10 January 2006
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SCOTTISH MANUFACTURED EXPORTS FOR THE THIRD QUARTER OF 2006
A Scottish Executive National Statistics Publication
Scottish manufactured export sales decreased by 0.8 per cent in real terms in 2006 Q3 but grew by 3.5 per cent over the year to 2006 Q3, according to estimates published today by the Scottish Executive.
The main findings are:
- Scottish manufactured export sales decreased by 0.8 per cent in real terms in 2006 Q3 but grew by 3.5 per cent over the year to 2006 Q3.
- Over the quarter, the main industry driving the decline in manufactured export sales was electrical and instrument engineering with a quarterly decline of 3.5 per cent, followed by other manufacturing
(-11.1%), and drink (-1.0%). The main industries showing growth in real terms were transport equipment (+5.8%), mechanical engineering (+5.7%) and chemicals (+2.5%).
- Over the year, electrical and instrument engineering was the main industry contributing to the growth in manufactured export sales with an annual rise of 4.8 per cent, followed by metals (+26.1%) and mechanical engineering (+7.4%). The main industry showing a decline in manufactured export sales in real terms over the year was wood, paper and publishing, with an annual decline of 13.0 per cent. Also contributing to the decline, but to a lesser extent, were food and tobacco (-6.1%) and textiles, fur and leather (-0.6%). All other industries grew over the year.
- Excluding the electrical and instrument engineering industry, Scotland's largest exporting sector, manufactured exports increased by 0.6 per cent in 2006 Q3 and increased by 2.9 per cent over the year to 2006 Q3.
Longer Term Trends
- Over 1995 Q1 to 2000 Q4, the index of manufactured exports exhibited a period of strong growth (1.9% average quarterly growth) which was followed by a sustained period of decline from 2000 Q4 (3.6% average quarterly decline 2000Q4-2003Q3). Since 2003, the volume of exports has been relatively stable.
- The growth and decline in manufactured exports over the period is largely explained by the electrical and instrument engineering sector which grew by 124.4 per cent 1995 Q1 to 2000 Q4 and fell by 65.9 per cent 2000 Q4 to 2004 Q4.
- At its peak, in 2000, the electrical and instrument engineering sector accounted for 58 per cent of Scotland's manufactured exports. This industry remains Scotland's largest exporting sector and accounted for 34 per cent of Scotland's total manufactured exports in 2005.
1. Estimates of Scottish manufactured exports are compiled on the standard industrial classification UKSIC(2003). Implemented on 1 January 2003, UKSIC(2003) is a minor revision to UKSIC(92), in line with the latest revision of the European Union classification system.
2. The estimates are derived from data on sales of goods produced by the Scottish manufacturing industry for export outwith the UK. The Office for National Statistics (ONS) collect the data used to produce these figures in their Monthly Production Inquiry. Export estimates for the refined petroleum products industry are calculated using a volume series supplied by the Department of Trade and Industry and export ratios estimated using the Scottish Executive's Global Connections Survey.
3. The main purpose of the Index is to identify volume changes over time. Accordingly, data are deflated to 2000 prices using UK export producer price indices, which are produced by the ONS. These constant (2000) price estimates provide a more appropriate measure for monitoring change over time as they have had the effect of price changes removed.
4. Deflated exports sales of the companies covered by the Inquiry are grossed up to represent the entire population of each industry using the Inter Departmental Business Register.
5. This quarter a major cross-referencing exercise with company information from the Global Connections Survey (GCS) has been conducted for the third year. This process enhances the level of consistency between individual company records held in both sources.
Annual GCS data are only available for calendar years 2002 -2005, so some rescaling of pre-2002 data has been necessary. Overall, there have been some substantial revisions to indices particularly from 2005 onwards.
6. The data have been seasonally adjusted where appropriate and this quarter a new improved method of seasonal adjustment - X-12-ARIMA - has been used in the production of these statistics. X-12-ARIMA was introduced into the quarterly GDP estimates in October and further information is available in an articicle published in the 2006 edition of Scottish Economic Statistics.
7. In total, the Index is based on a sample of around 1,000 Scottish manufacturing companies per quarter. This sample covers all sizes of unit across the manufacturing sector.
The Global Connections Survey
8. The annual Global Connections Survey (GCS) provides a current price cash estimate of the value of exports sales for the economy as a whole; the only survey to do so. The Quarterly Index of Manufactured Exports provides a time series of growth in export sales, at constant prices, for the manufacturing industry. The annual estimate of total exports from Scotland derived from the Global Connections Survey indicates that the manufacturing sector accounted for £13.1 billion in 2005 - 70 per cent of all exports from Scotland.
9. Further information about the methodology of the Index of Manufactured Exports and the Global Connections Survey can be found on the website at www.scotland.gov.uk/exports
10. Some of the indices for smaller industries can be particularly volatile when examined on a quarterly basis. In some cases, this is due to the nature of the industry (e.g. transport equipment), in others it can be due to the relatively small size of the industry in export terms (e.g. food & tobacco). For these reasons, care should be taken when drawing any firm conclusions from individual quarter results. Estimates of annual changes will be more robust than quarterly changes.
11. It is the Scottish Executive's policy to use all the data available at the time of publication to ensure that the best possible estimates are provided. This inevitably leads to revisions to previously published estimates. All quarters affected by data revisions are updated at the earliest possible opportunity. This allows those using the data for long-term analysis to have a long-term consistent series. We have a commitment to improve continually the quality of the index of manufactured exports, and part of this commitment involves an ongoing programme to develop the data sources and methodologies used in the compilation of the series.
12. As highlighted above, revisions this quarter are larger than normal and reflect work to enhance further the correspondence between these estimates and those derived from the annual Global Connections Survey and the incorporation of an improved method of seasonal adjustment. The chart above shows a comparison of the overall Index this quarter and the index published in October 2006. Tables 3 and 4 also provide detailed information of revisions at industry level.
13. In the compilation of these estimates, almost 200 of the largest and most influential exporters in the Scottish manufacturing sector have been cross-referenced against data held on the Global Connections Survey for the years 2002 to 2005. In a number of cases, adjustments have been made to the industrial classifications and export values of individual companies in order that the data are consistant across both sources. This has inevitably led to revised estimates for 2002 onwards. The incorporation of Global Connections Survey data has not led to any revisions to pre-2002 growth rates but may have led to adjusted industry rescaling factors for data before 2002. For some industries this has led to pre-2002 estimates being uniformly altered by the same factor. Note that revisions to the base year (i.e. 2003) causes revisions to the index to appear elsewhere in the series but actual revisions to GDP growth rates may not exist.
14. The data used in the production of these quarterly exports estimates are seasonally adjusted where appropriate to remove regularly occurring peaks and troughs so that the underlying trends and other features of the data are easier to identify. A major methodological improvement has been implemented this quarter to replace the software used to create seasonally adjusted estimates. This has led to revisions to historic quarterly growth rates but has had no effect on the annual totals.
15. Tables 3 and 4 provide detailed information of revisions at industry level. Quarterly revisions which balance out to zero over the year indicate that there has been a change to the seasonal pattern of the series rather than a revision to the data for any companies.
16. The industries most affected by the incorporation of updated and revised Global Connections Survey data are drink, mechanical engineering and electrical & instrument engineering.
17. Historic revisions are also present for the wood, paper & publishing industry but these are mainly due to updated rescaling factors which has led to pre-2002 estimates being revised by a uniform factor.
18. There are no planned changes to the methodologies used in the production of the Index of Manufactured Exports next quarter.
19. National Statistics are produced to high professional standards set out in the National Statistics Code of Practice. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference.
Mercury and Profile users may obtain a copy of the Index tables by telephoning the number below or via the website www.scotland.gov.uk/exports
Office of the Chief Economic Adviser
St Andrew's House
Edinburgh EH1 3DG
List of Tables
Table 1: Quarterly Index of Scottish Manufactured Exports, in Constant 2000 Prices, by Industry
Table 2: Quarterly Index of Scottish Manufactured Exports, in Constant 2000 Prices, Detailed Industry
Table 3: Revisions to Data Published on 4 October 2006 (Table 1)
Table 4: Revisions to Data Published on 4 October 2006 (Table 2)
Table 5: Percentage of Total Manufactured Exports Contributed by Each Industry, in Constant 2000 Prices