|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|
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 manufacturing fell by a greater amount than production during the economic downturn in 2008-09, the growth of manufacturing was greater between mid-2009 and 2011. Since then they have continued to contract. Comparing Q1 2013 with a year earlier, both manufacturing and production output were 2.6% lower.
The estimates provided in this release are consistent with Blue Book 2013, which incorporates methodological improvements and updates the base and reference years from chained volume measures to 2010. Within the output approach to measuring gross domestic product, the weighting of manufacturing has decreased marginally, falling from 10.5% to 10.4% between 2009 and 2010. Total production has been affected to a greater degree, decreasing from 15.6% to 15.2%, led by a fall in electricity, gas, steam & air conditioning supply.
The long term series for each component of production tell different stories about the evolution of output since 2003. Manufacturing, electricity, steam & air conditioning and the water supply & waste management components have remained broadly flat since 2005, while there has been a long term decline in mining & quarrying due to extraction of oil & gas which makes up the bulk of this industry. Oil & gas extraction has declined over the last 13 years as many of the North Sea oil and gas reserves have become more difficult to extract. Additionally, extraction equipment has aged such that rigs have required more extensive repairs and maintenance in recent years.
There has also been a steady decline in energy supply from 2000 onwards, albeit to a lesser extent than that witnessed in oil & gas extraction.
Table 2 shows the components of the output approach to measuring GDP. The estimates for the production industries for May are the first of the main components to be published. Output in construction will be published on 12 July 2013 and services published on 25 July 2013.
|Publication||% of GDP||Release date||Month / Quarter 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|
|Index of Production 1||15.2||9 July 2013||May||-1.9||0.2||-2.3||-|
|Construction output 2||6.3||14 June 2013||Q1||-6.3||-2.4|
|Index of Services||77.8||28 June 2013||Apr||1.8||0.8||2.0||0.2|
|Retail Sales||20 June 2013||May||0.7||0.7||1.9||2.1|
|Agriculture||0.7||27 June 2013||Q1||-6.3|
The data for the index of production reflect the latest revisions published as part of this release.
Construction output is non-seasonally adjusted.
Production fell by 2.3% between May 2012 and May 2013. The decrease reflects falls of 2.9% in manufacturing, 3.5% in mining & quarrying and 0.8% in the electricity, gas, steam & air conditioning sector. These falls were partially offset by a rise of 2.6% in the water, sewerage & waste management sector.
Users should be cautious when comparing movements between May 2012 and May 2013 data. In 2012, the end of May bank holiday was moved to June resulting in an additional working day in May, which may have been a contributing factor to the growth between these two periods.
There was no change in production between April 2013 and May 2013 (Figure 2). Within this, there were falls of 0.8% in manufacturing and 1.7% in the electricity, gas, steam & air conditioning sector. These falls were offset by rises of 3.5% in mining & quarrying and 3.6% in the water, sewerage & waste management sector.
Manufacturing fell by 2.9% between May 2012 and May 2013. The largest downward contributions in manufacturing output were: the manufacture of machinery & equipment not elsewhere classified, which fell by 13.5%; the manufacture of rubber & plastics products & other non-metallic mineral products, which fell by 9.2%; and the manufacture of basic metals & metal products, which fell by 6.1%. In contrast, the largest upward contributions came from the manufacture of basic pharmaceutical products & pharmaceutical preparations, which rose by 7.3%; the manufacture of transport equipment, which rose by 2.8%; and other manufacturing & repair, which rose by 4.7%.
Manufacturing fell by 0.8% between April 2013 and May 2013. The largest downward contributions in manufacturing output were: the manufacture of basic pharmaceutical products & pharmaceutical preparations, which fell by 5.9%; the manufacture of basic metals & metal products, which fell by 4.1%; and the manufacture of computer, electronic & optical products, which fell by 3.6%. In contrast, the largest upward contributions came from the manufacture of food products, drinks & tobacco, which rose by 2.3%; the manufacture of chemicals & chemical products, which rose by 2.4%; and the manufacture of rubber & plastics products and other non-metallic mineral products, which rose by 1.8%.
Mining & quarrying output fell by 3.5% between May 2012 and May 2013. Oil & gas extraction fell by 9.4% and the mining of coal & lignite fell by 27.6%. These falls were partially offset by a rise of 15.0% in the other mining & quarrying sector.
Mining & quarrying output rose by 3.5% between April 2013 and May 2013. Oil & gas extraction rose by 4.9%, Other mining & quarrying rose by 0.5%. These rises were partially offset by a fall of 6.5% in the mining of coal & lignite sector.
Electricity, gas steam & air conditioning output fell by 0.8% between May 2012 and May 2013 as a result of falls in both of its sectors. Electrical power generation, transmission & distribution fell by 0.9% and the supply of gas steam & air conditioning fell by 0.3%.
Electricity, gas steam & air conditioning output fell by 1.7% between April 2013 and May 2013 as a result of falls in both of its sectors. the supply of gas steam & air conditioning fell by 5.9% and electrical power generation, transmission & distribution fell by 0.2%.
Water supply, sewerage & waste management output rose by 2.6% between May 2012 and May 2013. Waste collection, treatment & disposal activities rose by 4.5%, water collection, treatment & supply rose by 3.9% and remediation activities & other waste rose by 5.6%. Offsetting this rise was a fall in sewerage, which fell by 1.5%.
Water supply, sewerage & waste management output rose by 3.6% between April 2013 and May 2013. There were rises in all sectors; waste collection, treatment & disposal rose by 4.8%, sewerage rose by 3.3%, water collection, treatment & supply rose by 2.0% and remediation activities and other waste rose by 4.9%.
The estimates included in this release are consistent with Quarterly National Accounts published on 27 June 2013. Any revisions to quarters have therefore already been included in the previously published GDP estimates.
This release conforms to the standard revisions policy for National Accounts. The revisions period in this release is from January 1997, in line with the 2013 Blue Book data set.
Since last month, a number of late responses have been received to the Monthly Business Survey. The combined impact of these late data, re-estimation of seasonal adjustment factors and the annual updating of chain-linked weights have led to the month on month growth rate for the Index of Production for April 2013 to be revised by -0.2 percentage points.
Users should consider the overall trend when using the data as monthly data can be volatile.
The Index of Production (IoP) estimates the output of the production industries in the United Kingdom. Figures are adjusted for seasonal variations unless otherwise stated and the reference year is 2010 = 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.
|Description||% of production||Month on same month a year ago growth (%)||Contribution2 to production (% points)||Month on previous month growth (%)||Contribution2 to production (% points)|
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.
Individual contributions may not sum to the total due to rounding.
Mining & quarrying fell by 3.5% between May 2012 and May 2013.
i) Oil & gas extraction fell by 9.4% and contributed 7.1 percentage points to the fall. This reflects the continued long term volatility of this industry following the impact of longer than usual maintenance periods and temporary shutdowns of some of the North Sea oil and gas fields during the past few months.
ii) The mining of coal & lignite fell by 27.6% and contributed 0.4 percentage points to the fall. This reflects the downward trend in this industry over recent months as a result of the mothballing of some collieries.
Mining & quarrying rose by 3.5% between April 2013 and May 2013.
i) Oil & gas extraction rose by 4.9% and contributed 3.4 percentage points to the rise. This reflects steady increases in production in some oil & gas fields in the North Sea as well as no significant summer maintenance taking place.
Manufacturing fell by 2.9% between May 2012 and May 2013.
i) Output decreased in nine of the 13 manufacturing sub-sectors and rose in four.
ii) The highest contributor to the fall was the manufacture of machinery & equipment not elsewhere classified, which fell by 13.5% and contributed 1.1 percentage points to the fall.
iii) The fall in manufacturing was largely offset by the manufacture of basic pharmaceutical products & preparations, which rose by 7.3% and contributed 0.5 percentage points.
Manufacturing fell by 0.8% between April 2013 and May 2013.
i) Output decreased in six of the 13 manufacturing sub-sectors and rose in seven.
ii) The highest contributor to the fall was the manufacture of basic pharmaceutical & preparations, which fell by 5.9% and contributed 0.5 percentage points to the fall.
iii) The fall in manufacturing was largely offset by the manufacture of food products, beverages & tobacco, which rose by 2.3%, and contributed 0.4 percentage points.
Electricity, gas, steam & air conditioning supply fell by 0.8% between May 2012 and May 2013.
i) The highest contributor to the fall was the electric power generation, transmission & distribution sector, which fell by 0.9% and contributed 0.7 percentage points to the fall.
Electricity, gas, steam & air conditioning supply fell by 1.7% between April 2013 and May 2013.
i) The highest contributor to the fall was the supply of gas, steam & air conditioning, which fell by 5.9% and contributed 1.6 percentage points to the fall. The increase in temperature in May, following the particularly cold April 2013 (the coldest April since 1989) and the use of coal since November 2011 for the generation of electricity have both contributed to the fall.
Water supply, sewerage & waste management rose by 2.6% between May 2012 and May 2013.
i) Waste collection, treatment & disposal activities rose by 4.5% and contributed 2.0 percentage points to the rise.
Water supply, sewerage & waste management rose by 3.6% between April 2013 and May 2013.
i) Waste collection, treatment & disposal activities rose by 4.8% and contributed 2.1 percentage points to the rise. Sewerage rose by 3.3% and contributed 1.0 percentage points to the rise.
The latest estimate of gross domestic product confirmed the UK economy grew by 0.3% in the first quarter of 2013. Production grew in line with this, with quarter-on-quarter growth of 0.2%. Information from the expenditure approach to measuring GDP indicated that while household expenditure rose slightly, both business investment and goods exports fell.
UK consumer price inflation increased in May, with the Consumer Prices Index rising by 2.7% compared with a year ago. However, average weekly earnings rose by a greater amount (3.3%), suggesting that households experienced a slight rise in their real wages during May. The prices of goods produced by UK manufacturers – or ‘factory gate prices’ – remained constant between April and May, after decreasing by 0.2% between March and April. Input prices for all manufactured goods fell by 0.3% over the same period, suggesting that price pressures eased somewhat for the production sector in April.
International economic conditions in the euro area remain difficult. The latest estimate of euro area GDP confirmed that output fell by 0.2% in Q1 2013 compared with Q4 2012, continuing the trend from 2012 of slight falls in quarterly output. The unemployment rate increased slightly to 12.2% in April from 12.1% in March, though this varies wildly by country. By contrast, economic growth in the United States of America picked up in Q1 2013 compared with Q4 2012. The labour market in the USA also continues to show signs of improvement, though the unemployment rate edged up by 0.1 percentage points in May from April to 7.6%. The UK also continued to have the highest annual rate of CPI inflation across the G7 in April, somewhat eroding the international competitiveness of the economy.Since 2011 the production industries of the G7 economies have remained broadly stagnant. However, comparing Q1 2013 with Q4 2012, G7 production grew by 1%, reaching a level of output last recorded in Q4 2011. Looking at the country level there was wide disparity in performance. Production in Canada, Japan and the USA has grown while the other G7 nations, including the UK, have stagnated, or in Italy’s case, continued to decline further.
This release conforms to the standard revisions policy for National Accounts (27.8 Kb Pdf) . In accordance with the policy, the current revisions period is open back to January 1997, in line with the 2013 Blue Book dataset.
The estimates in this statistical bulletin are consistent with this year’s Blue Book, to be published on 31 July 2012. The base year and reference year for chained volume estimates have both moved on from 2009 to 2010.
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.
As part of the celebrations for the Queen's Diamond Jubilee there were changes to bank holidays in May and June 2012. The change to the holidays count as a statistical special event in line with ONS's policy on Special Events. In 2012 there was only one bank holiday in May in 2012 instead of the usual two. This event is not regular, so no adjustment has been made to account for it as part of the seasonal adjustment process. Users are therefore likely to see an effect related to an additional working day in May 2012 in the estimate of the annual change (and there will be a similar effect on the annual change in June associated with two fewer working days in June 2012). More information on the movements in series in 2012 can be found here.
The index of production release for June 2013, to be published on 6 August 2013, will have a revisions period back to April 2013.
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.
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 2010=100 and are classified to the 2007 Standard Industrial Classification (SIC). The production industries, which accounted for 15.2% of gross domestic product in 2010, 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.
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.
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.
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.
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.
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.
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.
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 June 2013 will have a revisions period back to April 2013.
National Accounts revision policy (27.8 Kb Pdf) can be found on the National Statistics website.
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 June 2007 and May 2012 and the estimates published 12 months later.
|Growth rates||Value in latest period||Average||Absolute average|
|Production - 3 month||0.2||-0.15||0.31|
|Manufacturing - 3 month||0.3||-0.16||0.36|
|Production - 1 month||0.0||-0.12||*||0.26|
|Manufacturing - 1 month||-0.8||-0.10||*||0.29|
Spreadsheets give revisions triangles (3.75 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.
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 email@example.com.
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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publication: Tuesday 06 August 2013
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