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.
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.
|Publication||% of GDP||Release date||Month of GDP||Most recent quarter on a year earlier||Most recent quarter on a quarter earlier||Most recent month on the same month a year ago||Most recent month on the previous month|
|Index of Production||15.2||11 Jun||Apr||-1.9||0.4||-1.4||-0.1|
|Construction output||6.3||14 Jun||Apr||:||:||-2.2||4.6|
|Index of Services||77.8||28 Jun||Apr||1.8||0.8||2.0||0.2|
|Retail Sales||22 May||Apr||0.8||0.9||0.8||-1.1|
|Agriculture||0.7||Not available monthly|
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.
|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|
|Other New Work|
|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|
|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|
|Other New Work|
|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|
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’.
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).
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.
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.
|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|
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.
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.
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.
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.
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 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.
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.
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.
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 for the Output of the Construction Industry estimates can be found on the ONS website.
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’.
|New work published in this release||New work estimates previously published||New work revisions|
|R&M published in this release||R&M estimates previously published||R&M revisions|
|Total output published in this release||Total Output estimates previously published||Total output revisions|
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.
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.
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.
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