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.
Detailed estimates along with a longer run of time series data are available to download in the Output in the Construction Industry, December 2013.
Further details on the newly published monthly seasonally adjusted series and the chained volume measures can be found in the ‘What’s new’ section of the output background notes.
The ‘Definitions and explanations’ section in the background notes of this bulletin includes additional information on items contained in this release.
In December 2013, construction output increased by 6.3% compared with December 2012, up from 2.0% in November 2013. This growth was supported by both new work and repairs and maintenance, with particularly strong growth in new private dwellings and new private commercial buildings. Output was higher in all the components of new work than the same month a year ago, capturing a broad pick-up in the construction sector during 2013.
Taking 2013 as a whole, construction output expanded by 1.3%: faster than during 2012 where it fell by 7.9% but slower than during 2011 (2.3%) and 2010 (8.3%). Despite this recent growth, output in the construction industry remains well below the pre-downturn peak in 2007. This is largely as a consequence of lower new work, which in 2013 was 13.4% below the pre-downturn peak, while repairs and maintenance output was 9.6% lower over the same period.
There was 2.0% increase in construction output in December, recovering some of the output lost during November. New work more than accounted for the whole of this increase, growing by 3.4% in December, while repair and maintenance work contracted slightly on the month. The monthly output series for all construction remains relatively volatile – having moved between expansion and contraction throughout 2013.
The ONS house price index also showed that there was an increase of 5.4% in UK house prices in the 12 months to November 2013, which may be a contributing factor to the recent growth of new housing construction output.
Comparing construction output in Q4 2013 with Q3 2013 (Figure 1) the estimated volume of all work increased by 0.2%, the third consecutive quarter on quarter increase and the longest run of quarter on quarter growth increases since Q3 2010.
In the disaggregated series, there was a quarter on quarter increase of 0.7% in new work predominantly due to a 5.7% increase in new housing. Within this sub-sector public housing increased 10.5% while private housing increased 4.5%. Within new work, infrastructure increased by 1.3% although there were falls in both public and private other new work .
Repair & maintenance fell by 0.5% in Q4 2013 due to a fall of 1.8% in housing repair & maintenance. Non-housing repair & maintenance increased by a modest 0.8%.
All work increased by 2.0% in December 2013 when compared with November 2013 (Figure 2) due to a 3.4% (£200 million) increase in new work. Within new work there were increases in all sub-sectors, the largest increase coming from the new housing sector, which increased 4.9%. Private new housing, the largest component of new housing now stands at £1,614 million, its highest volume since the monthly series began in 2010.
Repair & maintenance fell slightly in December when compared with November, decreasing by 0.2%. A small decrease is also seen in the quarterly and annual estimates. Repair & maintenance in Q4 2013 was estimated to have fallen by 0.5% and annually by 0.3%.
When comparing December 2013 with December 2012 construction output increased 6.3% with increases in most sectors with the exception of private industrial new work and repair & maintenance of public housing. December 2013 saw the seventh consecutive month of year on year growth for construction all work.
Estimated to be £112.6 billion, the annual chained volume measure of construction output grew by a modest 1.3% in 2013 but was 3.9% higher than its economic downturn volume of £108.3 billion in 2009. Despite the increase construction output remained 12.2% below its peak of £128.2 billion recorded in 2007.
Within the sub-sectors, new work increased by 2.4%, where new housing showed a substantial increase in 2013 growing by 10.4% to £22,100 million, its highest volume since 2007. There were, however, drags on new work during 2013 when compared with 2012 with a large decrease in public spending on other new work of 8.7% (£900 million) and a 5.5% decrease (£200 million) in private industrial new work.
Repair & maintenance showed little movement in 2013 when compared with 2012 contracting 0.3%. There was however a noticeable decrease in public housing repair & maintenance which fell 4.8% (£350 million) over the period.
Table 1 shows the components of new work and their relative increases since their lowest recorded volumes.
|New Housing||Other New Work||All|
|% Increase from lowest volume||36.4||50.7||47.3||13.9||4.7||5.4||13.4||10.6|
|Date||Jan 2010||Jan 2010||Jan 2010||Jun 2012||Jan 2013||Jul 2011||Sep 2012||Mar 2013|
|Date||Mar 2011||Dec 2013||Dec 2013||Dec 2011||Feb 2011||Aug 2010||Sep 2011||Jun 2011|
|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||4.4||0.2||6.3||2.0||9,576|
|Total All New Work||5.6||0.7||7.8||3.4||6,050|
|Total Repair and Maintenance||2.4||-0.5||3.9||-0.2||3,526|
|All New Work|
|Total All New Work||5.6||0.7||7.8||3.4||6,050|
|Other New Work|
|Private Sector - Industrial||-18.9||-4.9||-19.2||2.9||254|
|Private Sector - Commercial||5.0||-2.1||5.3||2.5||1,818|
|Repair and Maintenance|
|Total Repair and Maintenance||2.4||-0.5||3.9||-0.2||3,526|
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 below.
Table 3 shows the output figures that fed into GDP for Q4 2013. Data from Q1 2013 are revised this month in accordance with the national accounts revisions policy. Revisions to construction throughout this period have no effect on GDP growth to 1 decimal point.
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.
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
|Publication||Weight in GDP||Release date||Latest period||Most recent quarter on a year earlier||Most recent quarter on the previous quarter||Most recent month on the same month a year ago||Most recent month on the previous month|
|Index of Production||152||7 Feb||Q4||2.3||0.5||:||:|
|Construction output||63||14 Feb||Q4||4.1||0.2||:||:|
|Index of Services||778||28 Jan||Q4||2.6||0.8||:||:|
|Retail Sales||17 Jan||Q4||3.2||0.4||:||:|
Figure 4 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 Q2 2011 and reaching the low point of this second downturn in Q3 of 2012. Since this low point construction output has continued to improve and had increased 6% into Q4 2013.
ONS previously announced the intention of transferring production of the construction estimates to a new CORD system from March 2014. ONS are reviewing this implementation date and will update users in due course.
Following a review of the sampling methodology, there will be an update to the sizebands used to stratify the sample. The 5 - 19 strata will be replaced by two strata one for 5-9 employment the other for 10 -19 employment. The overall sample size is unchanged. These changes will be implemented in March 2014 on the January 2014 dataset.
Users are reminded, in line with previous announcements, that this publication contains the final data point in the constant price (2005) series.
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.
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 Quarter 4 2013 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 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.
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 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.
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.
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% when compared to 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 there is potential for increased revisions until the seasonal pattern is established within the 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.
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 January 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.
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