Construction output estimates are a short term indicator of construction output by the private sector and public corporations within Great Britain and are produced from a monthly survey of 8,000 businesses in Great Britain. The estimates are produced and published at current prices (including inflationary price effects) and at chained volume estimates (with inflationary effects removed) both seasonally adjusted and non-seasonally adjusted.
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). Since quarter 2 2013 these data have been supplied by Barbour ABI. Further details can be found in the background notes section of this bulletin.
Detailed estimates along with a longer run of time series data are available to download in the Output in the Construction Industry, April 2014 and New Orders Q1 2014 dataset.
The ‘Definitions and explanations’ section in the background notes of this bulletin includes additional information on items contained in this release along with further details on the newly published monthly seasonally adjusted series and the chained volume measures.
Construction statistics for Northern Ireland are available through the Northern Ireland Statistics and Research Agency.
It should be noted that due to seasonal adjustment taking place on a short span of data points used to interpret the seasonal effects (52 months), there is potential for increased revisions until the seasonal pattern is established within the time series. The seasonal pattern is generally established after 60 months in a monthly time series.
Construction output is a component in the production approach to measuring gross domestic product (GDP), accounting for 6.3% of total GDP, based on 2010 weights. Due to the high value of construction in GDP and its stand alone status as a key economic indicator, the construction estimate is widely used by economists and industry specialists as an aid to economic interpretation and forecasting.
Construction output increased by 1.2% in April 2014 compared with March 2014. Falls in construction output in February and March 2014 have resulted in the rolling three month on three month growth rate falling by a modest 0.1%. However, compared with April 2013 construction output increased by 4.6% due to strong growth in new house building but the quarterly level is still 10.3% below its peak in 2008 Q1.
April’s construction data points towards a strengthening housing market and a pickup in commercial activity seen in private industrial and commercial building. These movements are supported in reports by the Bank of England; in its Agents’ Summary of Business Conditions it reported an increase in housing market transactions, strong growth in house building and a gradual return of confidence in the commercial construction sector.
These improvements coincide with growth in secured lending to finance house purchases and rising house prices. The Bank of England has reported an increase in secured lending in every quarter since Q1 2012, while the ONS House Price Index has risen in every month since March 2012.
More information on how construction output has fared during economic downturns can be found in the article ‘UK Construction Industry downturn in a historic context’
Comparing April 2014 with March 2014 (Figure 1), the output of the construction industry increased by 1.2% and by 4.6% compared with April 2013. The rolling three month data (February to April) show a slight fall of 0.1% compared with the previous three months (November 2013 to January 2014), this is mainly due to weak February and March data, where construction output may have been affected by severe storms across the UK. However, when compared with the same three months in 2013, the three months (February to April) showed an increase of 5.2% and as figure 1 shows construction output has steadily increased from its lowest point in September 2012 but has not recovered to the levels seen in 2011.
In April 2014, all new work increased by a modest 0.9% (£55 million) compared with March 2014. Of the new work components public housing and private commercial work both decreased with all other components seeing an increase in new work.
Figure 3, shows the performance of all new work components since monthly data were first collected in 2010. Due to the relatively small size of private industrial and public other new work, the increases in these sectors whilst contributing towards the modest growth in all new work did not provide as great a contribution as the small gain in infrastructure and the much larger increase in new housing work.
In April 2014, repair & maintenance work increased by 1.6% compared with March 2014 and by 4.2% compared with April 2013. Repair & maintenance of housing showed a modest increase due to an increase in public housing repair & maintenance being offset by a fall in private housing. Non-housing repair & maintenance increased by 2.8%.
|New Housing||Other New Work||All New Work|
|Public||Private||Total||Infras- tructure||Public||Private Industrial||Private Commercial|
|Date||Jan 13||Jan 10||Jan 10||Dec 10||Mar 14||Jul 11||Sep 12||Jun 12|
|Date||Mar 14||Jan 14||Apr 14||Dec 11||Feb 11||Aug 10||Sep 11||Jun 11|
|Percentage change from lowest volume||42.1||51.5||48.9||3.1||3.6||27.7||13.7||9.4|
|Percentage change from highest volume||-2.4||-3.0||-2.0||-25.3||-37.5||-13.8||-16.2||-10.1|
|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||5.2||-0.1||4.6||1.2||9,675|
|Total All New Work||5.5||-0.1||4.9||0.9||5,951|
|Total Repair & Maintenance||4.7||0.0||4.2||1.6||3,724|
|All New Work|
|Total All New Work||5.5||-0.1||4.9||0.9||5,951|
|Other New Work|
|Private Sector - Industrial||3.8||11.7||9.1||3.8||308|
|Private Sector - Commercial||2.3||0.5||1.0||-0.9||1,778|
|Repair & Maintenance|
|Total Repair & Maintenance||4.7||0.0||4.2||1.6||3,724|
Construction estimates are a key component of the output approach to measuring GDP along with the estimates of services, production and agriculture. As an aid to users, the short term releases that directly feed into GDP now include an additional table of GDP components. It is anticipated that this table will inform users of the relationship between the individual components which comprise GDP output. The publication dates and the quarterly growths of the individual GDP components are shown.
Each component of GDP has a weight within GDP based on its value in 2010. Construction has a weight of 63 which means that it is 63 parts of the 1,000 that make up total GDP.
The second estimate of GDP for Q1 2014 published on 22 May 2014 included an estimate of construction growth of 0.6%. This has been revised up in this release to an increase of 1.5%, late survey data particularly for March 2014 is the cause of this revision.
The revision of 0.9 percentage points results in an increased contribution to GDP growth of 0.09% compared with the previously published contribution to growth of 0.01%. Assuming there is no revision to Index of Services or the agriculture component of GDP this revision to construction output will revise GDP growth by 0.1 percentage points.
To determine the effect each component has on GDP multiply the component growth by its weight in GDP.
An example using Q2 2013 data:
Construction growth = 1.9
Weight in GDP = 0.063 (63/1000)
Effect on GDP = 1.9 * 0.063 = 0.1197 or 0.1 to 1 decimal place (dp).
Revisions to components and the effect on GDP can be calculated using the same process. As a general rule there are no revisions to GDP when the component revisions are:
IoP = between 0.3 and -0.3
Construction = between 0.7 and -0.7
IoS = 0.0 (all values above or below 0.0 effect GDP due to the high weight of IoS in GDP).
IoP = 0.152*0.4 = 0.0608 or 0.1 to 1 dp
Construction = 0.063*0.8 = 0.0504 or 0.1 to 1 dp
IoS = 0.778*0.1 = 0.0778 or 0.1 to 1 dp
Table 3 shows the latest monthly and revised quarterly output figures that fed into the second estimate of GDP release for Q1 2014 published on the 22 May 2014.
|Publication||Weight in GDP||Publication date||Latest periods||Most recent period on a year earlier||Most recent period on the previous period|
|Index of Production||152||10-Jun|
|Index of Services||778||22-May|
Figure 6 shows the quarterly path for GDP and its components from Q1 2005. While it is apparent that all the components were severely affected by the economic downturn from 2008 it is clear that the downturn had a more pronounced effect on both production and construction. Production and construction have in fact gone through a second contraction. The production fall began in Q4 2010 and output fell to levels lower than those seen through the downturn, while construction fell slightly later, beginning its decline in Q3 2011 and reaching the low point of this second downturn in Q3 of 2012. Since this low point construction output has continued to improve slowly and had increased 7.3% by Q1 2014 with a rate of improvement in 2013 sharper than that recorded for either the production or services industries.
It is estimated that the seasonally adjusted volume of all new orders decreased by 6.3% between Q4 2013 and Q1 2014 to £11,503 billion. There were falls in the volume of new orders for all types of work with the exception of public other new work and private housing but the increases here did little to negate the notable falls in public housing, infrastructure and private industrial new orders.
Annual growth rates show a different picture with new orders in Q1 2014 increasing by 7.6% compared with Q1 2013. All new housing increased by 13.8% due to an increase of 25.9% in private new housing but this was offset by a fall in public new housing of 27.2%. New orders for all other new work increased by 4.7%, this was in part due to a notable increase in private industrial work of 69.2%. However, the weight of this series in all other new work, 12%, means that this growth was somewhat negated by a fall of 0.1% in private commercial which has a weight of 40%.
In recent quarters the underlying trend in new housing orders has been one of growth. The quarter on quarter fall of 9.0% in Q1 2014 suggests that this trend has come to an end. However, splitting the sector into public and private new housing orders shows that this fall is due to a significant fall in public housing new orders of -45.7% as shown in figure 8.
Non-seasonally adjusted current price regional data, available in table 6 of the New Orders reference tables, shows that new housing orders varied across the regions. Figure 9 shows the monetary change in London, the rest of England, Scotland and Wales.
New orders for public housing fell in all regions with the exception of Wales, whereas private housing new orders increased in all but Scotland, where there was no change when compared with Q4 2013. Figure 10 show these changes as growth rates.
Possible reasons for the decline in public housing new orders are that investment in some housing associations is coming from a private rather than public source and house builders are building elements of affordable housing within larger schemes which may be allocated to private housing.
|Most recent quarter on a year earlier||Most recent quarter on the previous quarter||Most recent level|
|1. All New Work||Percentage change||£million|
|All New Work||7.6||-6.3||11,503|
|All New Housing||13.8||-9||3,840|
|All Other Work||4.7||-4.8||7,663|
|1.1 New Housing||Percentage change||£million|
|All New Housing||13.8||-9||3,840|
|1.2 Other New Work||Percentage change||£million|
|All Other Work||4.7||-4.8||7,663|
|Private - Industrial||69.2||-14.6||912|
|Private - Commercial||-0.1||-1.9||3,032|
Users should note that these New Orders statistics use data from Barbour ABI and are therefore produced using different methods from those in place at the time when the statistics were first assessed for compliance with the Code of Practice for Official Statistics. They are currently being reassessed as part of an ongoing assessment of ONS's short-term economic output indicators, with a view to confirming their designation as National Statistics. Further details on the collaboration between the ONS and Barbour ABI can be found in the background notes section of this bulletin.
Further users should note that there may be some discontinuity in the data around 2013 Q3 where the Barbour data were used for the first time to compile these statistics.
In April 2014 the United Kingdom Statistics Authority (UKSA) published an assessment of the Construction Output and New Orders statistical bulletin to measure its compliance with the Code of Practice for Official Statistics. This release and associated dataset now contain additional information for users to meet some of the requirements and suggestions of the assessment.
The Office for National Statistics (ONS) will be hosting two seminars on 19th June 2014 at the Queen Elizabeth II Conference Centre, London to engage with users regarding potential changes to GDP estimates. The two seminars are entitled; Improvements to the Output Approach to GDP and Construction Price Indices. To facilitate a good discussion at these seminars ONS welcomes attendance from a broad range of users.
ONS are currently looking at how it can publish construction data in a CSV format. Plans for how this will be achieved will be published shortly.
Further ONS are looking at how it can present information on potential breaks in the time series for New Orders. More information on this will be published shortly.
About this release
Construction output estimates are a short term indicator of construction output by private sector and public corporations within Great Britain. Output estimates are produced and published at current prices (including inflationary price effects) and at chained volume estimates (with inflationary effects removed) both seasonally adjusted and non-seasonally adjusted. Chained volume measures are also described as volume. Construction output is used in the compilation of the output approach to measuring gross domestic product (GDP).
The data published in this release cover construction estimates for Great Britain. Construction output estimates for Northern Ireland can be obtained from the Central Survey Unit.
New Orders in the Construction Industry estimates have been compiled using data supplied by Barbour ABI. These data have also been used in the compilation of tables 5 and 6 in the Output of the Construction Industry data tables. Full details of this change in data source can be found in the article, 'Announcement of Changes to New Orders in the Construction Industry'.
This release conforms to the standard National Accounts revision policy (27.8 Kb Pdf) , which can be found on the National Statistics website. In line with this, the construction output release for April 2014 has a revision period back to January 2013.
Figures for the most recent months are provisional and subject to revision in light of (a) late responses to the Monthly Business Survey MBS and (b) revisions to seasonal adjustment factors which are re-estimated every period.
Statistical continuous improvement
In March 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.
In response to user feedback and in line with the announcement made in the article ‘Improvements to the methods used to compile Output in the Construction Industry statistics’, this statistical bulletin now contains monthly seasonally adjusted chained volume estimates. Due to the potential for confusion when comparing constant price (volume) and chained volume measures, all references to constant price series for construction output have been removed from this, and future bulletins.
Use of the data
Output in 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 legislation on short-term business statistics (STS). Short-term business statistics provide information on the economic development of four major domains: industry, construction, retail trade and other services.
Industry analysts requiring estimates of the construction industry output of Great Britain.
Trade associations making UK and international comparisons and to forecast trends in the construction industry.
Other government departments including; the Department for Business, Innovation and Skills (BIS), HM Treasury (HMT), Department for Communities and Local Government (DCLG) and the Office for Budgetary Responsibility (OBR).
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 6.3% of GDP.
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.
Since the 1950s New Orders in Construction data had been collected from a sample survey of businesses; originally monthly and then quarterly. There were some known quality issues with the survey data as (a) the coverage of the survey was unknown; and (b) new orders allocated to regions were not always accurately recorded. The New Orders data are now supplied under contract to the ONS by Barbour ABI. Barbour ABI provide ONS with improved coverage and regional splits of new orders in construction data.
The latest Quality and Methodology report (161.5 Kb Pdf) for the Output of the Construction Industry estimates can be found on the ONS website.
The latest Quality and Methodology report (100.2 Kb Pdf) for New Orders in the Construction Industry estimates can be found on the ONS website.
One indication of the reliability of the key indicators can be obtained by monitoring the size of revisions. Analysis of the previously published quarterly seasonally adjusted constant price series has shown that revisions to construction data are small. Generally these quarterly revisions are less than 1 percentage point when compared with the final revised period five quarters after initial publication. This indicates that the published estimates are a reliable snapshot of the output in the industry at the date of publication.
The size and pattern of revisions which have occurred in the chained volume measures in the open period for revisions can be found in the new revision triangles on the construction web page. 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’.
It should be noted that due to seasonal adjustment taking place on a short span of data points used to interpret the seasonal effects (49 months), there is potential for increased revisions until the seasonal pattern is established within the time series. The seasonal pattern is generally established after 60 months in a monthly time series.
Please note that a monthly seasonally adjusted chained volume series is not available pre-2010. This is due to monthly data not being available for this period. These data are a requirement for creating previous year’s prices from which chain linked volume measures are created.
Revisions to the price indices used to compile the constant price series has caused data changes back to Q4 2012 in the new orders series (table 5). Due to these price changes in the non-seasonally adjusted series, a refinement to the seasonal pattern has also caused revisions to the seasonally adjusted series.
International construction comparisons are compiled by Eurostat. The estimates produced in this bulletin are included in these comparisons. Further information can be found on the Eurostat web page.
Releases on construction output and employment prior to the transfer to ONS can be found on the BIS website.
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.
Understanding the data
Interpreting the data
When making comparisons it is recommended that users focus on chained volume measures or constant price (volume), seasonally adjusted estimates as these show underlying movements rather than seasonal movements.
Construction output 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 April and can have an effect on the results published in May.
Definitions and explanations
Definitions of terminology found within the main statistical bulletin are detailed below:
Output is defined as the amount chargeable to customers for building and civil engineering work done in the relevant period excluding VAT. As well as work charged to customers, businesses are asked to include the value of work done on their own initiative on buildings such as dwellings or offices for eventual sale or lease, and of work done by their own operatives on the construction and maintenance of their own premises. The value of goods made by businesses themselves and used in the work is also included.
In all returns, work done by sub-contractors is excluded to avoid double counting, since sub-contractors are also sampled. Output does not include payments made to architects or consultants from other firms – this would also cover engineers and surveyors. It would include wages paid to such people if they were directly employed by the business.
Current price (value) (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 (volume) (KP)
A constant price or volume measure is a series of economic data from successive years expressed 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 the ‘Deflation’ section. Constant price series in this bulletin are based on the reference year 2005.
Chained volume measures (CVM)
A chained volume series is a series of data from successive years, put in constant price terms by computing the production volume for each year in the prices of the preceding year, and then chain-linking the data together to obtain a time-series of production figures from which the effects of price changes (i.e., monetary inflation or deflation) have been removed. Further information on chain-linking can be found in the methodological article ‘Annual chain-linking’.
Seasonal adjustment (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.
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 2010 for CVM data.
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-profit institutions serving 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 is generally defined as ‘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 is the generic term for the basic physical and organisational 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.
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.
Repair and maintenance
The repair 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 this bulletin aggregates infrastructure and other new work into non-housing.
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.
Details of the policy governing the release of new data are available from the Media Relations Office.
The Output in the Construction Industry statistical bulletin and relevant 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.
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 following information.
Tel Media Relations Office +44 (0)845 6041858
Emergency on-call +44 (0)7867 906553
Name Kate Davies
Tel +44 (0)1633 456344
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: email@example.com
|Kate Davies||+44 (0)1633 456344||Office for National Statisticsfirstname.lastname@example.org|