The Scottish Government

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SCOTTISH MANUFACTURED EXPORTS ESTIMATES FOR THE FOURTH QUARTER OF 2007

A NATIONAL STATISTICS PUBLICATION FOR SCOTLAND

2 April 2008

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Headline

Scottish manufactured export sales decreased by 2.0 per cent in real terms in the last quarter of 2007 and grew by 3.0 per cent over the year 2007, according to estimates published today by the Scottish Government.

The main findings are:

• Scottish manufactured export sales decreased by 2.0 per cent in real terms in 2007 Q4 (seasonally adjusted) and grew by 3.0 per cent over the 2007 calendar year.
• Over the quarter, the main industry contributing to the decrease in manufactured export sales was drink which fell by 8.1 per cent. All three subsectors within engineering showed quarterly reductions in export sales with electrical & instrument engineering (-2.2%) and mechanical engineering (-8.7%) contributing most to the overall fall in engineering exports of 3.6 per cent. Chemicals & refined petroleum grew by 12.4 per cent over the last quarter of 2007 and growth was also seen in other manufacturing (+6.8%), food & tobacco (+3.2%) and wood, paper, publishing & printing (+2.1%).
• Over the year, engineering and drink were the main industries contributing to the annual growth in manufactured export sales with annual growths of 3.5 per cent and 4.5 per cent respectively. Wood, paper, publishing & printing (+23.8%) and metals & metal products (+11.1%) also showed strong growth over the year. The main industry showing a decline in manufactured export sales in real terms over the year was chemicals, with an annual decline of 5.5 per cent. Electrical & instrument engineering (-1.1%), food & tobacco (-11.8%) and textiles, fur & leather (-1.7%) also fell over the year.

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 (2.7% average quarterly decline 2000Q4-2004Q4).
• 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 95.7 per cent between 1995 and 2000 and fell by 66.1 per cent between 2000 Q4 and 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 33 per cent of Scotland's total manufactured exports in 2007.

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 Government'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 are currently only available for calendar years 2002 - 2006, 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 article 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 estimate, in monetary terms, 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 £13.6 billion in 2006 - 66 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 Government'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 October 2007. 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.

13. Revisions this quarter have resulted from revisions to information previously supplied by respondent companies and re-estimation of seasonal adjustment factors. The series most affected are: wood, paper, publishing & printing; metals & metal products; drink and transport equipment.

Future Revisions

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

National Statistics

15. 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

Issued by:

Office of the Chief Economic Adviser

Scottish Government

St Andrew's House

Regent Road

Edinburgh EH1 3DG

Telephone:

Communications Office: Tim Jays 0131-244-5122

Statistician: Andrew Mortimer 0131-244-3771

List of tables

Table 1: Quarterly Index of Scottish Manufactured Exports, in Constant Prices, by Industry 2004=100

Table 2: Quarterly Index of Scottish Manufactured Exports, in Constant Prices, Detailed Industries 2004=100

Table 3: Revisions to data published on 9 January 2008 (Table 1)

Table 4: Revisions to data published on 9 January 2008 (Table 2)

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

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