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Chapter IV. Production

Published online by Cambridge University Press:  26 March 2020

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Extract

The industrial production forecast presented in February 1968 was based upon an assumption that government policy would secure a rate of overall growth during the year (from the fourth quarter of 1967 to the fourth quarter of 1968) of 4 per cent with a year-on-year rise in gross domestic product of less than 3 per cent. In the event, while the rise in output during the year is estimated to have been just about the 4 per cent assumed, the year-on-year rise was somewhat greater than assumed—about 3½ per cent. Much of the unforeseen buoyancy of output in the earlier part of the year was related to the unexpected consumer boom. This is reflected in the comparison of actual industrial production with the forecast (table 2). The most serious underestimate of growth occurred in industries particularly affected by the consumption boom (textiles, consumer durables, metal goods, leather, pottery, furniture, paper and printing, and ‘other’ manufactures). Overall growth in industrial production, forecast a year ago at 3½ per cent, was about 4½ per cent; the forecast for growth in output of total manufactures, 4 per cent, was exceeded by a slightly larger margin, the actual out-turn being put at some 5½ per cent. The distribution of growth by industrial sector is shown in table 1; this indicates that the growth in output was widely spread, only mining and shipbuilding registering falls.

Type
Research Article
Information
National Institute Economic Review , Volume 47 , February 1969 , pp. 54 - 63
Copyright
Copyright © 1969 National Institute of Economic and Social Research

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References

note (1) page 54 National Institute Economic Review no. 43, February 1968, Chapter IV, pages 40-48.

note (2) page 54 Some further comment on productivity growth is to be found on pages 26-27.

note (3) page 54 In general, past experience suggests that when gross domestic product is growing at a rate much less than about 2 per cent, the growth of industrial production is likely to fall below it, and that when growth in gross domestic product exceeds 2 per cent, that of industrial production is likely to be still greater. In broad terms the devaluation, and some of the policy decisions which have eventuated since November 1967 (e.g. those affecting public authorities' current spending), might be expected to raise the industrial production growth rate associated with any given growth in gross domestic product.

note (4) page 54 Copies of the press release issued on 27 January 1969 which covered the results of the Industrial Inquiry may be obtained on request.

note (1) page 56 ‘Short-term trends, November 1968’, Report of the EDC for Mechanical Engineering.

note (1) page 57 Cf. the forecast for consumer durables output we made this time last year, National Institute Economic Review no. 43, February 1968, page 42.

note (1) page 58 Firms were asked how much they could produce if the demand were there and if they could get and were to employ more labour. It is from answers to this question that the index of capacity utilisation is constructed, the level of 100 per cent representing full capacity. Chart 2 shows the distribution of spare capacity, as recorded in successive Industrial Inquiries.

note (1) page 60 Not covered by the Industrial Inquiry.

note (1) page 61 As measured by tonnage; they include a higher share of tankers which are much cheaper (per ton) to build than other ships.

note (2) page 61 National Institute Economic Review no. 43, February 1968, page 45.

note (3) page 61 Cf. report in the Financial Times, 1 January 1969.