Index of Production, UK: November 2019

Movements in the volume of production for the UK production industries: manufacturing, mining and quarrying, energy supply, and water and waste management. Figures are seasonally adjusted.

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Cyswllt:
Email Mark Stephens

Dyddiad y datganiad:
13 January 2020

Cyhoeddiad nesaf:
11 February 2020

1. Main points

  • Total production output decreased by 0.6% for the three months to November 2019, compared with the three months to August 2019; this was led by manufacturing output, which fell by 0.8%.

  • The three-monthly fall in manufacturing is because of widespread weakness, with 10 of the 13 subsectors providing downward contributions; this was led by pharmaceutical products (fall of 6.2%) and transport equipment (fall of 1.6%).

  • Production output fell by 1.2% between October 2019 and November 2019, with manufacturing providing the largest downward contribution, falling by 1.7%.

  • The monthly decrease of 1.7% in manufacturing output was because of downward contributions from 10 of the 13 subsectors; led by notable falls from transport equipment (3.4%), chemicals and chemical products (4.7%) and food, beverages and tobacco (1.8%).

  • For the three months to November 2019, production output decreased by 1.1%, compared with the same three months to November 2018; this was led by a fall in manufacturing of 1.2%.

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2. Production

Total production output for the three months to November 2019 fell by 0.6%, compared with the three months to August 2019.

Manufacturing output provided by far the largest downward contribution, falling by 0.8%, led by widespread weakness throughout the sector, with negative contributions from 10 of the 13 subsectors. Negligible contributions from water and waste, and mining and quarrying, which fell by 0.3% and 0.1% respectively, were offset by the only positive contribution from electricity and gas, which rose by 0.6%.

Growth for the Index of Production (IoP) was more pronounced from the beginning of 2010, as the economy recovered from the 2008 economic downturn, before a downturn during 2012. Production output in the UK was 5.5% lower for the three months to November 2019 than the pre-downturn peak for the three months to March 2008. Additionally, the current three-monthly rolling index level is the lowest since July 2017.

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3. Manufacturing

Growth for the Index of Manufacturing was more pronounced from the beginning of 2010, as the economy recovered from the 2008 economic downturn, before a downturn during 2012. Manufacturing output in the UK remained 2.9% lower for the three months to November 2019 than the pre-downturn peak for the three months to March 2008. Additionally, the current three-monthly rolling index level is the lowest since July 2017.

For further detail on the longer-term trend within manufacturing, please see the article, Manufacturing sector performance, UK: 2008 to 2018, published on 2 April 2019. The article provides an overview of the changes in the manufacturing sector between 2008 and 2018, focusing on the industries that have grown or shrunk the most.

Total manufacturing output for the three months to November 2019 fell by 0.8%, compared with the three months to August 2019. Of the 13 subsectors, 10 displayed negative contributions, led by:

  • basic pharmaceutical products, which fell by 6.2%, mainly because of monthly weakness during September 2019

  • transport equipment, which fell by 1.6%, caused by weakness from motor vehicles, trailers and semi-trailers, which fell by 2.4% because of the additional impact of shutdowns during November 2019; this industry is still showing a longer-term decline, as highlighted by the three months on same three months a year ago indicator, which fell by 3.1%

  • chemicals and chemical products, which fell by 2.5%, partially because of the impact of maintenance and shutdowns but also because of widespread weakness in November and a continuation of sustained weakness since the three months to March 2019

Partially offsetting the cumulative impact from the negative contributions was widespread growth from food, beverages and tobacco, which rose by 1.9%. Within this sector, there was notable strength from meat and meat products (2.1%), other food products (2.3%), alcoholic beverages (2.8%) and soft drinks (4.6%).

There was also a notable increase from computer, electronic and optical products, which rose by 2.2%, mainly because of monthly export-driven strength during October 2019.

The notable decrease of 1.7% in total manufacturing output in November 2019, compared with October 2019, was mainly because of widespread weakness, with 10 of the 13 subsectors displaying downward contributions, most notably from:

  • the motor vehicles, trailers and semi-trailers industry (6.1%), which was impacted by factory shutdowns during November 2019

  • widespread weakness from chemicals and chemical products (4.7%), following on from the impact of maintenance and shutdowns

  • food, beverages and tobacco (1.8%) because of widespread weakness, led by an export-driven fall from alcoholic beverages, which fell by 4.0%

This is the largest monthly fall in total manufacturing since April 2019, when output fell by 4.2% and the second-largest fall since June 2012, when output fell by 2.6%. Additionally, the decline in output for November 2019 results in the index falling to the weakest level since November 2016.

Widespread weakness is underpinned by falls in both nominal total turnover and export turnover and more detail can be found in our Monthly Business Survey turnover in production industries published alongside this release.

For the three months to November 2019, compared with the same three months to November 2018, total output declined by 1.2%, the sixth consecutive fall for this indicator, led by:

  • chemicals and chemical products, which fell by 8.5%, the strongest fall since April 2016

  • rubber and plastic products, which fell by 5.4%

  • machinery and equipment, which fell by 4.5%

  • transport equipment, which fell by 2.2%, a continuation of ongoing weakness since June 2018

Partially offsetting overall weakness was long-term strength from the pharmaceutical products subsector (4.9%).

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4. Mining and quarrying

There is a continuation of weakness within this sector, with the three months to November 2019 on three months a year ago output falling by 3.1%, continuing the trend of a weaker 2019 in comparison with 2018. The three-monthly indicator to November 2019 fell by 0.1%.

Monthly output increased by 1.3%, led by a rise of 1.7% from oil and gas extraction; a partial bounceback following notable weakness in October 2019, when it fell by 4.6%.

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5. Electricity and gas

The three-monthly growth to November 2019 of 0.6% was driven by electricity supply, which increased by 1.2%. In contrast gas supply fell by 1.3%.

Monthly output rose by 0.1% for November 2019 because of increased demand for both electricity and gas supply, resulting in negligible rises of 0.1% and 0.3% respectively. The Met Office reported that the provisional UK mean temperature was 5.3 degrees Celsius, which is 0.9 degrees Celsius below the 1981 to 2010 long-term average. Additionally, the mean temperature fell by 3.7 degrees Celsius between October and November 2019.

In contrast, the three months to November 2019 on three months a year ago indicator fell by 1.3%, mainly because of gas supply, which fell by 7.0%. This decline was also temperature-driven, with colder than average temperatures across the three months to November 2018 increasing demand, in comparison with the same three months to November 2019.

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6. Water and waste

Work carried out on waste treatment projects is the underlying factor behind the continuation of longer-term strength across the three months to November 2019 on three months a year ago indicator for the waste collection industry, which rose by 3.5%. In contrast, and partially offsetting this growth, was a 2.6% fall for sewerage.

Despite strength in the three months on a year ago indicator within waste supply, monthly output declined by 1.7% for this industry; this was led by weakness from large businesses, driving the overall sector level fall of 0.3%.

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7. Index of Production data

Index of Production time series
Dataset DIOP | Released 13 January 2020
Movements in the volume of production for the UK production industries: manufacturing, mining and quarrying, energy supply, and water and waste management. Figures are seasonally adjusted.

Output of the production industries
Dataset | Released 13 January 2020
Index values and growth rates for production, manufacturing and the main industrial groupings in the UK.

Index of Production and industry sectors to four decimal places
Dataset | Released 13 January 2020
Monthly index values for production and the main Index of Production (IoP) sectors in the UK to four decimal places.

Monthly Business Survey turnover in production industries
Dataset | Released 13 January 2020
Monthly Business Survey (MBS) production industries’ total turnover, domestic sales and exports in the UK. Figures are in current price and non-seasonally adjusted.

Export proportions for manufacturing industries
Dataset | Released 13 January 2020
Monthly, quarterly and annual export data for the manufacturing industries, collected by the MBS at industry level in the UK.

All data related to the IoP are available on the Related data page.

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8. Glossary

Index number

The index number is a measure of the average level of prices, quantities or other measurable characteristics relative to their level for a defined time period or location.

Industrial classification or breakdown

The industrial classification or breakdown is the internationally standardised method for classifying the wide range of industrial sectors in an economy. We use the Standard Industrial Classification 2007 (SIC 2007) for industrial breakdowns.

Manufacturing

The manufacturing sector includes the output of manufacturing industries and is broken down into 13 subsectors.

Monthly Business Survey

The Monthly Business Survey (MBS) collects information on the monthly turnover of UK businesses within the production and service sectors from various industrial sectors and regions in the UK.

Production

The production sector includes the output in the manufacturing (the largest component of production), mining and quarrying, energy supply, and water supply and waste management industries.

Turnover

The turnover of a company is the value of the goods or services sold during a particular time period. It includes total takings or invoiced sales and receipts. Interest and similar income, “other operating income”, and extra ordinary income is excluded. Value Added Tax (VAT) invoiced to the customer is excluded.

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9. Measuring the data

The Index of Production (IoP) uses data from a variety of sources and is calculated by taking turnover and removing the impact of price changes or by using direct volume estimates.

The majority of data are collected as “turnover values” through the Monthly Business Survey (MBS). In addition, direct volume series are collected by the Department for Business, Energy and Industrial Strategy (BEIS) and the International Steel Statistics Bureau (ISSB) for steel industries.

From January 2018, Value Added Tax (VAT) data have also been included across 64 production industries for small- and medium-sized businesses. For more information, see VAT turnover data in National Accounts: background and methodology.

A comprehensive list of the IoP source data can be found in the Gross domestic product (GDP(O)) source catalogue (XLS, 715KB).

More quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in the UK Index of Production QMI.

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10. Strengths and limitations

Seasonal adjustment

The data published in the Index of Production (IoP) release are all seasonally adjusted (although non-seasonally adjusted estimates are also available). This aids interpretation by removing annually recurring fluctuations, for example, those caused by holidays or other seasonal patterns.

Data volatility

Care should be taken when using the month-on-month growth rates as data can be volatile. Longer-term growth rates and examination of the time series allow for better interpretation of the statistics.

Comparability with UK trade statistics

The Monthly Business Survey (MBS) turnover in production industries dataset produces the proportion of turnover from exports by industry and level of turnover and exports (British Pound, millions). However, this is not always comparable with UK trade statistics. Further information on UK trade and how data on it are compiled can be found in the UK trade release.

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Manylion cyswllt ar gyfer y Bwletin ystadegol

Mark Stephens
indexofproduction@ons.gov.uk
Ffôn: +44 (0)1633 456387