12.1%; the manufacture of chemicals & chemical products, which fell by 6.4% and the manufacture of food products, beverages & tobacco which fell by 2.7%. In contrast, the most significant increases came from the manufacture of transport equipment, which rose by 5.8%, the manufacture of computer, electronic & optical products, which rose by 4.3% and the manufacture of basic metals & metal products, which rose by 1.4%.

Between February 2013 and March 2013 manufacturing rose by 1.1%. The largest upward contributions in manufacturing output were: the manufacture of basic metals & metal products, which rose by 2.8%, the manufacture of computer, electronic & optical products, which rose by 5.5% and the manufacture of machinery & equipment not elsewhere classified, which rose by 2.2%. In contrast, the most significant decreases came from the manufacture of food products, beverages & tobacco, which fell by 1.0% and the manufacture of textiles, wearing apparel & leather products, which fell by 1.5%.

The quarterly and yearly rise in the manufacture of transport equipment and, the monthly rise in the manufacture of machinery & equipment not elsewhere classified are partially due to an increase in new export orders.

Mining & quarrying

Output of the mining & quarrying sector rose by 4.0% in Q1 2013 when compared with Q4 2012. Other mining & quarrying rose by 8.9%, the extraction of crude petroleum and natural gas rose by 2.1% and the mining of coal and lignite rose by 4.5%.

Between March 2012 and March 2013 mining & quarrying fell by 9.0%. The extraction of crude petroleum & natural gas fell by 15.2% and the mining of coal & lignite fell by 14.7% during this period. These decreases were partially offset by other mining and quarrying which rose by 10.0%.

Between February 2013 and March 2013 mining & quarrying fell by 2.0%. The extraction of crude petroleum & natural gas fell by 1.8%, other mining & quarrying fell by 1.7% and the mining of coal and lignite fell by 12.3%.

Electricity, gas steam & air conditioning

Electricity, gas steam & air conditioning output rose by 0.6% in Q1 2013 when compared with Q4 2012. Gas supply rose by 5.5% but was partially offset by electrical power generation, transmission & distribution, which fell by 0.3%.

Between March 2012 and March 2013 the supply of electricity, gas steam & air conditioning rose by 10.9%. Electrical power generation, transmission & distribution rose by 6.6% and the supply of gas, steam & air conditioning rose by 35.2%.

Between February 2013 and March 2013 the supply of electricity, gas steam & air conditioning rose by 2.4%. The supply of gas, steam & air conditioning rose by 12.4% and electrical power generation, transmission & distribution rose by 0.4%.

The increases in this sector may have been due to a colder than average March. ‘The provisional UK mean temperature was 2.2°C, which is 3.3°C below the 1981-2010 average. It was the coldest March since 1962, and the equal second-coldest since 1910. March was the coldest month of the ‘extended winter’, the first time this has happened since 1975, and the coldest calendar month since December 2010.’*

*Source: http://www.metoffice.gov.uk/climate/uk/summaries/2013/march

Water & waste management

Water & waste management output fell by 1.0% in Q1 2013 when compared with Q4 2012. Water collection, treatment & supply fell by 2.1%, waste & recycling fell by 1.1% and sewerage fell by 0.4%. Partially offsetting these falls was a 4.2% rise in remediation activities & other waste management services.

Between March 2012 and March 2013 water & waste management fell by 3.1%.  Waste & recycling fell by 8.3% and remediation activities & other waste management services fell by 4.5%. Offsetting these falls was a rise of 1.7% in sewerage. Water collection, treatment & supply remained flat for this period.

Between February 2013 and March 2013 water & waste management fell by 0.4%. Sewerage fell by 3.0% over this period. This was partially offset by rises in remediation activities & other waste management services, which rose by 4.1%, water collection, treatment & supply, which rose by 1.1% and waste & recycling, which rose by 0.8%.

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

GDP Impact

The preliminary estimate of GDP, published on 25 April 2013, contained a forecasted rise of 0.2% for production in Q1 2013.  This release of data also estimates production rose by 0.2% between Q4 2012 and Q1 2013 and therefore has no impact on the previously published Q1 2013 GDP estimate.

Revision Period

In this release of the Index of Production the periods open for revision are from January 2013.

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 March 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 -1.4 -1.4 0.7 0.7
Sector B 15.4 -9.0 -1.06 -2.0 -0.22
Division 06 12.6 -15.2 -1.33 -1.8 -0.14
Sector C 67.0 -1.4 -1.01 1.1 0.75
Sector D 9.6 10.9 0.98 2.4 0.24
Sector E 8.0 -3.1 -0.26 -0.4 -0.03

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 4: Manufacturing growth rates and contributions to the Index of Production March 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 -2.7 -0.35 -1.0 -0.14
CB Textiles and leather products 2.0 -3.7 -0.07 -1.5 -0.03
CC Wood, paper and printing 5.5 2.5 0.12 2.2 0.11
CD Coke and petroleum 0.8 -8.9 -0.07 0.7 0.00
CE Chemical products 6.1 -6.4 -0.39 -0.1 0.00
CF Pharmaceutical products 6.1 -12.1 -0.59 0.8 0.03
CG Rubber and plastic products 4.7 -7.7 -0.35 -0.5 -0.02
CH Metal products 8.6 1.4 0.13 2.8 0.26
CI Computer, electronic & optical  4.3 4.3 0.17 5.5 0.22
CJ Electrical equipment 2.1 -4.2 -0.10 3.8 0.09
CK Machinery and equipment 4.8 -0.3 -0.02 2.2 0.13
CL Transport equipment 5.7 5.8 0.47 1.1 0.09
CM Other manufacturing & repair 4.5 1.1 0.05 -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 and quarrying

Mining & quarrying rose by 4.0% between Q4 2012 and Q1 2013.

i) The increase follows a weak Q4 2012 when a longer than usual maintenance period at one of the UK’s largest North Sea oil fields reduced output.  

ii) Other mining and quarrying rose by 8.9% and contributed 2.5 percentage points to the rise.

iii) The extraction of crude petroleum and natural gas rose by 2.1% and contributed 1.5 percentage points to the rise.

Mining & quarrying fell by 2.0% between February 2013 and March 2013.

i) Extraction of crude petroleum and natural gas fell by 1.8% and contributed 1.3 percentage points to the fall.  This follows recent volatility in the industry.

Manufacturing

Manufacturing fell by 0.3% between Q4 2012 and Q1 2013.

i) The largest decreases were in the manufacture of machinery and equipment not elsewhere classified, which fell by 5.5% and in the manufacture of rubber and plastic products, which fell by 4.5%;

ii) Within the manufacture of rubber & plastic products the main falls were in cement, lime, plaster and articles of concrete, which fell by 14.5% and in rubber and plastic products, which fell by 2.8%;

Manufacturing fell by 1.4% between March 2012 and March 2013.

i) The manufacturing of basic pharmaceutical and pharmaceutical preparations fell by 12.1% and contributed 0.8 percentage points to the fall in manufacturing.

ii) Chemicals and chemical products fell by 6.4% and contributed 0.6 percentage points to the fall in manufacturing.

Manufacturing rose by 1.1% between February 2013 and March 2013. The largest upward contributions came from the manufacture of basic metals & metal products, which rose by 2.8%, the manufacture of computer, electronic & optical products, which rose by 5.5% and the manufacture of machinery & equipment not elsewhere classified, which rose by 2.2%.

Energy supply

Electricity, gas, steam & air conditioning supply rose by 0.6% between Q4 2012 and Q1 2013.

i) Supply of gas, steam & air conditioning rose by 5.5% and contributed 0.9 percentage points to the rise.

Electricity, gas, steam & air conditioning supply rose by 10.9% between March 2012 and March 2013.

i) Electric power generation, transmission & distribution rose by 6.6% and contributed 5.6 percentage points to the rise.          

The rises in this sector reflect the colder weather during Q1 2013. March was reported to be the coldest calendar month since December 2010 and the coldest March since 1962.

Water supply and waste management

Water supply, sewerage & waste management fell by 1.0% between Q4 2012 and Q1 2013.

i) Water collection, treatment and supply fell by 2.1% and contributed 0.5 percentage points to the fall.

ii) Waste collection, treatment & disposal activities fell by 1.1% and also contributed 0.5 percentage points to the fall

Water supply, sewerage & waste management fell by 3.1% between March 2012 and March 2013.

i) Waste collection, treatment & disposal activities fell by 8.3% and contributed 3.5 percentage points to the fall.

Revisions

This release conforms to the standard revisions policy for National Accounts. In this release, periods from January 2013 are 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 February 2013 has been revised by -0.2%.

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, periods from January 2013 are 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

    There are no periods open for revision in next months release. Therefore all data published for periods prior to April 2013 will remain unchanged.

  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 (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.

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

    Table 5: Revisions March 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 0.2 -0.12 0.31
    Manufacturing - 3 month -0.3 -0.14 0.36
    Production - 1 month 0.7 -0.11 * 0.25
    Manufacturing - 1 month 1.1 -0.10 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 (3.67 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 11 June 2013
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    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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