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Statistical bulletin: Index of Production, February 2015 This product is designated as National Statistics

Released: 10 April 2015 Download PDF

Main points

  • Total production output is estimated to have increased by 0.1% in February 2015 compared with February 2014. There were increases in 2 of the 4 main sectors, with manufacturing output being the largest contributor, increasing by 1.1%.
  • There were increases in 9 of the 13 manufacturing sub-sectors compared with a year ago and the largest contributor was the manufacture of transport equipment, increasing by 6.1%.
  • Total production output increased by 0.1% in February 2015 compared with January 2015. There were increases in 3 of the 4 main sectors, with manufacturing being the largest contributor, increasing by 0.4%.
  • The main components contributing to the month-on-month increase in manufacturing were the manufacture of transport equipment, the manufacture of machinery & equipment not elsewhere classified and the manufacture of basic metals & metal products.
  • In the 3 months to February 2015, production and manufacturing were 10.4% and 4.9% respectively below their figures reached in the pre-downturn GDP peak in Quarter 1, Jan to Mar 2008.
  • In this release, the only period open for revision was January 2015, in line with the National Accounts revisions policy. There was no impact on previously published GDP estimates resulting from revisions to this period.

Main figures

This bulletin presents the monthly estimates of the Index of Production (IoP) for the United Kingdom production industries, February 2015. The IoP is one of the earliest indicators of growth and it measures output in the manufacturing (the largest component of production), mining & quarrying, energy supply and water supply & waste management industries. The production industries account for 14.6% of the output approach to the measurement of gross domestic product (GDP).

IoP values are referenced to 2011 so that the average for 2011 is equal to 100. Therefore, currently an index value of 110 would indicate that output is 10% higher than the average for 2011. The index estimates are mainly based on a monthly business survey (MBS) of approximately 6,000 businesses, covering all the territory of the UK without geographical breakdown. The total IoP estimate and various breakdowns are widely used in private and public sector institutions. Care should be taken when using the month on month growth rates due to their volatility. All figures contained within this release are seasonally adjusted estimates, unless otherwise stated.

Table 1 shows the main figures for this release. Figure 1 shows the production and manufacturing series from November 2012 to February 2015. This release also presents the economic context to the IoP, GDP impact and components, a supplementary analysis to the IoP, industry spotlight and a background notes section for an assessment of the quality of the IoP, as well as an explanation of the terms used in this bulletin.

Table 1: Index of Production Main Figures, February 2015

UK

Index number Most recent month on a year earlier Most recent 3 months on a year earlier Most recent month on previous month Most recent 3 months on previous 3 months
  2011=100        
Production 98.5 0.1 0.7 0.1 -0.2
Manufacturing 101.5 1.1 1.8 0.4 0.1

Table source: Office for National Statistics

Table notes:

  1. Source: Primarily Monthly Business Survey (Production and Services) - Office for National Statistics

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Figure 1: Seasonally adjusted production and manufacturing, November 2012 - February 2015

UK

Figure 1: Seasonally adjusted production and manufacturing, November 2012 - February 2015

Notes:

  1. Source: Primarily Monthly Business Survey (Production and Services) - Office for National Statistics

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Quality of the Index of Production

The Office for National Statistics (ONS) has developed guidelines for measuring statistical quality (1.22 Mb Pdf) ; these are based upon the 5 European statistical system (ESS) quality dimensions. The IoP in its current form adheres to these requirements. One important dimension for measuring statistical quality is accuracy. That is, the extent to which the estimate measures the underlying ‘true’ value of the output growth (of the production industries) in the UK for a particular period. Although the IoP meets its legal requirements for statistical accuracy, still as in all surveys based estimates, by definition, its estimates are subject to statistical uncertainty/errors. These errors consist of 2 main elements; the sampling error and the non-sampling error.

For many well-established statistics ONS measures and publishes the sampling error associated with the estimate, using this as an indicator of accuracy. The IoP however, is constructed from a variety of data sources, some of which are not based on random samples. As a result ONS currently does not publish a measure of the sampling error associated with the IoP underlying data, mainly the monthly business survey (MBS). However, research is currently under way to attempt to measure the standard error and the results of this will be published on completion.

Non-sampling errors are not easy to quantify but can be caused by coverage issues, measurement, processing and non-response. The response rate gives an indication of the likely impact of non-response error on the survey estimates. From January 2015, the MBS response rates for data included in the IoP publication were published in the background methods section of the statistical bulletin. This is to give further information of the percentages of the amount of turnover and questionnaire forms returned. In this and future publications, ONS is also publishing MBS historical response rates back to 2010.

A further dimension of measuring accuracy is reliability, which can be measured using evidence from analyses of revisions to assess the closeness of early estimates to subsequent estimated values. Revisions are an inevitable consequence of the trade-off between timeliness and accuracy. Figures for the most recent months are provisional and subject to revision in light of

  • late responses to surveys and administrative sources

  • forecasts being replaced by actual data

  • revisions to seasonal adjustment factors, which are re-estimated every month and reviewed annually. Revisions to the IoP are typically small (around 0.1 to 0.2 percentage points), with the frequency of upward and downward revisions broadly equal. Further information on the most recent revisions analysis can be found in the revisions to IoP section and in the revision triangles (4.39 Mb ZIP) section in the bulletin background note  

It should be noted that care should be taken when using the month-on-month growth rates, due to their volatility. Further information on the latest quality and methodology information (QMI) for the IoP can be found in the QMI paper. Furthermore, the IoP is constantly being reviewed and improved for accuracy and uncertainty as part of the GDP(O) improvement project; further details of improvements are published each year as part of a suite of Blue Book articles. A full list of the GDP(O) improvement project articles can be found on the Improvements page of our website.

Economic Context

Figure 2 shows that the pace of growth in manufacturing exceeded that of total production between 2003 and 2006. This trend was, however, temporarily interrupted following the economic downturn in 2008, where manufacturing fell by a greater extent than total production.

Following the 2008 to 2009 downturn, total production and manufacturing returned to growth for a short period, before falling again in 2011 and 2012. This coincided with falling gross domestic product (GDP) in the euro area. Total production was particularly affected, falling below its downturn trough in Quarter 4, Oct to Dec 2012, while manufacturing fell by a smaller amount.

For production and manufacturing, conditions improved throughout 2013 and continued to do so in 2014. The Quarterly National Accounts reported that GDP rose by 0.6% in the fourth quarter of 2014, marking an eighth consecutive quarter of expansion, mainly due to the services industries, which grew by 0.9% on the quarter. Looking at the other components of GDP, agriculture also experienced growth in output, by 0.4%, although construction fell by a marked 2.2%, its first decline in output since Quarter 1, Jan to Mar 2013.

Despite falling monthly production output in October and December, the industry continued to show growth on an annual basis; production was 1.0% higher in Quarter 4, Oct to Dec 2014 compared with Quarter 4, Oct to Dec 2013, with manufacturing 2.6% higher. For production, this does however represent the weakest quarter-on-quarter a year ago growth since Quarter 3, Jul to Sep 2013, largely attributable to a fall in output in the mining & quarrying and water supply, sewerage & waste management industries.

Figure 2: Quarterly seasonally adjusted production and manufacturing, quarter 4 (Oct to Dec) 2003 - quarter 4 (Oct to Dec) 2014

UK

Figure 2: Quarterly seasonally adjusted production and manufacturing, quarter 4 (Oct to Dec) 2003 - quarter 4 (Oct to Dec) 2014

Notes:

  1. Source: Primarily Monthly Business Survey (Production and Services) - Office for National Statistics

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Despite GDP having surpassed its pre-downturn peak in Quarter 3, Jul to Sep 2013, services (which account for over 78% of total GDP) remained the only industry grouping to have exceeded its pre-downturn peak in output. In contrast, output in the production and construction industries in Quarter 4, Oct to Dec 2014 remained below levels experienced just before the onset of the downturn, by 10.3% and 7.0% respectively (according to the Quarterly National Accounts). Manufacturing output has performed more favourably compared with these industries; however output still remained 4.9% below pre-downturn levels.

The recent period of rising manufacturing output has coincided with easing price pressures in the manufacturing industry, both in terms of the prices manufacturers pay for materials and fuels used in the production process (input prices) and the prices they charge for the goods they produce (output prices). Both measures are published by us in the Producer Price Inflation bulletin. Input prices marked their 16th successive month of deflation in the year to February 2015, with prices falling by 13.5% on an annual basis. Output prices have also experienced deflation, falling by 1.8% on an annual basis.

International Perspective

Globally, the performance of manufacturing output has varied across G7 nations since the onset of the economic downturn; Japan experienced the largest average annual fall in output over 2008 and 2009 (12.5% per annum), whereas the smallest decline was in the UK (6.1% per annum). 

Following the 2008 to 2009 economic downturn, all G7 nations’ manufacturing industries returned to growth. However, except for the USA, all members experienced further declines between the second half of 2012 and the first half of 2013, particularly in Italy and Japan. More recently, in Quarter 4, Oct to Dec 2014, all member countries except France have experienced growth in manufacturing output, although this has been to varying degrees. Japan experienced the strongest growth in output on a quarterly basis (1.7%). Germany and the USA grew by 1.4% and 1.0% respectively, while output growth in Canada, Italy and the UK has been relatively more modest. For most member states, manufacturing output remained below their respective pre-downturn levels experienced in 2007. Output in Italy, France and Japan remained a marked 24.0%, 16.2% and 14.1% below respective pre-downturn levels. However, in Quarter 3, Jul to Sep 2014, the USA did surpass its pre-downturn level and exceeded it by 1.6% in Quarter 4, Oct to Dec, while Germany was also above its respective pre-downturn level, by 1.7%.

Figure 3: Quarterly international manufacturing output, quarter 4 (Oct to Dec) 2008 - quarter 4 (Oct to Dec) 2014

Figure 3: Quarterly international manufacturing output, quarter 4 (Oct to Dec) 2008 - quarter 4 (Oct to Dec) 2014

Notes:

  1. Source: OECD/ONS
  2. Data for the UK are consistent with the February ONS Index of Production bulletin, while data for all other remaining G7 economies have been sourced from OECD.

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Figure 4 presents month-on-year percentage growth rates in 8 of the 13 UK manufacturing sub-industries for January 2015, alongside comparable growth rates achieved in Germany, France, Italy and the euro area. This shows that the UK experienced the strongest total manufacturing growth of these listed countries at 1.7%, compared with total euro area manufacturing growth of 0.1%. Germany experienced growth of 1.0%, while France and Italy both experienced falling output over the same period.

Figure 4 shows that the UK’s comparable strength is concentrated in the manufacture of food products and pharmaceutical products; partially offset by relative weakness in the manufacture of other machinery and equipment (that includes general purpose machinery products for use in other industries, such as pumps, valves gears and compressors, among others).

Figure 4: Month on a year ago manufacturing sub-industry percentage growth in the UK and the euro area

Figure 4: Month on a year ago manufacturing sub-industry percentage growth in the UK and the euro area

Notes:

  1. Source: Eurostat/ONS
  2. Data for the UK are consistent with the February ONS Index of Production bulletin, while data for all other remaining economies have been sourced from Eurostat.

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GDP Impact and Components

In this release, the only period open for revision was January 2015, in line with the National Accounts revisions policy (41.6 Kb Pdf) .

The estimates for the production industries are generally the first of the main components for the output approach to the measurement of GDP to be published (agriculture, construction and services are the other components). All the components are already available for Quarter 4, Oct to Dec 2014. Details of the data already published can be found in Table 2. The Retail Sales Index reported in Table 2 is not a direct component of the output approach to measuring GDP. It does, however, feed into estimates of GDP in 2 ways. Firstly, it feeds into the services industries when GDP is measured from the output approach. Secondly, it is a data source used to measure household final consumption expenditure which feeds into GDP estimates when measured from the expenditure approach.

Output in the construction industry for February 2015 will also be published on 10 April 2015 and services output for the same period on 28 April 2015.

Table 2: GDP component table, February 2015

UK

              Percentage change
Publication Percentage of GDP Release date Month or 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  14.6 10 Apr Feb 0.7 -0.2 0.1 0.1
Production 1     Jan 1.1 0.0 1.2 -0.1
               
               
Construction  6.4 10 Apr Feb 0.3 -3.2 -1.3 -0.9
      Jan 2.5 -2.8 -3.0 -2.5
               
               
Index of  78.4 31 Mar Jan 3.3 0.8 3.2 -0.2
Services              
               
               
Retail    26 Mar Feb 5.1 2.0 5.7 0.7
Sales     Jan 5.4 2.4 5.9 0.1
             
               
Agriculture 0.6 31 Mar Q4 1.6 0.4 .. ..
      Q3 1.9 0.6 .. ..
               

Table source: Office for National Statistics

Table notes:

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

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Production and Sectors Supplementary Analysis

Table 3: Headline growth rates and contributions to the Index of Production, February 2015

UK

Description Percentage of production Month on same month a year ago growth (per cent)  Contribution to production (Percentage points) Month on previous month growth (per cent) Contribution to production (Percentage points)
IoP 100.0 0.1 0.1 0.1 0.1
Sector B 15.7 -6.0 -0.85 -2.7 -0.37
Division 06 12.9 -12.0 -1.29 -3.8 -0.37
Sector C 69.4 1.1 0.81 0.4 0.27
Sector D 7.1 5.9 0.39 1.2 0.08
Sector E 7.9 -3.2 -0.27 1.4 0.12

Table source: Office for National Statistics

Table notes:

  1. Headline figures for the Index of Production are:

    Total Index of Production; Sector B Mining & quarrying; and within this Division 06 Oil & gas extraction; Sector C Manufacturing; Sector D Electricity, gas, steam & air conditioning; and Sector E Water supply, sewerage & waste management.

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Figure 5: Contribution to production percentage growth, between February 2014 and February 2015

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

Figure 5: Contribution to production percentage growth, between February 2014 and February 2015

Notes:

  1. Source: Primarily Monthly Business Survey (Production and Services) - Office for National Statistics

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Figure 6: Contribution to production percentage growth, between January 2015 and February 2015

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

Figure 6: Contribution to production percentage growth, between January 2015 and February 2015

Notes:

  1. Source: Primarily Monthly Business Survey (Production and Services) - Office for National Statistics

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Total production

As seen in Table 3, total production output in February 2015 increased by 0.1% compared with February 2014. This increase reflected rises in 2 of its 4 main components with manufacturing, the largest component of production, increasing by 1.1% and contributing 0.8 percentage points. The rises were largely offset by a fall in mining & quarrying, which decreased by 6.0% and contributed 0.9 percentage points to total production.

Between January 2015 and February 2015, total production increased by 0.1%, see Table 3, having decreased the previous month by 0.1%. This reflected increases in 3 of its main sectors, with the largest contributor being manufacturing, which increased by 0.4% and contributed 0.3 percentage points. Largely offsetting the increases was a decrease in mining & quarrying, which decreased by 2.7% and contributed 0.4 percentage points to total production.

Manufacturing

Manufacturing output increased by 1.1% between February 2014 and February 2015 and contributed 0.8 percentage points to total production growth. Output increased in 9 of the 13 manufacturing sub-sectors compared with a year ago (see Figure 5 for the contribution to production growth from each of the main sectors and sub-sectors). The manufacturing sub-sector with the largest upward contribution to total production growth was the manufacture of transport equipment, which increased by 6.1% and contributed 0.7 percentage points. The main contributor within this sub-sector was the motor vehicles, trailers & semi-trailers industry, which increased by 7.1% and contributed 0.4 percentage points to total production. This was the 14th consecutive increase this month compared with a year ago.

In contrast, the manufacturing sub-sector with the largest downward contribution to total production was the manufacture of machinery & equipment not elsewhere classified, which decreased by 9.9% and contributed 0.5 percentage points to total production. This followed a similar decrease in January 2015 of 10.2% when compared with January 2014.

Manufacturing output increased by 0.4% between January 2015 and February 2015. There were increases in 7 of the 13 manufacturing sub-sectors (see Figure 6). The manufacturing sub-sector with the largest contribution to the increase in total production was the manufacture of transport equipment, which increased by 1.6% and contributed 0.2 percentage points to total production.

In contrast to the above increases, the manufacturing sub-sector with the largest downward contribution to total production was the manufacture of basic pharmaceutical products & pharmaceutical preparations, which decreased by 1.7% and contributed 0.1 percentage points to total production, having also fallen the previous month by 1.4%.

Mining and quarrying

Mining & quarrying output decreased by 6.0% between February 2014 and February 2015, having increased by 3.1% the previous month. The sub-sector with the largest downward contribution (see Figure 5) compared with a year ago was the extraction of crude petroleum & natural gas, which decreased by 12.0% and contributed 1.3 percentage points to total production.

Mining & quarrying output decreased by 2.7% in February 2015 compared with January 2015, having increased by 1.9% the previous month. The sub-sector with the largest downward contribution was the extraction of crude petroleum & natural gas, which decreased by 3.8% and contributed 0.4 percentage points to total production (see Figure 6). This followed an increase of 2.4% the previous month in this sub-sector.  Evidence suggests that the fall observed within this sub-sector was mainly attributed to a reduction in crude oil and gas production in some of the North Sea oil terminals and gas fields when compared with January 2015.

Electricity, gas, steam & air conditioning

Electricity, gas, steam & air conditioning output increased by 5.9% in February 2015 compared with February 2014 and contributed 0.4 percentage points to total production (see Figure 5). This reflected increases in output in both sub-sectors, with the largest from electric power generation, transmission & distribution, which increased by 6.0% and contributed 0.3 percentage points to total production. Evidence suggested that the average temperature during February 2015 was cooler than a year earlier, therefore the increase in output was mainly attributed to an increase in demand.

Electricity, gas, steam & air conditioning output increased by 1.2% in February 2015 compared with January 2015 and contributed 0.1 percentage points to total production (see Figure 6). There were increases in both sub-sectors with the largest increase from electric power generation, transmission & distribution, which rose by 1.2% and contributed 0.1 percentage points to total production.

Water & waste management

Water supply, sewerage & waste management output in February 2015 decreased by 3.2% compared with February 2014 and contributed 0.3 percentage points to total production. This was the ninth consecutive decrease since May 2014, compared with a year ago. This decrease reflected falls in 3 of its 4 sub-sectors’ output (see Figure 5). The largest contributor to the decrease was sewerage output, which decreased by 9.7% and contributed 0.3 percentage points to total production.

Water supply, sewerage & waste management output increased by 1.4% between January 2015 and February 2015, having increased by 0.4% the previous month. This increase reflected rises in 3 of its 4 sub-sectors (see Figure 6), with the largest contribution coming from waste collection, treatment & disposal activities, which increased by 2.2% and contributed 0.1 to total production.

Revisions to IoP

Revisions to the Index of Production follow the National Accounts Revisions policy (41.6 Kb Pdf) (41.7 Kb Pdf). Revisions are caused by a number of factors including, but not limited to: revisions to source data due to late responses to the monthly business survey (MBS), actual data replacing forecast data and revisions to seasonal factors that are re-estimated every period. ONS produces revisions triangles of production and manufacturing growth to provide users with one indication of the reliability of this main indicator. Statistical tests are performed on the average revision to test if it is statistically significantly different from zero. Further information can be found in background note 5.

In this release of data, the only period open for revision is January 2015. There was no revision to the IoP month-on-month growth rate for this period. Further details on the revisions to IoP components can be found in the IoP5R tables, located within the data section of this release.

Industry Spotlight: Manufacture of Computer, Electronic and Optical Products

Industry CI (division 26) covers the manufacture of computer, electronic and optical products in the Index of Production data. It is a diverse industry producing high-technology products, with turnover frequently being driven by large, high value contracts. Such products include measuring, testing and navigation equipment (46% of total industry turnover in January 2015), medical scanners (10% of turnover) and communication equipment (13% of turnover). The industry is highly export-orientated, with 50% of turnover generated from export orders in 2014.

In 2014, output in this industry totalled £10.0 billion in current prices, equivalent to 6.6% of all manufacturing output and 0.6% of whole economy output. According to the annual business survey, there were approximately 6,000 enterprises operating in this industry in 2013, employing 138,000 people on average throughout the same year (see Table 4). As a proportion of turnover, the industry also invested slightly more than average (2.6%) compared with the total manufacturing industry in 2013.

In the 5 years running up to the 2008/09 global financial crisis, output in the industry exhibited a slight downward trend, falling by around 1.1% per annum (see Figure 7). The economic downturn exacerbated this trend of declining output, with the industry falling by a greater 6.3% and 4.2% during the 2008 and 2009 calendar years respectively. Output in the industry continued to be subdued in the subsequent 4 years but recovered strongly in 2014, growing by 4.3%, the fastest rate in 14 years.

Figure 7: Volume of output in the manufacturing of computer, electronic and optical products industry, Jan 2002 to Feb 2015

UK

Figure 7: Volume of output in the manufacturing of computer, electronic and optical products industry, Jan 2002 to Feb 2015

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The strength in output observed over 2014 was concentrated in the latter half of the year, with output in December 2014 particularly strong. As turnover in the industry is generated from large, non-seasonal high value contracts, output in the industry can fluctuate and the strength observed in December was a result of an uptick in contracts that did not continue at the start of 2015. The characteristics of this sub-sector mean that it can experience some volatility, though it is by no means the most volatile of the 13 sub-sectors.

Table 4: Summary statistics for the manufacture of computer, electronic and optical products, 2008 to 2013

UK

Year Number of enterprises Average employment during the year (thousands) Total net capital expenditure (£ million)
2008                           7,097 147 376
2009                           6,968 116 294
2010                           6,384 133 416
2011                           6,117 128 480
2012                           5,875 128 511
2013                           6,001 138 506

Table source: Office for National Statistics

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Background notes

  1. What's new?

    The Assessment of Short-Term Economic Output Indicators: Preliminary Estimate of GDP, Indices of Production and Services, and Retail Sales has been published. Please see assessement report number 278 for further details.

    In November 2014, Government Statistical Service (GSS) uncertainty guidance was published.

    On 7 January 2015, the following papers were published:

    Impact of quarterly employment question on monthly survey response (163.7 Kb Pdf) .

    Monthly Business Survey variance of change (110 Kb Pdf) .

    ONS has implemented an updated version of the seasonal adjustment software called X-13-ARIMA-SEATS. The new version is in line with international best practice and is a change from the previously used version X-12-ARIMA. In practice, this will result in improved quality of outputs for seasonally adjusted estimates.

    Upcoming changes

    The Index of Production release for March 2015, to be published on 12 May 2015, will have a revisions period back to January 2015.

  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.

  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 2011=100 and are classified to the 2007 Standard Industrial Classification (SIC). The production industries, which accounted for 14.6% of gross domestic product in 2011, cover mining & quarrying (Section B), manufacturing (Section C), gas & electric (Section D), and water supply & sewerage (Section 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:

    • late responses to surveys and administrative sources

    • 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:

    • 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, Her Majesty’s Treasury and the Office for Budget Responsibility, to assist in informed policy and decision making.

  4. Methods

    An article about the Index of Production methodology (66.5 Kb Pdf) is available on the Office for 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 of various industries in the economy. It is one of the main data sources used in the compilation of the Index of Production.

    Approximately 70% of the IoP estimates are based on data collected through the ONS monthly business survey (MBS). The remainder are based on data received from external sources. The MBS response rates for data included in this publication are presented in Table 5 for the current month and the three months prior. The response rates for the historical periods are updated to reflect the current level of response, incorporating data from late returns. Two response rates are included with one percentage for the amount of turnover returned and the other percentage for the amount of questionnaire forms. We have also published MBS historical production industries response rates (34 Kb Excel sheet) back to 2010.

    Table 5: Monthly Business Survey (MBS) Response Rates, February 2015

    UK

     
    Percentage
      Year Period Turnover Questionnaire
    MBS overall 2015 Feb 83.1 76.5
    2015 Jan 92.3 83.6
    2014 Dec 96.5 85.5
    2014 Nov 97.4 86.7
    MBS production only 2015 Feb 89.3 78.8
    2015 Jan 95.3 86.1
    2014 Dec 96.6 88.9
      2014 Nov 97.8 90.0

    Table source: Office for National Statistics

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    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 4 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 chained volume measures. 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.

    Quality and methodology information report
    A quality and methodology information report for this statistical bulletin can now be found on the ONS 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 5 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.

    Table 6 presents a summary of the differences between the first estimates published between March 2008 and February 2014 and the estimates published 12 months later.

    Table 6: Revisions, February 2015

    UK

    Percentage change
    Revisions between first publication and estimates twelve months later
    Growth rates Value in latest period Average over the last 60 months   Average over the last 60 months without regard to sign (average absolute revision)
    Production - 3 month -0.2 -0.14 0.29
    Manufacturing - 3 month 0.1 -0.15 0.29
    Production - 1 month 0.1 -0.11 * 0.28
    Manufacturing - 1 month 0.4 -0.08 0.28

    Table source: Office for National Statistics

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    Spreadsheets give revisions triangles (4.39 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 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.

    The result presented in Table 6 suggests that the average revision for our 3 monthly estimates is not statistically significantly different from zero and that there are small downward revisions for our monthly production estimates over 12 months. In other words, the initial estimates for any given period provide a good indication of the later IoP estimates once more data have become available.

  6. Publication policy

    Details of the policy governing the release of new data are available from the media relations 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 0845 601 3034 or email Customer Contact Centre.

  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) 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.

  8. Relevant links

    The Changing Shape of UK Manufacturing, an event coordinated jointly with the Department for Business, Innovation and Skills, took place on 22 October 2014. The event featured a range of talks from users, producers and suppliers of manufacturing statistics, not just from government, but also business representatives and academics. To view the content of the day, please visit Storify

    Disclosure control policy (337 Kb Word document)

    The UK has one of the fastest growing economies in the G7

    ONS has published a short story describing how the pharmaceuticals industry has changed over time.

    Impact on National Accounts of Producer Price Index Rebasing

    On 17 September 2014 a 'Summary of upcoming changes to GDP' was published.

    An article titled 'Impact of upcoming improvements on estimates of real and nominal annual and quarterly GDP: 1997 to 2012' was published on 3 September 2014.

    On 31 October 2014, ONS published updated methodology for the IoP on the guidance and methodology web pages. The updated documentation includes a new and comprehensive source catalogue detailing the methods, data and weights used to compile IoP, IoS and GDP(O).

    The GDP Output Improvement Report, published on 30 September 2014, provides a detailed update of the implementation of improvements for Blue Book 2014, progress on industry reviews and wider cross-cutting improvements, a comprehensive timetable for the industry review project, an update of industry quality ratings and progress on experimental statistics.

    On 6 November 2014 ONS published a short story looking at the changing shape of the UK aerospace manufacturing industry.

  9. Customer feedback

    ONS has received some comments from users regarding the Index of Production. These have mainly been in three areas and the bullet points detail the action ONS has taken, or plans to take, to address these concerns:

    As a reader and user of our statistics we would welcome your feedback on the content of this publication, your views for improvement and on the way you currently use our statistics. If you would like to get in touch or to send your feedback please contact us via email: indexofproduction@ons.gsi.gov.uk.

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  11. Next publication: Tuesday 12 May 2015
    Issued by : Office for National Statistics, Government Buildings, Cardiff Road, Newport NP10 8XG

    Media contact:
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  12. 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
Alaa Al-Hamad +44 (0)1633 455648 ONS alaa.al-hamad@ons.gsi.gov.uk
Get all the tables for this publication in the data section of this publication .
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