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

Released: 12 July 2013 Download PDF

Key Points

  • Users are reminded that the figures contained within this release are estimates produced from a monthly survey of 8,000 contributors in Great Britain. Unless otherwise stated, the estimates in this release are seasonally adjusted. Explanations of the terms used within this release can be found in the ‘background notes’ section of this bulletin.
  • 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 volume estimates alongside quarterly seasonally adjusted chained volume measures of construction output estimates.
  • The estimated monthly seasonally adjusted, total volume of construction output in May 2013 was 4.8% lower than in May 2012 (Figure 1).
  • Comparing the three months from March 2013 to May 2013 with the same three months a year earlier, the volume of construction output decreased by 4.8%.
  • Comparing May 2013 with April 2013, the seasonally adjusted total volume of construction output showed zero growth (Figure 1). There was a small increase in all new work of 0.3%, which was negated by a decline in repair & maintenance output of 0.5%.
  • These estimates for the construction industry are the second of the main components for the output approach to measuring GDP to be published for May 2013, the second month of quarter two 2013 (Table 1). Estimates for production were published on 9 July while the third main component of GDP, services, will be published on 25 July alongside the preliminary estimate of GDP for Q2 2013.

Introduction

Further details on the newly published monthly seasonally adjusted series and the new chained volume measures contained in the time series data set can be found in the ‘What’s new’ section of the background notes.

The ‘Definitions and explanations’ section in the background notes of this bulletin includes additional information on items contained in this release.

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, May 2013.

Economic Background

The most recent estimate of gross domestic product (GDP) confirmed the UK economy grew by 0.3% in the first quarter of 2013 following a contraction of 0.2% in Q4 2012. Construction output has contrasted these recent movements, falling 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 3.9% in the five years since the first quarter of 2008, whereas construction output has fallen by 18.9% over the same time period. Construction estimates are highly responsive to the economic cycle and have provided some of the largest downward contributions to GDP. In terms of volume, construction output fell to £23,669 million in Q1 2013. This is the lowest level since Q1 1999 and £309 million below the previous trough in Q3 2009 (See figure 2).

Anecdotal evidence suggests that bad weather conditions in certain periods and subdued underlying demand contributed to the weak performance of the construction sector. In addition to this subdued demand, year on year comparisons may have been affected by May 2012 having only one bank holiday as opposed to the usual two. More information on this can be found in the background notes section of this release.

Within the production approach to measuring gross domestic product, the weighting of construction has decreased marginally, falling from 6.8% to 6.3% between 2009 and 2010.

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
 
    09 Jul May -1.9 0.2 -2.3 0.0
Index of Production 15.2 11 Jun Apr -1.9 0.4 -1.4 -0.1
    09 May Q1 -2.6 0.3 -2.0 0.0
 
 
    12 Jul May -4.8 0.0 -4.8 0.0
Construction output 6.3 14 Jun Apr : : -2.2 4.6
    10 May Q1 -6.3 -2.4  :  :
 
 
    25 Jul May        
Index of Services 77.8 28 Jun Apr 1.8 0.8 2.0 0.2
    23 May Q1 1.3 0.5 1.2 0.0
 
    20 Jun May 0.7 0.7 1.9 2.1
Retail Sales   22 May Apr 0.8 0.9 0.8 -1.1
    18 Apr Q1 0.4 0.5 -0.4 -0.5
 
 
Agriculture 0.7     Not available monthly
 

Table source: Office for National Statistics

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Output in the Construction Industry, May 2013

Figure 1: Construction Output, Constant (2005) prices, Non-seasonally adjusted (NSA) and Seasonally adjusted (SA)

Figure 1: Construction Output, Constant (2005) prices, Non-seasonally adjusted (NSA) and Seasonally adjusted (SA)
Source: Construction: Output & Employment - Office for National Statistics

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Comparing the three months from March 2013 to May 2013 with the same three months a year earlier, the volume of construction output decreased by 4.8%.

New work was lower by 5.5% with large falls in public other new work and private-commercial other new work, which reported decreases of 18.1% and 10.1% respectively. Other new work excludes the housing and infrastructure sectors but includes construction on factories, warehouses, schools and offices etc. There was also a 3.4% decrease in repair and maintenance mainly due to a 5.6% fall in housing repair and maintenance. 

Figure 2: Construction Output, Quarterly Time Series, Constant (2005) Prices, Non-Seasonally (NSA) and Seasonally Adjusted (SA), in £ million

Figure 2: Construction Output, Quarterly Time Series, Constant (2005) Prices, Non-Seasonally (NSA) and Seasonally Adjusted (SA), in £ million
Source: Construction: Output & Employment - Office for National Statistics

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Table 2: Construction summary tables, Constant prices (2005), Seasonally adjusted

  Percentage change £million
Table 2: 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 -4.8 0.0 -4.8 0.0 8,063
  Total All New Work -5.5 0.1 -5.3 0.3 5,132
  Total Repairs and Maintenance -3.4 0.3 -4.1 -0.5 2,931
           
           
Table 2a: All New Work          
           
Total All New Work -5.5 0.1 -5.3 0.3 5,132
  New Housing          
    Public Corporations 3.7 6.5 7.4 2.6 319
    Private Sector -1.6 -0.3 2.7 -0.5 1,156
  Other New Work          
    Infrastructure 6.2 1.7 8.9 3.5 966
    Excl Infrastructure          
      Public Corporations -18.1 -1.1 -18.4 1.6 705
      Private Sector          
        Private Sector - Industrial -0.4 -4.6 -6.7 -8.3 278
        Private Sector - Commercial -12.1 -1.0 -12.3 -0.5 1,705
           
 
Table 2b: Repairs and Maintenance        
           
Total Repairs and Maintenance -3.4 0.3 -4.1 -0.5 2,931
  Housing          
    Public corporations -2.0 0.0 -6.9 -4.7 482
    Private sector -7.7 0.1 -8.5 -3.1 816
  Non-Housing -1.5 0.5 -0.7 2.3 1,634
           

Table source: Office for National Statistics

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Table 3: Chained volume measures (2010), Seasonally adjusted

  Percentage change £million
Table 3: Construction      
Most recent quarter on a year earlier  Most recent quarter on a quarter earlier  Most recent level
Total All Work -6.3 -1.8 26,929
  Total All New Work -7.8 -2.6 16,435
  Total Repairs and Maintenance -3.9 -0.6 10,494
       
       
Table 3a: All New Work      
       
Total All New Work -7.8 -2.6 16,435
  New Housing      
    Public Corporations -9.6 -2.4 990
    Private Sector -5.0 -3.0 3,840
  Other New Work      
  Infrastructure -3.0 -6.0 3,136
  Excl Infrastructure      
    Public Corporations -19.8 -5.6 2,297
    Private Sector      
      Private Sector - Industrial 6.5 -0.2 870
      Private Sector - Commercial -7.8 0.9 5,302
       
       
Table 3b: Repairs and Maintenance    
       
Total Repairs and Maintenance -3.9 -0.6 10,494
  Housing      
    Public corporations -3.9 -5.6 1,746
    Private sector -9.3 2.0 3,339
  Non-Housing -0.3 -0.4 5,409
       

Table source: Office for National Statistics

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Background notes

  1. What’s new
    This statistical bulletin contains information on the newly released seasonally adjusted constant price (volume) series. Users should be aware that due to seasonal adjustment taking place on the minimum amount of data points used to interpret the seasonal effects (36 months), there is potential for increased revisions until the seasonal pattern is established within the time series.

    Users should note that a monthly seasonally adjusted chained volume series is not available. This is due to monthly data not being available pre-2010, these data are a requirement for creating previous year’s prices from which chain linked volume measures are created.

    This non-availability of pre-2010 data also means that chained volume measures for infrastructure and public and private other work cannot be created.

    From September 2013 the Output in the Construction Industry statistical bulletin will be combined with the New Orders in the Construction Industry statistical bulletin into one construction release. Further details surrounding the reasons behind this decision can be found in the document ‘Announcement of Changes to New Orders in the Construction Industry’.

  2. About this release
    Construction output estimates are a short term indicator of construction output by private sector and public corporations within GB. The estimates are produced and published at current prices (including inflationary price effects) and at constant prices (with inflationary effects removed) both seasonally adjusted and 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).

  3. 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.

  4. 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 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 this publication the construction output time series has assumed the same revision policy as the UK National Accounts (Table 4).

    The UK  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 2013 Q2 09-Aug
    September 2013 Q3 M1 2012 Q3 2012 Q1 13-Sep
    October 2013 Q3 M2 2012 Q4 2013 Q3 11-Oct
    November 2013 Q3 2012 Q4 2013 Q3 08-Nov
    December 2013 Q4 M1 2012 Q4 2012 Q1 13-Dec

    Table source: Office for National Statistics

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  5. 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.

  6. 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.

    Special events
    As part of the celebrations for the Queen's Diamond Jubilee there were changes to bank holidays in May and June 2012. The change to the holidays count as a statistical special event in line with ONS's policy on Special Events. In 2012 there was only one bank holiday in May in 2012 instead of the usual two. This event is not regular, so no adjustment has been made to account for it as part of the seasonal adjustment process. Users are therefore likely to see an effect related to an additional working day in May 2012 in the estimate of the annual change (and there will be a similar effect on the annual change in June associated with two fewer working days in June 2012). More information on the movements in series in 2012 can be found in the ELMR article 'The Diamond Jubilee and the London 2012 Olympics'.

    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 (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 also deflation below. 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 chainlinking can be found in the methodological article ‘ Annual chain-linking (58 Kb Pdf) ’.

    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
    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
    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.

    Tables 2 and 3 of the bulletin aggregates infrastructure and other new work into non-housing.

  7. 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 and to enable European comparisons and assist in policy decisions.

    • 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 6.3% of GDP.

  8. 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.

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

  10. Revisions
    This publication includes survey data revisions from April 2013. In addition to survey data revisions, a refinement to the seasonal pattern has caused slight revisions to the seasonally adjusted time series from quarter 1 of 2012 although these changes to growth will not be apparent until the period is opened up for published revisions in the September 2013 publication.

    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, Monthly, Constant prices (2005), Seasonally adjusted (KP SA)

      New work published in this release New work estimates previously published New work revisions
    April 20131 : : :
       
      R&M published in this release R&M estimates previously published R&M revisions
    April 20131 : : :
       
      Total output published in this release Total Output estimates previously published Total output revisions
    April 20131 : : :

    Table source: Office for National Statistics

    Table notes:

    1. First publication of monthly seasonally adjusted KP SA data

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  11. Relevant links

    International comparisons
    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.

  12. 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.

  13. 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.

  14. 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.

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  16. 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:  Stuart Deneen
    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:  ONS website 
    Twitter:  ONS Twitter

  17. 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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