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

Released: 08 November 2011 Download PDF

Key points

  • The seasonally adjusted Index of Production fell by 0.7 per cent in September 2011 compared with September 2010.
  • The seasonally adjusted Index of Manufacturing rose by 2.0 per cent in September 2011 compared with September 2010.
  • Between August 2011 and September 2011 overall production remained flat, with manufacturing rising by 0.2 per cent.
  • The seasonally adjusted Index of Production rose by 0.4 per cent in the third quarter of 2011.

Key figures

Percentage change

         
Index number Month on a year earlier 3 months on a year earlier Month on previous month 3 months on previous 3 months
  2008=100        
Production 92.5 -0.7 -0.8 0.0 0.4
Manufacturing 96.6 2.0 2.1 0.2 0.2

Table source: Office for National Statistics

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Supplementary analysis

The seasonally adjusted index of production rose by 0.4 per cent in the third quarter of 2011 compared with the second quarter of 2011, the strongest quarter on quarter growth since the second quarter of 2010. Manufacturing output rose by 0.2 per cent, mining and quarrying rose by 0.4 per cent and energy sector rose 2.4 per cent on the quarter.

The seasonally adjusted index of production fell by 0.7 per cent in September 2011 compared with September 2010. This is the 3rd consecutive fall on the month a year ago growth, the last rise was in February 2011, which was the 12th consecutive increase. A decrease of 14.7 per cent in the mining and quarrying sector was only partially offset by an increase of 2.0 per cent in the manufacturing sector, 0.1 per cent in the energy sector and 2.5 per cent in water and waste management sector.

The seasonally adjusted index of production remained flat between August 2011 and September 2011. The manufacturing sector rose by 0.2 per cent and the water and waste management sector rose by 0.9 per cent. Mining and quarrying fell by 0.9 per cent and the energy sector fell by 0.5 per cent, completely offsetting the increases. 

Manufacturing

Manufacturing output rose by 0.2 per cent in the third quarter of 2011 compared with second quarter of 2011, the 8th consecutive quarter on quarter rise since the third quarter of 2009. The manufacture of transport equipment industries rose by 2.3 per cent, manufacture of basic pharmaceutical products and preparations industries rose by 2.7 per cent and manufacturing of machinery and equipment industries rose by 1.8 per cent.

Seasonally adjusted manufacturing output rose by 0.2 per cent in September 2011 compared with August 2011, the strongest month on month growth since May 2011. Six manufacturing industry sectors rose, five fell and two remained flat. The largest contributions to the month on month rise in manufacturing output were the manufacture of transport equipment industries which rose by 3.9 per cent, followed by the manufacture of basic metals and metal products industries which rose by 1.9 per cent. In contrast, the manufacture of food, beverages and tobacco industries fell by 2.0 per cent in September 2011 compared with August 2011 and manufacture of computer, electrical and optical industries fell by 3.3 per cent.

The transport equipment industries showed a strong growth on both month on month and quarter on quarter, the main driver was motor vehicles, trailers and semi trailers which rose by 8.8 per cent on the month and 5.4 per cent on the quarter. 

Mining and quarrying

In September 2011, output of the mining and quarrying industries fell by 14.7 per cent compared with September 2010, the 12th consecutive decrease. The biggest decrease was in the extraction of oil and gas which fell by 18.3 per cent in September 2011 compared with the same month a year ago.

Between August 2011 and September 2011 mining and quarrying fell by 0.9 per cent and oil and gas fell by 1.7 per cent.

Energy supply

Output of the energy sector fell on the month however rose on the month a year ago. Between September 2010 and September 2011 energy supply rose by 0.1 per cent. Electricity supply increased by 1.9 per cent and Gas supply decreased by 5.5 per cent. Energy supply fell between September 2011 and August 2011 by 0.5 per cent, with a decrease in electricity supply of 0.3 per cent. Gas supply decreased by 1.1 per cent on the month. 

Water and waste management

Output of the water and waste management sector rose by 2.5 per cent on the month a year ago and rose by 0.9 per cent between August 2011 and September 2011.

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 September 2011

Description % of production Year on year growth (%)  Contribution to production (% points) Month on month growth (%) Contribution to production (% points)
IoP 100.0 -0.7 -0.7 0.0 0.0
Sector B 16.4 -14.7 -2.25 -0.9 -0.12
 Division 06 14.1 -18.3 -2.37 -1.7 -0.19
Sector C 66.6 2.0 1.37 0.2 0.12
Sector D 9.3 0.1 0.01 -0.5 -0.05
Sector E 7.7 2.5 0.19 0.9 0.07

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 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 September 2011

Sub-sector % of production Year on year growth (%)  Contribution to production (% points) Month on month growth (%) Contribution to production (% points)
CA 11.2 3.3 0.41 -2.0 -0.26
CB 2.1 1.1 0.02 1.5 0.03
CC 5.9 -0.2 -0.01 -0.6 -0.03
CD 0.4 -0.3 0.00 -1.0 0.00
CE 5.5 2.9 0.14 -0.8 -0.04
CF 4.9 -10.2 -0.56 0.2 0.01
CG 5.0 -1.0 -0.04 0.0 0.00
CH 9.3 2.2 0.19 1.9 0.17
CI 4.9 0.6 0.03 -3.3 -0.16
CJ 2.2 -4.6 -0.10 0.0 0.00
CK 4.4 9.1 0.42 2.2 0.11
CL 5.8 6.1 0.44 3.9 0.29
CM 4.9 8.6 0.43 0.1 0.01

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 September 2011 fell by 14.7 per cent compared with September 2010. In particular:

  • oil and gas extraction decreased by 18.3 per cent;

  • the largest contributor to the 14.7 per cent year on year fall in overall mining and quarrying was approximately 15.5 percentage points from oil and gas extraction. 

Manufacturing

The seasonally adjusted index of manufacturing in September 2011 rose by 2.0 per cent compared with September 2010. In detail:

  • output increased in eight of the 13 manufacturing sub-sectors and fell in five sub-sectors;

  • the largest increases in output were in the transport equipment industries which rose by 6.1 per cent and other manufacture and repair industries which rose by 8.6 per cent;

  • within the transport equipment industries, the main rises were in the manufacture of motor vehicles, trailers and semi trailers (13.9 per cent) and the manufacture of other transport equipment (13.8 per cent);

  • within the other manufacture and repair industries the main rises were in other manufacturing (9.0 per cent) and the rest of repair and installation (11.3 per cent);

  • the largest contributors to the 2.0 per cent year on year rise in overall manufacturing were approximately 0.6 percentage points from the transport equipment industries and approximately 0.6 percentage points from other manufacturing and repair industries. 

Energy supply

The seasonally adjusted index of the electricity, gas, steam and air conditioning supply industries in September 2011 rose by 0.1 per cent compared with September 2010. The main movements were:

  • electric power generation, transmission and distribution increased by 1.9 per cent;

  • gas; distribution of gaseous fuels through mains; steam and aircon supply decreased by 5.5 per cent;

  • the largest contributor to the 0.1 per cent year on year rise in overall electricity, gas, steam and air conditioning supply was approximately 1.4 percentage points from 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 September 2011 rose by 2.5 per cent compared with September 2010. The main movements were:

  • sewerage which increased by 12.9 per cent;

  • remediation activities and other waste management services which decreased by 2.3 per cent;

  • the largest contributor to the 2.5 per cent year on year rise in overall water supply, sewerage and waste management was approximately 3.9 percentage points from sewerage.

Revisions

This release conforms to the standard revisions policy for National Accounts. In this release, periods from July 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 August 2011 to be revised by 0.1.

Impact on GDP

The impact on the 2011 Quarter 3 Preliminary Estimate of GDP, published on 01 November 2011, arising from this IoP release of data is minimal (less than 0.05 percentage points).

Background notes

  1. What's new?

    In accordance with the National Accounts revision policy, the current revisions period is open back to July 2011.

    The Index of Production publication is released in accordance with the 2007 UK Standard Industrial Classification System (SIC 07).  The latest base year for the chained volume measure of IoP is 2008.  Further information can be found on the website at:

    Bluebook 2011: Improvements to GDP(O), IoS and IoP

    The Index of Production produces the statistical bulletin and tables in accordance with the 2007 UK Standard Industrial Classification System (SIC07).

    Within this release of Index of Production data ONS has produced estimates of data prior to 1997 on a Standard Industrial Classification (SIC) 2007 basis. Data has been produced for total IoP, each sector of the IoP (B, C, D and E) and each sub sector of manufacturing on a seasonally adjusted basis. The majority of series have been estimated back to 1948 on a quarterly and annual basis, and back to 1968 on a monthly basis.

    The definition of 'production' and 'manufacturing' is different under the SIC 2007 classification from that under SIC 2003. However, these changes are generally small. There is limited information available to estimate the effect of industries moving in or out of these sectors and hence, it is not possible to accurately calculate the IoP and IoM on the SIC 2007 basis pre 1997. Therefore the methodology used to calculate the IoP and IoM series prior to 1997 was to use previous SIC 2003 annual growth rates for periods up to 1998.

    All other aggregates have been estimated using conversion factors from the ONS's inter departmental business register (IDBR). The IDBR was dual classified for a period of time, hence each reporting unit on the IDBR was classified according to SIC 2003 and SIC 2007. This meant that conversion factors could be built-up from the unit level. Factors were produced based on unit counts (i.e. the number of units), employment (i.e. the numbers employed by those units) and turnover (i.e. the registered turnover of those units). Of these, turnover was used as the basis for the National Accounts conversion because it was conceptually more accurate to use it for output. These conversion factors are then applied to the SIC 2003 indices to produce estimates of SIC 2007 indices.

    Upcoming changes

    The index of Production release for October 2011 will have a revisions period back to January 2010. 

  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 2011.

  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 ONS work programme consultation which ended in December looked at customers views on how ONS could address customers’ needs within a reducing budget.

  4. Methods

    The Index of Production methodology can be found on the ONS 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 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 here.

    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 September 2011 and will be published on 8 November 2011, the period open for revision will be from July 2011.

    National Accounts revision policy can be found here.

    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 September 2005 and August 2010 and the estimates published 12 months later.

    Revisions September 2011

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

    Growth rates Value in latest period Average Absolute average
    Production - 3 month 0.4 -0.06 0.26
    Manufacturing - 3 month 0.2 -0.08 0.32
    Production - 1 month 0.0 -0.07 0.26
    Manufacturing - 1 month 0.2 -0.04 0.27

    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 (1.27 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 here.

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

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  9. Next publication:  Wednesday 7 December 2011
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    Email:       Indexofproduction@ons.gsi.gov.uk

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  10. Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gsi.gov.uk

    These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority.

Statistical contacts

Name Phone Department Email
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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