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Statistical bulletin: New Orders in the Construction Industry, Q1 2013 This product is designated as National Statistics

Released: 07 June 2013 Download PDF

Key Points

  • New orders in the construction industry estimates are a short term indicator of construction contracts for new construction work awarded to main contractors by clients in both the public and private sectors within the UK. The estimates are produced and published both seasonally and non-seasonally adjusted at current prices (including inflationary price effects) and at constant prices (with inflationary effects removed).
  • At 2005 based prices, the estimated Q1 2013 seasonally adjusted total volume of all new construction orders was 10.0% lower than Q4 2012. The Q1 2013 estimates show a 0.2% fall compared with Q1 2012.
  • The fall between Q4 2012 and Q1 2013 was attributable to the decline in all other new work which fell 13.9% (£1,200 million). This fall was solely due to the large decline in infrastructure which fell 49.8% (£1,600 million) compared to Q4 2012. The components excluding infrastructure all showed positive quarter-on-quarter growth.
  • New housing showed a very small increase in Q1 2013 of 0.2%. However, this minor increase ensures that new housing is at its highest level since Q1 of 2008. Comparing the year-on-year estimates, new housing shows an increase of 29.5% (£760 million).
  • The ‘Definitions and explanations’ section in the background notes of this bulletin includes additional information on items contained in this release.

Introduction

This bulletin includes commentary on the dataset in addition to relevant graphs and tables. Accompanying background notes provide information on coverage, quality reporting, revisions and publication policy.

The information in this release relates to contracts for new construction work awarded to main contractors by clients in both the public and private sectors. Also included is speculative work, undertaken on the initiative of the firm, where no contract or order is awarded. The value of this work is recorded in the period when foundations work is started. This series cannot be used to directly predict future output in the construction sector, although it can provide an indication of trends in the construction and allied trades industry.

Economic Background

The second estimate of gross domestic product (GDP) saw no revision to the 0.3% growth in Q1 2013 reported in the preliminary estimate, following a contraction of 0.3% in Q4 2012. New orders in construction acted conversely, falling by 10.0% in Q1 2013 after growth in Q4 2012. The number of new orders for infrastructure declined by 49.8%, the largest fall in this component since Q4 1987.

Since Q1 2008 GDP has fallen by 2.6%, whereas new orders in construction have fallen by 33.9% over the same period. Public sector & housing associations is the only component to have experienced growth in these five years (11.1%) whilst private commercial other new work has fallen by 55.2%.

Anecdotal evidence suggests the bad weather in certain periods and subdued underlying demand contributed to the weak performance for the construction industry in the short term, while the long term trends also show a decline in the industry.

Orders for New Construction, Q1 2013

 

 

Figure 1: All New Work (constant (2005) prices, seasonally adjusted)

£ million

Figure 1: All New Work (constant (2005) prices, seasonally adjusted)
Source: Construction: Contracts & New Orders - Office for National Statistics

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Table 1: Value of New Orders summary tables

Quarterly constant prices, seasonally adjusted

Most recent quarter on a year earlier  Most recent quarter on the previous quarter  Most recent level
       
1. All New Work        Percentage change Percentage change £million
       
         
All New Work   -0.2 -10.0 10,793
    Total New Housing   29.5 0.2 3,319
    Total Other New Work   -9.4 -13.9 7,474
       
       
1.1  New Housing      Percentage change   Percentage change £million
       
         
All New Housing   29.5 0.2 3,319
    Public & Housing Associations   39.7 -0.3 729
    Private   27.0 0.4 2,590
       
       
1.2  Other New Work        Percentage change Percentage change £million
       
         
All Other New Work   -9.4 -13.9 7,474
    Infrastructure   -39.4 -49.8 1,570
    Excl Infrastructure      
        Public   36.8 9.9 2,230
        Private - Industrial   -19.3 11.5 564
        Private - Commercial   -6.6 3.3 3,110
     

Table source: Office for National Statistics

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Background notes

  1. Special Events Policy

    ONS has produced an ONS Policy on Special Events.

  2. Changes to Construction Statistics

    Statistical bulletins for new orders are produced quarterly. Publication dates in 2013 have been placed on the forward release calendar.

    An article describing the improvements made to New Orders and Output in the construction industry was published in ONS’s Economic and Labour Market Review in March 2010. See ‘ Development of construction statistics (135.4 Kb Pdf) ’.

    An explanation of the changes introduced in 2010 and the impact this has had on the published series is available (115.6 Kb Pdf) .

    Standard revisions to the new orders series include late responses from respondents, revisions to the price indices used to deflate the current prices to constant (2005) prices and due to seasonal adjustment

  3. Relevance to users

    The statistical bulletin brings together information on orders for new construction in Great Britain. It draws on data compiled from the Quarterly Survey of Contracts and New Orders, with businesses selected from the Inter-Departmental Business Register (IDBR). The construction industry, which contributes to the overall estimate of gross domestic product (GDP) by approximately 6.8%, covers Sections 41, 42 and 43 of the Standard Industrial Classification 2007 (excluding section 41.1 (property developers).

  4. Further information

    Releases on construction output and employment prior to the transfer to ONS can be found on the Department of Business, Innovations and Skills (BIS) website.

  5. User Engagement

    The user engagement section of the ONS website contains results of the survey held in April 2011 regarding users' satisfaction and use of the new orders and construction output surveys.

  6. Interpreting the data

    When making comparisons it is recommended that users focus on constant price, seasonally adjusted estimates as these show underlying movements rather than seasonal movements.

    Construction estimates are subject to revision because of:

    • late responses to the New Orders Survey

    • revisions to seasonal adjustment factors which are re-estimated every quarter

    Definitions and explanations
    Definitions found within the main statistical bulletin are listed here:

    Current price (CP)
    Current prices are the actual or estimated recorded monetary value over a defined period. They show the value for each item expressed in terms of the prices of that period.

    Constant price (KP)
    A constant price measure is a series of economic data from successive years put in real terms by computing the production volume for each year in the prices of a reference year. The resultant time-series of production figures has the effects of price changes removed (that is, monetary inflation or deflation). In other words, from the raw data a series is obtained which reflects only production volume. See also deflation below.

    Seasonally adjusted (SA)
    Seasonal adjustment aids interpretation by removing effects associated with the time of the year or the arrangement of the calendar, which could obscure movements of interest.

    Deflation
    It is common for the value of a group of financial transactions to be measured in several time periods. The values measured will include both the change in the volume sold and the effect of the change of prices over that year. Deflation is the process whereby the effect of price change is removed from a set of values. The current reference year is 2005.

    Sectors
    Institutional sectors are defined in the System of National Accounts (SNA) glossary as:

    Units that are grouped together to form institutional sectors on the basis of their principal functions, behaviour, and objectives.

    The resident institutional units that make up the total domestic economy are grouped into five mutually exclusive sectors:

    • non-financial corporations

    • financial corporations

    • general government

    • non-profit institutions serving households

    • households

    In the case of non-financial and financial sectors these can be further broken down into public sector, those units either controlled by the state or funded from the public purse and include general government, local authorities, housing associations and nationalised industries and private sector, those units controlled by private individuals or groups and not by the public sector.

    Gross domestic product (GDP)
    Gross domestic product (GDP) is an integral part of the UK national accounts and provides a measure of the total economic activity in a nation.  
    GDP is often referred to as one of the main 'summary indicators' of economic activity and references to 'growth in the economy' are quoting the change in GDP during the latest quarter.

    Construction estimates are a component of GDP from the output or production approach (GDP(O)) which measures the sum of the value added created through the production of goods and services within the economy (our production or output as an economy). This approach provides the first estimate of GDP and can be used to show how much different industries (for example, agriculture) contribute within the economy.

    Housing
    All buildings that are constructed for residential use. Within the public sector this classification includes construction items such as local authority housing schemes, hostels (except youth hostels), married quarters for the services and police; old peoples' homes; orphanages and children’s remand homes; and the provision within housing sites of roads and services for gases, water, electricity, sewage and drainage.
    Private sector housing includes all privately owned buildings for residential use, such as houses, flats and maisonettes, bungalows, cottages, vicarages and the provision of services to new developments.

    Infrastructure
    Infrastructure is the generic term for the basic physical and organizational structures and facilities needed for the operation of a society or enterprise. These construction items include buildings, roads, power supplies, etc.

    Other new work
    Other new work excludes the housing and infrastructure sectors. This classification includes construction items such as factories, warehouses, schools and offices etc.

  7. Revisions

    This publication includes data revisions from Quarter 4 2011. In addition to data revisions, a refinement to the seasonal pattern has caused slight revisions to the seasonally adjusted time series from quarter 4 of 2011.

    One indication of the reliability of the key indicators can be obtained by monitoring the size of revisions. The tables below record the size and pattern of revisions which have occurred over the last five quarters. Please note that these indicators only report summary measures for revisions. The revised data may be subject to sampling or other sources of error. Details about this revisions material can be found in the document ‘Revisions information in ONS First Release’.

    Table 2: Revisions Policy

    Source of revisions Revision periods
    New survey data New quarter + revised previous quarter
    Revised deflators from BIS* New quarter + revised previous 2 quarters
    Seasonal factors New quarter + revised previous 5 quarters

    Table source: Office for National Statistics

    Table notes:

    1. * BIS - Department for Business, Innovation and Skills

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    Table 3: Revisions to New Orders (constant (2005) prices, seasonally adjusted)

      All New Work published in this release (%) All New Work estimates previously published (%) All New Work revisions (%)
    2011 Q4 -11.6 -9.3 -2.3
    2012 Q1 10 6.6 3.4
    2012 Q2 -8.6 -8.7 0.1
    2012 Q3 9.7 10.5 -0.7
    2012 Q4 10.5 3.4 7.1

    Table source: Office for National Statistics

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  8. Publication policy

    Details of the policy governing the release of new data are available from the Media Relations Office. Also available is a list of the names of those given pre-publication access to the contents of this bulletin.

  9. Accessing data

    The New Orders in the Construction Industry statistical bulletin and time series datasets are available to download free from the Office for National Statistics website at 9.30 am on the day of publication.

    ONS allows a list of agreed officials to have access to data 24 hours before publication, which is available on the Construction release page.

    The New Orders in the Construction Industry statistical bulletin conforms to the standards set out in the UK Statistics Authority Code of Practice.

  10. Further information and user feedback

    As a user of our statistics, we would welcome feedback on this release, in particular on the content, format and structure. For further information about this release, or to send feedback on our publications, please contact us using the information below.

    ONS are currently performing a consultation on the Publication of New Orders in the Construction Industry Data (158 Kb Word document) which closes on 14 June 2013. If you would like to comment on the consultation please follow the above link to the consultation document.

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    Tel +44 (0)1633 456344
    Email construction.statistics@ons.gsi.gov.uk

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  12. Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gsi.gov.uk

    These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority.

Statistical contacts

Name Phone Department Email
Stuart Deneen +44 (0)1633 456344 Office for National Statistics construction.statistics@ons.gsi.gov.uk
Get all the tables for this publication in the data section of this publication .
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