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Statistical bulletin: Output in the Construction Industry April 2013 This product is designated as National Statistics

Released: 14 June 2013 Download PDF

Key Points

  • Construction output estimates are a short term indicator of construction output by private sector and public corporations within the UK. The estimates are produced and published at current prices (including inflationary price effects) and at constant prices (with inflationary effects removed) both quarterly seasonally adjusted and monthly non-seasonally adjusted. Constant prices are also referred to as volume terms. Construction output is used in the compilation of the production approach to measuring gross domestic product (GDP).
  • At 2005 prices, the estimated non-seasonally adjusted total volume of construction output in April 2013 was 1.1% lower than in April 2012 (Figure 1).
  • Comparing the three months from February 2013 with April 2013 with the same three months a year earlier, the volume of construction output decreased by 4.7%. New work was lower by 5.8% with large falls in public other new work and private-commercial other new work, which reported decreases of 17.3% and 8.8% respectively. Other new work excludes the housing and infrastructure sectors but includes construction on factories, warehouses, schools and offices etc. There was also a 2.8% decrease in repair and maintenance mainly due to a 7.5% fall in private housing repair and maintenance.
  • Comparing April 2013 with March 2013, the non-seasonally adjusted total volume of construction output decreased by 6.5% (Figure 1). There were decreases in all sectors with the exception of private housing new work and repair & maintenance which showed increases of 3.6% and 0.4% respectively. Overall repair & maintenance decreased by 9.7%, mainly due to large falls in infrastructure and public housing repair & maintenance, which fell 21.6% and 18.5% respectively.
  • Following a detailed analysis of the three years of monthly construction data, ONS has concluded that it is possible to produce monthly seasonally adjusted statistics for Output in the Construction Industry. These statistics will be introduced in the Quarterly National Accounts on the 27 June 2013 and will be published in all construction releases following this date.
  • These estimates for the construction industry are the second of the main components for the output approach to measuring GDP to be published for April 2013, the first month of quarter two 2013 (Table 1). Estimates for production were published on 11 June while the third main component of GDP, services, will be published on 27 June alongside the quarterly GDP release for Q2 2013.
  • Further information on the changes in growth and the levels of the components of construction are contained in tables 2 and 3 of the Additional Information section of this bulletin.
  • 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 supplementary graphs and tables to complement the construction output datasets. Accompanying background notes provide information on coverage, quality reporting, revisions and publication policy.

Detailed estimates of construction output at current and constant prices for seasonally and non-seasonally adjusted estimates are available to download in the Output in the Construction Industry, April 2013.

Care should be taken when comparing month-on-month estimates as these may be influenced by seasonal factors.

Economic Background

 

The most recent second estimate of gross domestic product (GDP) indicated that the UK economy grew by 0.3% in the first quarter of 2013 following a contraction of 0.3% in Q4 2012. In contrast with this, construction output fell by 2.4% in Q1 2013 after a short-lived return to growth (0.8%) in the previous quarter.

Looking at the longer term trend, GDP has fallen by 2.6% in the five years since the first quarter of 2008, whereas construction output has fallen by 19.0% over the same time period. Construction estimates account for just 6.8% of overall GDP but are highly responsive to the economic cycle and have provided some of the largest downward contributions. In terms of volume, construction output at constant prices fell to £23,669 million in Q1 2013. This is the lowest level since Q1 1999 and £279 million below the previous trough in Q3 2009.

Anecdotal evidence suggests that bad weather conditions in certain periods and subdued underlying demand contributed to the weak performance of the construction industry.

Construction estimates are a key component of GDP along with the estimates of services, production and agriculture. The table below summarises the various GDP production approach components’ headline growths for Q2 2013 along with the revised estimates for Q1.

Table 1:GDP Quarter 2 2013 Component tables, Constant Prices, Seasonally Adjusted

        Percentage Change
Publication % of GDP Release date Month of GDP Most recent quarter on a year earlier  Most recent quarter on a quarter earlier  Most recent month on the same month a year ago Most recent month on the previous month
             
               
Index of Production 15.6 11 Jun Apr -1.5 0.8 -0.6 0.1 
    9 May Q1 -2.3 0.2 -1.4 0.7
               
             
   
Construction output 6.8 9 Aug Q2        
    10 May Q1 -6.3  -2.4    
               
               
               
Index of Services 77 27 Jun Apr        
    23 May Q1         1.5 0.6 1.6           0.2
               
               
Retail Sales   22 May Apr 0.7 0.7 0.5 -1.3
    18 Apr Q1 0.4 0.4 -0.5 -0.7
               
 
Agriculture 0.6       Not available monthly
               

Table source: Office for National Statistics

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Output in the Construction Industry- April 2013

Figure 1: Construction Output (constant (2005) prices, non-seasonally adjusted)

Figure 1: Construction Output (constant (2005) prices, non-seasonally adjusted)
Source: Construction: Output & Employment - Office for National Statistics

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Summary Tables April 2013

Table 2: Construction Summary Tables, Constant Prices, Quarterly Seasonally Adjusted

£ million
Percentage change     
Table 2: Construction Most recent quarter on a year earlier  Most recent quarter on a quarter earlier  Most recent level
Total All Work -6.3 -2.4 23,669
 Total All New Work -7.8 -3.4 15,030
 Total Repairs and Maintenance -3.5 -0.6 8,639
       
       
Table 2a: All New Work      
       
Total All New Work -7.8 -3.4 15,030
 New Housing             
  Public Corporations -8.5 -3.4 868
  Private Sector -6.1 -3.7 3,291
 Other New Work      
  Infrastructure -1.5 -4.2 2,803
  Excl Infrastructure      
   Public Corporations -19.7 -8.2 2,079
   Private Sector      
    Private Sector - Industrial 6.5 0.9 872
    Private Sector - Commercial -8.6 -1.4 5,118
       
     
Table 2b: Repairs and Maintenance    
       
Total Repairs and Maintenance -3.5 -0.6 8,639
 Housing      
  Public corporations -1.1 -0.1 1,465
  Private sector -10.3 -0.3 2,407
 Non-Housing -0.4 -2.7 4,767
       

Table source: Office for National Statistics

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Table 3: Construction Summary Tables, Constant Prices, Monthly Non-Seasonally Adjusted

          £million
Percentage Change      
Table 3: Construction Most recent 3 months on a year earlier  Most recent 3 months on 3 months earlier  Most recent month on the same month a year ago Most recent month on the previous month Most recent level
Total All Work -4.7 3.3 -1.1 -6.5 7,768
 Total All New Work -5.8 2.2 -3.1 -4.6 4,952
 Total Repairs and Maintenance -2.8 5.3 2.4 -9.7 2,815
           
           
Table 3a: All New Work          
           
Total All New Work -5.8 2.2 -3.1 -6.5 4,952
 New Housing          
  Public Corporations -0.7 10.3 0.7 -6.3 307
  Private Sector -2.1 3.1 6.3 3.6 1,144
Other New Work          
 Infrastructure 1.1 2.5 3.8 -7.8 917
Excl Infrastructure          
  Public Corporations -17.3 2.0 -15.1 -7.4 685
  Private Sector          
   Private Sector - Industrial 5.8 2.9 4.3 -9.2 271
   Private Sector - Commercial -8.8 0.0 -8.5 -5.7 1,629
           
 
Table 3b: Repairs and Maintenance        
           
Total Repairs and Maintenance -2.8 5.3 2.4 -9.7 2,815
 Housing          
  Public corporations -4.0 2.4 0.2 -18.5 445
  Private sector -7.5 -0.8 2.5 0.4 807
 Infrastructure 4.1 12.9 -3.9 -21.6 553
 Non-Housing          
  Public corporations 0.5 11.5 11.7 -12.9 354
  Private sector -4.0 5.4 5.1 -0.1 657
           

Table source: Office for National Statistics

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Background notes

  1. Code of Practice for Official Statistics
    National Statistics are produced to high professional standards which are set out in the Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure that they meet customer needs and are produced free from any political interference.

  2. Aligning the construction output revision period to National Accounts policy
    Construction output is a key component of the production approach to measuring gross domestic product (GDP) and, as such, should be subject to the same data policies that govern the accounts although historically it has not been. National accounts data are subject to a revision policy (27.8 Kb Pdf) which determines the periods open for data revisions ensuring that revisions to individual estimates can be shown throughout the accounts. Other major short term indicators such as the Index of Production, UK Trade and the Index of Services already adhere to this policy.

    From July 2013 the Construction Output time series will be assuming the same revision policy as National Accounts (Table 4).

    The National Accounts revisions policy (27.8 Kb Pdf) covers all published quarterly and annual series appearing in the National Accounts.The National Accounts represent a wide array of data on areas as diverse as production, trade, earnings, spending, investment in fixed and financial assets and balance sheets.

    The nature of the National Accounts is that in principle all the activity is linked, so that a change in one area will have an impact elsewhere and consequently making revisions to one part of the National Accounts may lead to revisions through the system. The main strength of the system is that it allows analysis of the various economic indicators both in isolation and in conjunction with others. The strength of the integrated National Accounts system however may mean less flexibility for taking on revisions to the National Accounts. The National Accounts revisions policy is designed to give users a clear understanding of which periods are open for revision at each data release and why incorporating revisions from a single source is not a simple matter.

    The current revision policy for construction output is to revise current price survey data for 13 months and seasonal factors for 5 quarters. While this is still applicable for processing the data the revisions to the time series will not be available to users until the back periods are ‘open’ for revisions within the National Accounts. The open revision dates for publications up to the end of 2013 are tabled below.

    Table 4: Construction/National Accounts revision periods

    Publication Month 2013 Latest data Traditional period to be revised New period to be revised Date of Publication
    July 2013 Q2 M2 2012 Q3 2013 Q2 12 Jul
    August 2013 Q2 2012 Q3 2012 Q1 09 Aug
    September 2013 Q3 M1 2012 Q3 2013 Q3 13 Sep
    October 2013 Q3 M2 2012 Q4 2013 Q3 11 Oct
    November 2013 Q3 2012 Q4 2012 Q1 08 Nov
    December 2013 Q4 M1 2012 Q4 2013 Q4 13 Dec

    Table source: Office for National Statistics

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  3. Statistical continuous improvement
    In December 2012, as part of its Statistical Continuous Improvement programme, ONS published a Review of Sample Design and Estimation Methodology for Construction Output. This report evaluated the sample design and estimation methods used on the Construction Output Survey. The conclusions of the review were that the current sample is performing well and that the current methodology for estimation within the survey produces the smallest standard error.

  4. Understanding the data

    Short guide to Construction
    Construction output estimates are a short term indicator of construction output by private sector and public corporations within the UK. The estimates are produced and published at current prices and constant prices both seasonally and non-seasonally adjusted.
    Construction output is used in the compilation of the production approach to measuring gross domestic product.

    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 Construction Output Survey 

    • revisions to seasonally adjusted factors which are re-estimated every quarter

    • annual updating of the Inter-Departmental Business Register (IDBR) that forms the basis of the sampling for the Construction Output Survey. This occurs in January and can have an effect on the results published in May.

  5. Definitions and explanations
    Definitions of terminology found within the main statistical bulletin are detailed below:

    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 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 region.

    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 growth 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, nursing 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.

    Non-housing
    Within the public sector, non-housing is classified as the construction of building such as schools and colleges, hospitals, universities, fire stations, prisons and museums. Private sector non-housing is comprised of the private /industrial and private/commercial classifications. Private - industrial is the economic activity concerned with the processing of raw materials and manufacture of goods in factories and includes construction items such as factories and shipyards while private – commercial includes all items not included in the previous categories such as embassies, theatres, retail units, warehouses and garages etc.

    Repairs and maintenance
    The repairs and maintenance heading in the construction estimates comprises of housing, infrastructure and other new work. This concerns work which is either repairing something that is broken, or maintaining it to an existing standard.  For housing output this includes repairs, maintenance, improvements, house/flat conversions, extensions, alterations and redecoration etc on existing housing. For non-housing this includes repairs, maintenance, redecoration etc on existing buildings/structures, which are not housing, for examples schools, offices, roads, shops.

    Table 2 of the bulletin aggregates infrastructure and other new work into non-housing.

  6. Use of the data
    Output of the Construction Industry estimates are widely used both internally and externally and have been identified by legal requirement and user engagement surveys.

    The key users of data from the Output of the Construction Industry dataset are:

    • United Kingdom National Accounts  

    • Eurostat, the statistical office of the European Union, in order to comply with statutory requirements

    • industry analysts requiring estimates of the construction industry output of Great Britain

    • trade associations making UK and international comparisons

    • other government departments including; BIS, HM Treasury (HMT) and the Department for Communities and Local Government (DCLG).

    As well as being a key indicator of the performance of construction companies, the results of the survey also contribute to the estimate of the gross domestic product of the UK, contributing approximately 7% of GDP.

  7. Methods
    The ONS Monthly Construction Output Survey measures output from the construction industry in Great Britain. It samples 8,000 businesses, with all businesses employing over 100 people or with an annual turnover of more than £60m receiving a questionnaire by post every month. The results of the survey are deflated using price indices from the Building Cost Information Service (BCIS) of the Royal Institute of Chartered Surveyors (RICS) and then seasonally adjusted using X-12 Arima to derive the published estimates.

  8. Quality
    The latest Quality and Methodology report for the Output of the Construction Industry estimates can be found on ONS Website.

  9. Revisions
    This publication includes data revisions from April 2012. 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 5: Revisions Table (constant (2005) prices, seasonally adjusted)

    New work published in this release New work estimates previously published* New work revisions
    2012 Q1* -7.5 -7.5 0.0
    2012 Q2* -3.3 -3.5 0.2
    2012 Q3* -2.5 -2.1 -0.4
    2012 Q4* 1.2 0.9 0.3
    2013 Q1* -3.4 -3.2 -0.2
       
    R&M published in this release R&M estimates previously published* R&M revisions
    2012 Q1* -0.3 -0.3 0.0
    2012 Q2* -1.1 -1.2 0.1
    2012 Q3* -2.0 -2.1 0.1
    2012 Q4* 0.2 0.1 0.1
    2013 Q1* -0.6 -0.9 0.3
       
    Total output published in this release Total Output estimates previously published* Total output revisions
    2012 Q1* -5.1 -5.0 0.1
    2012 Q2* -2.5 -2.7 0.2
    2012 Q3* -2.3 -2.1 -0.2
    2012 Q4* 0.8 0.6 0.2
    2013 Q1* -2.4 -2.4 0.0

    Table source: Office for National Statistics

    Table notes:

    1. * Revised since March 2013 publication

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  10. Relevant links

    International Comparisons
    International construction comparisons are compiled by Eurostat, the European statistical organisation. The estimates produced in this bulletin are included in these comparisons. Further information can be found on the Eurostat web page.

  11. 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.

  12. Accessing data
    The Output of 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 Output in the Construction Industry statistical bulletin conforms to the standards set out in the UK Statistics Authority Code of Practice.

  13. 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. If you would like to comment on the consultation please follow the above link to the consultation document.

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    Statistical contact:
    Name Stuart Deneen
    Tel +44 (0)1633 456344
    Email construction.statistics@ons.gsi.gov.uk

    Contact us:
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  15. 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
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