Scottish Government

4 April 2007

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SCOTTISH MANUFACTURED EXPORTS FOR THE FOURTH QUARTER OF 2006

A Scottish Executive National Statistics Publication

Scottish manufactured export sales increased by 2.2 per cent in real terms in 2006 Q4 and grew by 3.2 per cent over the year to 2006 Q4, according to estimates published today by the Scottish Executive.

The main findings are:

• Scottish manufactured export sales increased by 2.2 per cent in real terms in 2006 Q4 and grew by 3.2 per cent over the year to 2006 Q4.
• Over the quarter, the main industry driving the increase in manufactured export sales was drink with a quarterly increase of 9.2 per cent, followed by electrical and instrument engineering (+2.5%) and metals and metal products (+4.3%). The main industries showing decline in real terms were chemicals (-4.6%), textiles, fur and leather (-9.0%), transport equipment (-1.7%) and wood, paper and publishing (-1.0%).
• Over the year, electrical and instrument engineering and metal products were the main industries contributing to the growth in manufactured export sales with annual growth of 2.7 per cent and 27.8 per cent respectively. Other industries showing annual growth in exports were drink (2.3%), transport equipment (+9.6%) and mechanical engineering (+9.1%). 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 16.9 per cent. Food and tobacco also fell over the year (-9.4%).
• Excluding the electrical and instrument engineering industry, which is Scotland's largest exporting sector, manufactured exports increased by 2.1 per cent in 2006 Q4 and increased by 3.4 per cent over the year to 2006 Q4.

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 the end of 2004, there has been some evidence of modest growth in manufactured export sales.
• The growth and decline in manufactured exports over the period 1995-2004 is largely explained by the electrical and instrument engineering sector which grew by 124.5 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 2006.

BACKGROUND NOTES

Methodology

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. Cross-referencing of company information from the Global Connections Survey (GCS) is carried out annually to enhance the level of consistency between individual company records held in both sources. GCS annual data is currently only available for calendar years 2002 - 2005, so rescaling of pre-2002 data takes place to ensure continuity.

6. The data have been seasonally adjusted where appropriate using the X-12-ARIMA technique. Further information is available in an articicle published in the 2006 edition of Scottish Economic Statistics ( http://www.scotland.gov.uk/stats/ses/).

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

Volatility

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. Revisions

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. The chart above shows a comparison of the overall Index this quarter and the index published in January 2007. Tables 3 and 4 also provide detailed information of revisions at industry level.

13. 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.

14. The industries most affected by the incorporation of updated and revised data are drink (due to revisions to the last quarter which in turn have led to the re-estimation of the seasonal adjustment factors, particularly those relating to quarter 3) and mechanical engineering (due to sectoral reclassification of a large company from 2005 onwards).

Future Revisions

15. There are no planned changes to the methodologies used in the production of the Index of Manufactured Exports next quarter.

National Statistics

16. 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

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 10 January 2007 (Table 1)

Table 4: Revisions to Data Published on 10 January 2007 (Table 2)

Table 5: Percentage of Total Manufactured Exports Contributed by Each Industry, in Constant 2000 Prices