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

Released: 12 April 2013 Download PDF

Key Findings

  • 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 seasonally and non-seasonally adjusted. Construction output is used in the compilation of the UK National Accounts’ production measure of Gross Domestic Product.
  • Users are reminded that the figures contained in this release are estimates and produced on a non-seasonally adjusted basis.
  • The total volume of construction output in February 2013 was 7.0% lower than in February 2012 (based on 2005 constant prices).
  • Comparing the three months from December 2012 to February 2013 with the same three months one year earlier, the volume of construction output decreased by 8.9%. New work was lower by 10.7% with large falls in public other new work and private-commercial other new work, which reported decreases of 23.7% and 9.8% respectively. Other new work excludes the housing and infrastructure sectors but includes construction such as factories, warehouses, schools and offices etc. There was also a 5.6% decrease in repair and maintenance, mainly due to a 8.3% fall in the repair and maintenance of housing.
  • Comparing February 2013 with January 2013 the total volume of construction output increased by 5.5%. There were increases in output for nearly all sectors, with the exception of private commercial other new work which showed a fall of 0.5%.
  • These estimates for the construction industry are the second of the main components for the output measure of GDP to be published for February 2013, the second month of quarter one 2013. Further information on the various components of GDP is contained within the Economic background 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 commentary on the dataset in addition to relevant graphs and tables. 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, February 2013 (846.5 Kb Excel sheet)  tables.

Care should be taken when comparing month-on-month estimates as these may be influenced by seasonal factors. ONS is currently undertaking a detailed analysis of the three year seasonal adjustment pattern of these estimates. An article expaining this analysis will be published alongside the March 2013 release of Output in the Construction Industry. 

Economic Background

In seasonally adjusted constant prices, the last quarter of 2012 saw a 0.3% dip in the third estimate of Gross Domestic Product (GDP), reflecting the subdued UK economy. Contrasting this, quarter-on-quarter growth in construction was quite strong, rising 1.0%, as projects that had previously been disrupted by the Olympic and Paralympic Games came back on-line. However, this did disguise some underlying weakness: compared with a year ago construction output has fallen by 8.5%.

The 5.5% monthly rise in the constant price, non-seasonally adjusted estimates in February could indicate a break from this pattern. However, the February growth, while appearing strong is based on low volume of output in January. The volume of construction output in January of £6,900 million was the lowest level since publication of the monthly estimates began in January 2010 while February’s volume estimate of £7,300 million is the third lowest level behind January 2013 and December 2012.
 
Construction estimates account for just 6.8% of GDP, and has provided some of the main downward contributions to total output since the recession. Construction output is highly responsive to the economic cycle and has fallen by 16.5% when comparing the last quarter of 2012 with the first quarter of 2008.

Construction estimates are a key component of GDP along with the estimates of services, production and agriculture. The table below summarises the various component headline growths for quarter 1 2013.

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

        Percentage change
Publication GDP weight Release date Month of GDP 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
               
Index of Production 15.6 09-Apr Feb -2.5 0.3 -2.2 1.0
    12-Mar Jan -2.6 -1.0 -3.1 -1.3
               
               
Construction output1 6.8 12-Apr Feb -8.9 -16.0 -7.0 5.5
    08-Mar Jan -8.7 -1.5 -7.9 -6.3
               
               
Index of Services2 77.0 25-Apr Feb        
    28-Mar Jan 0.9 -0.2 0.8 0.3
               
Retail Sales   21-Mar Feb 0.8 -0.2 2.6 2.1
    15-Feb Jan 0.2 -0.6 -0.5 -0.7
             
 
Agriculture 0.6 25-Apr   Not available monthly
               

Table source: Office for National Statistics

Table notes:

  1. Construction output is non-seasonally adjusted.
  2. The February estimates for the final component, services, will be published on the 25 April alongside the preliminary estimate for quarter one 2013 GDP.

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Output in the Construction Industry - February 2013

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

Construction Output
Source: Construction: Output & Employment - Office for National Statistics

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The total volume of construction output in February 2013 was estimated to have been 7.0% lower than in February 2012 (based on 2005 constant prices).

Comparing the three months from December 2012 to February 2013 with the same three months one year earlier, the volume of construction output in this period decreased by 8.9%. There were falls in both the main sectors where all new work decreased 10.7% and repairs and maintenance decreased 5.6%. Within repairs and maintenance estimates of housing repairs and maintenance decreased 8.3% while estimates of the volume of infrastructure work decreased by 0.6% over this period.

Comparing February 2013 with January 2013 the volume of construction output increased by 5.5% with rises in nearly all sectors, particularly in the repairs and maintenance sector. Within repairs and maintenance housing repairs and maintenance increased 8.2%, infrastructure increased by 12.5% and public and private other work increased 12.5% and 8.8% respectively.

However, the February growth, while appearing strong is based on low volume of output in January. The volume of construction output in January of £6,900 million was the lowest level since publication of the monthly estimates began in January 2010 while February’s volume estimate of £7,300 million is the third lowest level behind January 2013 and December 2012.

Table 2: Construction Summary Tables, Constant Prices, Non-Seasonally Adjusted

  Percentage change       £million
Table 2: Construction Most recent rolling 3 months on a year earlier  Most recent rolling 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 -8.9 -16.0 -7.0 5.5 7,288
Total All New Work -10.7 -17.0 -7.8 3.0 4,531
Total Repairs and Maintenance -5.6 -14.1 -5.6 9.8 2,757
           
   
  Percentage change       £million
Table 2a: All New Work Most recent rolling 3 months on a year earlier  Most recent rolling 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 New Work -10.7 -17.0 -7.8 3.0 4,531
New Housing          
  Public Corporations -14.4 -15.4 -8.1 18.5 268
  Private Sector -7.0 -17.1 -7.1 6.1 964
Other New Work          
Infrastructure -7.6 -14.9 1.0 3.3 869
Excl Infrastructure          
Public Corporations -23.7 -23.6 -21.1 1.1 619
Private Sector           
Private Sector - Industrial 3.1 -10.9 -7.2 3.9 249
Private Sector - Commercial -9.8 -16.4 -6.5 -0.5 1,562
           
   
  Percentage change       £million
Table 2b: Repairs and Maintenance Most recent rolling 3 months on a year earlier  Most recent rolling 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 Repairs and Maintenance -5.6 -14.1 -5.6 9.8 2,757
Housing          
Public corporations -4.4 -17.8 -8.8 8.1 461
Private sector -10.5 -14.4 -11.7 8.3 754
Infrastructure -0.6 -9.7 4.3 12.5 566
Non-Housing          
Public corporations 1.9 -10.7 4.0 12.5 369
Private sector -8.2 -16.6 -8.5 8.8 608
           

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 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. 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.

    Seasonally adjusted monthly constant price data is undergoing review now that three years data are available for analysis. The results of this detailed analysis will be published once completed.

  3. 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 UK National Accounts’ production measure of Gross Domestic Product. 

    Interpreting the Data
    When making comparisons it is recommended that users focus on constant prices, 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.

    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 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 private sector, those units controlled by private individuals or groups and public sector, those units controlled by the state.

    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.

    Repairs and Maintenance
    The repairs and maintenance heading in the construction estimates comprises of housing, infrastructure and other work. Table 2 of the bulletin aggregates infrastructure and other work into non-housing. The disaggregated series will be published once seasonal analysis has been completed on the monthly time series.

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

    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, 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 6.8% of GDP.

    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.

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

     

  4. Revisions

    In line with the revisions policy used for national accounts this month, this publication includes data revisions from January 2012. In addition to data revisions, a refinement to the seasonal pattern has caused slight revisions to the seasonally adjusted time series from quarter 3 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 3: Revisions Policy

    Source of revisions Revision periods
    New survey data New month + revised 12 previous months
    Revised deflators from BIS* New quarter + revised 2 previous quarters
    Seasonal factors New quarter + revised 5 previous quarters

    Table source: Office for National Statistics

    Table notes:

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

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    Table 4: Revisions Table (constant (2005) prices, seasonally adjusted)

    New work published in this release New work estimates previously published* New work revisions
    2011 Q4* -1.6 -1.1 -0.5
    2012 Q1* -8.0 -8.3 0.3
    2012 Q2* -3.2 -3.1 0.0
    2012 Q3* -1.6 -1.6 0.0
    2012 Q4* 1.5 1.4 0.1
         
    R&M published in this release R&M estimates previously published* R&M revisions
    2011 Q4* 0.8 0.8 -0.1
    2012 Q1* -0.5 -0.6 0.1
    2012 Q2* -1.2 -1.2 0.0
    2012 Q3* -2.0 -2.1 0.1
    2012 Q4* 0.1 -0.4 0.5
         
    Total output published in this release Total output estimates previously published* Total output revisions
    2011 Q4* -0.8 -0.5 -0.4
    2012 Q1* -5.4 -5.7 0.3
    2012 Q2* -2.4 -2.4 0.0
    2012 Q3* -1.7 -1.8 0.0
    2012 Q4* 1.0 0.8 0.3

    Table source: Office for National Statistics

    Table notes:

    1. * Revised since January 2013 publication.

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  5. 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.

  6. 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.
     

  7. Accessing Data

    The Output of the Construction Industry statistical bulletin and time series datasets are available to download free from the 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 with the latest Construction release (62 Kb Pdf) .

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

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

  9. Following ONS

    Follow ONS on Twitter (@statisticsons) and Facebook (statisticsons).

    You can also view the latest podcasts on YouTube (ONSstats). 

  10. Contacts

    Media contact:
    Tel Media Relations Office    +44 (0)845 6041858
     Emergency on-call    +44 (0)7867 906553
    Email  press.office@ons.gsi.gov.uk

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

    Contact us:
    Tel  +44 (0)845 601 3034
    Email  info@ons.gov.uk
    Website  Office for National Statistics
    Twitter  Statistics ONS

  11. 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
Kate Davies +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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