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Archive:Industry and construction statistics - short-term indicators

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Data from September 2012. Most recent data: Further Eurostat information, Main tables and Database.

This article examines recent statistics in relation to developments for both industry and construction in the European Union (EU). Short-term business statistics (STS) are provided in the form of indices that allow the most rapid assessment of the economic climate within industry and construction, providing a first evaluation of recent developments for a range of activities. STS show developments over time, and so may be used to calculate rates of change, typically showing comparisons with the month or quarter before, or the same period of the previous year. As such, STS do not provide information on the level of activity, such as the monetary value of output (value added or turnover), or actual prices.

Main statistical findings

Industry

The impact of the financial and economic crisis and the subsequent recovery of the EU-27’s industrial economy can be clearly seen in two of the main industrial indicators, namely the industrial production index and the index for industrial domestic output prices. Over several years there was relatively stable output and price growth across the EU-27 (see Figure 1), which was interrupted from the second half of 2007 as price growth accelerated, while industrial output slowed. The EU-27’s industrial production index saw its month-on-month rate of change turn negative in March 2008, while the index for domestic output prices peaked six months later in July 2008. The fall in output lasted more than one year, returning to a positive rate of change in June 2009, while domestic output prices reached their lowest level in July 2009 and started a run of relatively sustained increases from October 2009.

The decline in industrial output in the EU-27 from its relative peak in February 2008 was particularly steep (-17.2 %), as the relative trough recorded in May 2009 was the lowest level of output since May 1999. By contrast, although industrial output prices in July 2009 were 8.1 % lower than at their relative peak a year earlier, they remained in line with the price level recorded in September and October 2007 prior to the financial and economic crisis; in part, price developments continued to reflect the relatively high price of crude oil and associated energy-related and intermediate products. Domestic output prices for industry rose by 6.7 % in 2011, which was almost twice as fast as they had increased in 2010 (3.5 %).

Industrial import prices for the euro area peaked in July 2008, regardless of whether imports were from outside the euro area or from other Member States within the euro area (see Figure 2). Thereafter, prices of imports from within the euro area fell over a nine month period by a total of 7.5 %, whereas the prices of imports from outside the euro area fell by a total of 15.3 % over the same period. Since their low point in the spring of 2009 prices for imports from within the euro area increased by 12.3 % through to April 2011, since when they remained relatively stable through to July 2012 (latest available data at the time of writing). Starting from the same low point (May 2009), import prices from outside the euro area increased by 26.6 % through to March 2012 and remained relatively stable (with a slight decrease) through until July 2012. Prices for imports passed their pre-crisis highs (of July 2008) in December 2010 for imports from within the euro area and in January 2011 for imports from outside of the euro area.

The downturn in industrial activity was widespread across the EU, illustrated by the fact that every Member State recorded lower output in 2009 than in 2008, with falls ranging from -3.7 % in Poland to -23.9 % in Estonia (see Table 1). The subsequent recovery was also widespread, as only Cyprus and Greece recorded a further contraction in activity during 2010, with growth rates peaking at 23.0 % in Estonia. Although output continued to expand in 2011 in most of the EU Member States, the contraction in Greece and Cyprus persisted while five other Member States also recorded a contraction in their output. The index of production for the EU-27 rose, on average, by 3.2 % in 2011, which was just less than half the rate of increase experienced in 2010 (6.8 % growth in industrial output).

The downturn in activity during the financial and economic crisis was spread across almost the full range of industrial activities: in 2009 there was just one industrial activity (at the NACE Rev. 2 division level) that reported continued growth within the EU-27, as the output of pharmaceutical products and preparations rose by 3.5 % compared with the year before. The recovery in 2010 was also relatively widespread: there were seven exceptions (at the NACE Rev. 2 division level), where output continued to contract in 2010, most notably for the manufacture of tobacco products, with a loss of 5.8 %. The number of activities that recorded a fall in output increased to ten in 2011 (see Figure 3), with four of the seven activities that had contracted in 2010 continuing their downward path, while a further six activities followed expansion in 2010 with contraction in 2011. The relatively strong contraction (-14.1 %) in output recorded for the extraction of crude petroleum and natural gas reflects, at least in part, a long-term decline in North Sea reserves of these products.

Construction

The downturn in activity for construction within the EU-27 lasted longer than for industry. Furthermore, after stabilising in 2010 and even displaying a slight upturn in the first half of 2011, a second downturn started in the third quarter of 2011 and has not yet (at the time of writing) shown signs of stabilising.

Construction output in the EU-27 peaked in March 2007 and fell gradually for five months. This initial downturn was followed by a slight, temporary recovery until January 2008, after which substantial falls in construction activity were recorded, reaching a low in February 2010, just under three years after the initial downturn. Between January 2008 and February 2010 the index of production for construction in the EU-27 fell by 13.4 % overall, deteriorating to a level not seen since October 1999. From this low point at the beginning of 2010 construction output remained relatively stable over the next 18 months to the middle of 2011. In August 2011 the second downturn in construction output started and by June 2012 (latest data available at the time of writing) output had fallen a further 6.0 % from the mid-2011 level; between February 2008 and June 2012 construction output fell by a total of 18.1 %.

The construction of buildings is the dominant part of construction output, and unsurprisingly output for building work followed a similar path to the overall indicator for construction, although the magnitude of the contraction from the beginning of 2007 to the beginning of 2010 was slightly greater, totalling 16.5 % in the EU-27 (see Figure 4). For civil engineering the developments were less clear cut. From March to December 2008, civil engineering output in the EU-27 fell in a similar manner to the developments seen for building output. However, there followed a substantial increase in January 2009, mainly due to a massive expansion in civil engineering work in Spain. Civil engineering output then resumed its downward path through much of 2009, before contracting rapidly between February and March 2010 after which it was relatively unchanged through to the end of 2010. A short recovery in civil engineering output in the first five months of 2011 was followed by a return to a downward path in line with that observed for construction as a whole. By June 2012 civil engineering output in the EU-27 was 12.7 % lower than it had been in February 2008.

The long and deep downturn in construction activity was widespread within the EU-27, illustrated by the fact that every Member State except Poland experienced at least one year of contraction in construction output during the four latest years (2008 to 2011) for which data are available. In 2008 a total of 13 EU Member States recorded a contraction in construction output and this number rose to 24 in 2009, before dropping back to 21 in 2010. The latest annual figures show that a small majority (14) of the EU Member States reported an increase in construction output in 2011.

The Czech Republic and Italy recorded negative rates of change in relation to their construction activity in all four years (2008 to 2011); while the ongoing downturn has been even longer in Ireland and Spain where five consecutive negative annual rates of change were recorded (from 2007 to 2011), while in Hungary the sequence is now six years (2006 to 2011), and in Portugal the last positive annual rate of change was recorded in 2001. Construction output declined by 10 % or more in Portugal, Bulgaria, Ireland and Spain in 2011, and by 20 % or more in Slovenia and Greece. In contrast, Latvia, Germany and Poland reported an increase in construction output above 10 % in 2011, while output increased by more than 20 % in Lithuania and Estonia.

Data sources and availability

Short-term business statistics (STS) are compiled within the scope of the STS Regulation 1165/98 of 19 May 1998 concerning short-term statistics. The STS Regulation brought major changes and improvements in the availability and timeliness of indicators which followed its implementation. The STS Regulation has been amended and adjusted to meet emerging users' needs – generally in relation to monetary union and more specifically to the requirements of the European Central Bank (ECB).

Indicators common to industry and construction include the production index and labour input indicators concerning employment, wages and salaries, and hours worked. For industry there are additional STS indicators concerning turnover and output prices, which are compiled as a total and also distinguishing between domestic and non-domestic markets, with a further analysis of non-domestic markets between euro area and non-euro area markets. In a similar manner, there are industrial import prices, with a distinction between imports from euro area and non-euro area markets. For construction activities there is a distinction in the production index between building and civil engineering, while additional indicators are collected on building permits, as well as construction cost and price indices.

The presentation of short-term statistics may take a variety of different forms. Gross or unadjusted indices are the basic form of an index. Working-day adjustment takes into account the calendar nature of a given month in order to adjust the index. The number of working days for a given month depends on: the timing of certain public holidays (Easter can fall in March or in April depending on the year); the possible overlap of certain public holidays and non-working days (1 May can fall on a Sunday); whether or not a year is a leap year, and other reasons. Seasonal adjustment aims, after adjusting for calendar effects, to take into account the impact of known seasonal factors that have been observed in the past. For example, in the case of the production index, annual summer holidays have a negative impact on industrial production. The trend is a slow variation over a long period of years, generally associated with the structural causes of the phenomenon in question. The cycle is a quasi-periodic oscillation. It is characterised by alternating periods of higher and lower rates of change possibly, but not always, involving expansion and contraction. Generally, if this component of the time series is relatively important, the trend cycle series is a better series for the analysis of longer-term developments. However, this advantage is less clear when analysing very recent developments. This is because trend cycle values for recent periods may have greater revisions than the equivalent seasonally adjusted values. Hence, the latter may be more appropriate for the analysis of very recent developments; this is particularly true around turning points.

Depending on the indicator in question, the EU Member States are required to transmit unadjusted or adjusted data to Eurostat. In the case that Member States transmit unadjusted data, then Eurostat calculates the seasonal adjustment. The Member States' national statistical authorities are responsible for data collection and the calculation of national time series. Eurostat is responsible for the EU-27 and euro area aggregations.

NACE Rev. 2 is the latest version of the statistical classification of economic activities and has been implemented in STS during 2009. This involved not just changing data compilation practices to use NACE Rev. 2 but also recalculating or estimating a time series in NACE Rev. 2, normally back to the year 2000. Simultaneously with the introduction of NACE Rev. 2, a new base year (2005) was adopted for STS indices to better reflect the economic structure; previously indices were presented with 2000 as the base year. The next base year change, namely to a base year of 2010=100, is due to be introduced during 2013.

Context

The profile and use of STS is expanding rapidly, as information flows have become global and the latest news release for an indicator may have significant effects on financial markets, or decisions that are taken by central banks and business leaders. STS are a key resource for those who follow developments in the business cycle, or for those who wish to trace recent developments within a particular industry, construction or service.

Some of the most important STS indicators are a set of principal European economic indicators (PEEIs) that are essential to the ECB for conducting monetary policy within the euro area. Three PEEIs concern industrial short-term business statistics: production, output prices of the domestic market and import prices. A further two PEEIs concern construction short-term business statistics: production and building permits.

Further Eurostat information

Publications

Main tables

Industry (t_sts_ind)
Industry production index (t_sts_ind_prod)
Industry turnover index (t_sts_ind_tovt)
Industry new orders index (t_sts_ind_nord)
Industry producer prices index (PPI) (t_sts_ind_pric)
Industry import prices index (t_sts_ind_impi)
Industry labour input index (t_sts_ind_labo)
Construction, building and civil engineering (NACE F) (t_sts_cons)
Construction production (teiis500)
Construction cost - new residential buildings (teiis510)
Construction labour input (teiis520)
Building permits (teiis540)

Database

Industry (NACE Rev.2) (sts_ind)
Industry production index (NACE Rev.2) (sts_ind_prod)
Industry turnover index (NACE Rev.2) (sts_ind_tovt)
Industry new orders index (NACE Rev.2) (sts_ind_nord)
Industry producer prices index (PPI) (NACE Rev. 2) (sts_ind_pric)
Industry import prices index (NACE Rev. 2) (sts_ind_impi)
Industry labour input index (NACE Rev.2) (sts_ind_labo)
Construction, building and civil engineering (NACE F) (sts_cons)
Construction production index (NACE Rev.2) (sts_cons_pro)
Construction labour input index (NACE Rev.2) (sts_cons_lab)
New residential buildings - prices index (sts_cons_pri)
Building permits - index (sts_cons_per)

Dedicated section

Methodology / Metadata

Source data for tables and figures (MS Excel)

External links

See also

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