Index of Production
Measuring the volume of industrial production
The Index of Production (IoP) measures the volume of production of the manufacturing, mining and quarrying, and energy supply industries, which covered 17.2 per cent of the UK economy in 2005.
The index is measured at base year prices (currently 2000). The IoP is a monthly time series with annual and quarterly data also available.
The Index of Manufacturing (IoM) covers the 13 sub-sectors of manufacturing and these are aggregated to form the resulting monthly manufacturing output time series. The IoM is widely used as a short-term economic indicator in its own right and the manufacturing industries made up 77.0 per cent of the total IoP in 2005.
The IoP has three primary uses:
- As a short-term economic indicator in its own right. The Government and the Bank of England, among others, monitor the IoP as an important indicator of industrial activity. The IoP is usually published 26 working days after the end of the month - the earliest official indicator on the performance of UK industry.
- As a component of the production or output measure of GDP. The IoP is a major contributor to the National Accounts. GDP measures the sum of the value added created through the production of goods and services within the economy.
- As a requirement for the Statistical Offices of the European Community (Eurostat). Information on production and current price sales are provided to Eurostat. These are used with data from other countries to construct EC indices, published on a monthly basis.
Ideally, the IoP would measure changes in value added of the production industries each month. On a short term basis it is difficult to measure all of the outputs and inputs in an industry, so the IoP measures changes in gross output. This is turnover plus the change in work in progress and finished goods inventories.
The IoP is published as a First Release. The Release disaggregates the manufacturing sector into seven industrial sectors as well as showing the main industrial groupings and the oil and gas extraction industry. The Release shows the standard three-month on three month percentage movements. The IoP is a monthly series and news agencies and media generally focus on the monthly move. However, monthly movements can be volatile, and the ONS gives prominence to three month on three-month movements.
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Index of Production Press Release