Read them how you will but it is hard to portray the most recent index of industrial production figures as being particularly positive. After all, industrial production in July 2014 was 4.2% lower than it was in June 2014, and it was 0.3% lower than it was in July 2013 (when adjusted for working days).

The NSO themselves explain that the Index of Industrial Production (IIP) “monitors the changes in production of leading products from a sample of industrial enterprises. They add that the IIP “is regarded as one of the most important measures of economic activity”, pointing out that “For short-term statistics this index is the reference indicator for economic development and is used in particular to identify changes in trends at an early stage.”

The sample of industries they include reflect 95% of total industrial production, covering around 180 enterprises which are then categorised under one of the following industrial groupings: intermediate goods (i.e. goods, such as components, that are used in the making of other goods); energy; capital goods (i.e. durable goods, such as machinery, used to manufacture other goods); and consumer goods (separated, in turn, into durable consumer goods, and non-durable consumer goods). The figures generated by this sampling are then seasonally and working-day adjusted, before then being subjected to additional statistical filtering. Furthermore the final data for each industrial grouping are then weighted.

So looking at these figures in more detail and taking the seasonally adjusted industrial production, compared to 2010, we see that total production in July 2014 is 6.1% lower than it was in 2010, and has been since September 2013. Breaking this down further, the production of intermediate goods, and consumer goods have all seen decreases since 2010. The only areas where production is now higher than 2010 is in energy (0.6% higher), and capital goods (17.3% higher).

Looking at the working day adjusted figures provided by, total production in July 2014, compared to 2010, now shows a slight increase, of 1.2%, with the production of intermediate goods and durable consumer goods all showing a decrease, while there were increases in energy (20.3%), capital goods (16.2%), and non-durable consumer goods (3.5%).

The figures for annual variation (i.e. comparing July 2014 with July 2013) show that total production is 0.3% lower than it was. (While this isn’t great the figures for April and May 2014 were -11.8% and -11.0% respectively, and so far worse.)The monthly variation table (seasonally adjusted) shows total production declining by 4.5% by comparison with June 2014.

The interesting question is to see how the political parties spin these results. The government published a statement stating that the “index of industrial production for July 2014 shows positive signs of recovery” justifying this statement by explaining that “when comparing July 2014 with July 2013, the index re-affirms signs of improvement for the second consecutive month”. By improvement in this context they mean that whereas the production in April and May 2014 reduced by 11.8% and 11.0% respectively, in June and July 2014 it only declined by 0.6% and 0.3% respectively. On reflection it is perhaps rather kind to call this a “positive sign of recovery”.

The opposition, by contrast in a somewhat more bearish statement noted that “The dire situation in the industrial sector of the country has been confirmed by the National Statistics Office, which… showed how during the month of July, industrial production fell by more than 4%.” Their statement also adds that Malta has experienced a decrease on July 2013, and in the last ten months.

The government speaks of “signs of recovery despite the difficult economic scenario in Malta’s core export markets, namely, Germany, Italy and France” and notes that “These results confirm that, while the economies of other EU Member States, some of which are Malta’s core export markets, are still in a state of uncertain recovery, the Government’s success in various economic sectors, including work creation, investment and commerce, are impacting positively on the Maltese economy.” However the opposition, understandably, see these statistics in a more negative light complaining that the problem is increasingly a structural one and that the government’s pre-budget report for 2014 offers “no new ideas to incentivize industrial sectors”. The Nationalists see a vicious circle of fewer job opportunities and declining consumer confidence.

So wherein lies the truth? Malta’s recent GDP growth has been impressive, being one of the highest performing nations of the EU and the Eurozone, growing by 3.4% in the first half of 2014 alone. Similarly unemployment is low and stable, as is inflation. Malta is a small economy, and when the government has been challenged about industrial production in the past it has pointed to a small number of larger manufacturers that have been hit, having a disproportionate impact on the economy as a whole.

It must be remembered that industry only forms a section of the economy, excluding, in particular, the service industries. The service economy is an increasingly important new sector, however that is not to say that industry should be neglected. Indeed a recent trend in many economies has been the reinvigoration of their manufacturing sectors as they seek to bring their supply chains closer to home.  There are key steps that the government can take to support local manufacturing, for example the extension of the current Freeport, or the addition of a Freeport to the airport, allowing goods to be imported to Malta and assembled for export. Developing Malta’s logistics industry would provide tangible benefits to industry. In these and other way the Government should seek to develop local industry as part of its overarching economic strategy.