Both the level of industrial production and its composition suffered large changes in the first half of 1980. The downturn that began in some industries after the second quarter of 1979 became a sharp and general fall in the second quarter of 1980. In 1979, pessimism began in the capital goods industries in the summer and spread to consumer industries in the autumn. For the year as a whole there was only a small change in output as the continuing growth in personal consumption balanced lower growth in industries dependent on exports or investment, particularly construction-related industries. At the beginning of this year, we expected a similar outturn in 1980: investment would fall sharply and exports grow slowly, but with consumption expected to rise at almost 3 per cent a year in 1980 and 1981 little change was expected in the level of output, although there would be a continuing shift towards consumer industries. Investment is falling, but up to now this has been concentrated in construction, both housing and industrial. Investment in machinery has held up, and much of the expected fall has been deferred into 1981, although it will then be more serious. But the sharp fall in consumer expenditure in the second quarter and the forecast that there will be little change in it for the next eighteen months mean that industries dependent on consumer demand are facing a much greater change from recent years than are more investment-orientated industries.