Industrial production (volume) index overview

Data extracted in February 2017. Most recent data: Further Eurostat information, Main tables and Database. Planned update of this article: February 2018.
Please also see the monthly Eurostat News Release 13 December 2017.
Figure 1: EU-28 Industrial production for total industry and the main industrial groupings, monthly data, seasonally adjusted, 2005-2016, Source: Eurostat (sts_inpr_m)

The industrial production index (abbreviated IPI and sometimes also called industrial output index or industrial volume index) is a business cycle indicator which measures monthly changes in the price-adjusted output of industry. This article takes a look at the industrial production index as it is calculated in the European Union (EU) as well as in some EFTA and candidate countries.

Main statistical findings

Table 1: Annual rates of change for total industry, main industrial groupings and NACE divisions, calendar adjusted data, EU-28, 2005-2016, Source: Eurostat (sts_inpr_a)
Table 2: Annual rates of change by country, calendar adjusted data, 2005-2016, Source: Eurostat (sts_inpr_a)

Since mid-2003 total industrial output had been on a relatively steady growth path. The production level reached its highest value in April 2008 and then fell continuously for one year until in April 2009 when it was more than 22 percentage points below its former peak. Afterwards the indicator steadily increased again and regained over 90 % of its pre-crisis value by May 2011. In the second half of 2011 and in 2012, industrial production in the EU-28 was on a slow downward trend. Since early 2013 the index value is again slightly increasing (with an average monthly growth rate of 0.2%) but still only stands at around 94 % of its 2009 peak level (Figure 1).

When distinguishing between the main industrial groupings, data show that the production of capital and intermediate goods peaked just before or at the same time as total production and then fell rapidly for over one year until April 2009. Afterwards production in these areas recovered until the first half of 2011 and then saw a decline for almost two years. Since the end of 2012/early 2013 both display a moderate increase.

The production of consumer durables reached its peak several months before total production. In the more recent past production levels in this industry sector developed even less favourably than total production. The development of non-durable consumer goods was less dramatic. Between January 2008 and August 2009 the European production in this industrial grouping fell by almost 7 percentage points (Figure 1). Ever since the volume of non-durable consumer goods has developed much in line with total production.

For energy products the development of the output level was somewhat different from the evolution of the other areas. Production levels in this industry tend to be rather volatile. Before the onset of the crisis in 2008 the average production index was around 2.4 percentage points lower than for total industry. Production fell by more than 14 percentage points between April 2008 and April 2009. Until the end of 2011 energy production recovered somewhat but since than the output of energy products had been on a declining path until early 2014. Since then the production level for energy remained rather stable.

Table 1 shows a breakdown of the general development of the main industrial groupings in more detailed NACE divisions. The 2009 decline in production was particularly strong for machinery and equipment and for motor vehicles which together account for more than 16 % of total industrial production. Considerable negative rates of change were also recorded for electrical equipment, for basic metals and fabricated metal products. The magnitudes of the various rates of change for consumer goods reflect consumers' possibilities and inclinations to adjust their consumption to the new circumstances in the economic crisis. (Table 1).

The economic crisis did not start in all Member States at exactly the same moment (Table 2). Several countries (Estonia, Greece, Spain, Luxembourg, Malta and Portugal) already recorded rates of change below -4 % in 2008 but a relatively large number of countries still displayed positive growth rates of industrial production. In 2009 all EU countries experienced a fall in industrial production and the European average rate of decline was -14 %. In 2010 all EU countries with the exception of Greece, Croatia, and Cyprus had returned to positive growth rates. After two years of recovery the EU-28 as a whole in 2012 again displayed a negative industrial development. This downwards trend for the EU-28 continued for the following year. However the negative growth rates were smaller in 2013 than in 2012. In 2014 the EU returned to a positive growth which continued in 2015 and 2016. During the last three years particularly strong increases in industrial production (10nbsp;% or more) were recorded in the Czech Republic, Hungary, Romania, Slovenia, and Slovakia. The very high growth rates for Ireland are due to on-shoring activities of a few large multinational enterprises.

Data sources and availability

Despite its name the industrial production index is not intended to measure production but should – in theory – reflect the development of value added in the different branches of industry. This means that the inputs obtained by one branch from another must be deducted from its gross output. In this way double counting of production is prevented and the degree of vertical integration of branches should not influence the results for the indicator.

In practice, however, it is difficult to collect value-added data on a monthly basis. Most statistical institutes therefore derive monthly production data from other sources including deflated turnover, physical production data, labour input, intermediate consumption of raw materials and energy etc.

Eurostat publishes, on a monthly basis, the industrial production index for the EU, for the euro area and the Member States; data are also collected for several non-EU countries (Table 2). Data are presented in calendar adjusted/working-day adjusted and in seasonally adjusted form. Currently the indices for industrial production are calculated with 2010 as the base year (=100).

Context

The industrial production index is one of the most important short-term statistics indicators. It is used to identify turning points in the economic development at an early stage and to assess the future development of GDP. In order to serve this purpose it is available on a monthly basis in a detailed activity breakdown and with a rather short delay (1 month and 10 days). The industrial production index is one of the so-called 'Principal European economic indicators (PEEI)' which are used to monitor and steer economic and monetary policies in the EU and in the euro area.

Further Eurostat information

See also

Publications

Main tables

Industry (NACE Rev.2) (t_sts_ind)
Industry production index (NACE Rev.2) (t_sts_ind_prod)

Database

Industry (NACE Rev.2) (sts_ind)
Industry production index (NACE Rev.2) (sts_ind_prod)

Dedicated section

Methodology / Metadata

External links