Industrial Production Rising on Last Year

In the year from April 2010 to April 2011 Industrial production increased by approximately 4%.  The Modern Sector which comprises the pharmaceutical and other high technology industries increased 2.6% while the Traditional sector recorded an increase of 1.4%.

Figure 1 displays the increase per quarter in the overall index of industrial production (with 2005 as the base year).  The CSO defines the industrial index as the “current trends in the volume of production of industrial local units with three or more persons engaged”.  It can be observed that over the last three years this has fallen from a peak in 2007 untilQ4 2009.  Following this industrial production saw a significant recovery, followed by a slight decline at the end of 2010.  

When we look at what sectors contributed to this decline and subsequent recovery, the CSO distinguishes between the Modern (High Technology) Sector and the Traditional (Low Technology) sectors.  We can see in Figure 2 that during the decline in 2008 and 2009, it was mainly a loss of production in the Traditional Sector as oppose to the Modern Sector which drove the steep falls.  While the recovery seems to be driven by a rise in the Modern Sector and simply a stabilisation in the Traditional Sector. 

While the rise of the Modern Sector is certainly good news, if we hope for an employment boost from this growth we may be disappointed.  Even though the Modern Sector produces more than the Traditional Sector, as of 2010, the Traditional Sector still employed more than twice the number of individuals as the Modern Sector.  So while the Modern sector would appear to be more productive (in terms of output per worker), growth in this sector may be more productivity driven as oppose to job creating.