Statistical bulletin: Output in the Construction Industry, September and Q3 2011

Headline figures

• The total volume of construction output in the third quarter of 2011 fell by 0.2 per cent compared with the second quarter of 2011.
• The total volume of construction output in the third quarter of 2011 fell by 1.0 per cent compared with the same quarter in 2010.
• All new work fell by 0.6 per cent and repair and maintenance rose by 0.7 per cent compared with the second quarter of 2011.
• All new work fell by 1.8 per cent and repair and maintenance rose by 0.9 per cent compared with the same quarter in 2010.
• Quarter on quarter volume reductions were experienced in six out of nine sectors reported.

Introduction

This bulletin shows output in the construction industry for the third quarter of 2011.

Output in the construction industry

Construction Output

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

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Construction output (constant (2005) prices, seasonally adjusted)

Great Britain

Table source: Office for National Statistics

New housing

The volume of new private housing work in the third quarter of 2011 was 2.5 per cent lower compared with the previous quarter. New private housing output in the third quarter of 2011 was 0.7 per cent higher compared with the same quarter in 2010.

The volume of new work in the public housing sector in the third quarter of 2011 was 8.2 per cent lower than the previous quarter and 8.9 per cent lower compared with the same quarter in 2010.

New Housing

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

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New public and private infrastructure

The volume of new infrastructure output in the third quarter of 2011 was 0.3 per cent lower compared with the previous quarter and 13.4 per cent higher compared with the same quarter in 2010.

New Public and Private Infrastructure

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

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New public non-housing (excluding infrastructure)

The volume of new work in the public non-housing sector (excluding infrastructure) in the third quarter of 2011 was 0.5 per cent higher compared with the previous quarter and 7.8 per cent lower compared with the same quarter in 2010.

New Public Non-Housing Excluding Infrastructure

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

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New private non-housing (excluding infrastructure)

The volume of new construction work in the private industrial sector in the third quarter of 2011 was 8.4 per cent lower compared with the previous quarter and 26.5 per cent lower compared with the same period in 2010.  Revisions have been introduced in the Private Industrial series within the revisions period as a result of changes to the classification of businesses. As a result, care should be exercised when comparing any growths prior to September 2010 with growths after this period in the Private Industrial sector. 

The volume of new private commercial output in the third quarter of 2011 was 2.4 per cent higher compared with the previous quarter and 1.9 per cent lower compared with the same quarter in 2010.

New Private Non-Housing Excluding Infrastructure

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

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Housing repair and maintenance

The volume of housing repair and maintenance work (including improvement work) in the public sector in the third quarter of 2011 was 2.2 per cent lower compared with the previous quarter and 6.5 per cent lower compared with the same period in 2010.

Housing repair and maintenance work in the private sector in the third quarter of 2011 was 0.7 per cent lower compared with the previous quarter and 6.4 per cent lower compared with the same period in 2010.

New Housing Repair and Maintenance

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

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Non-housing repair and maintenance

The volume of repair and maintenance work in the non-housing sector in the third quarter of 2011 was 2.3 per cent higher compared with the previous quarter and 8.0 per cent higher compared with the same period in 2010. No comparison can be made for repair and maintenance split between private and public due to the introduction of an infrastructure repair and maintenance question in 2010.

Non-Housing Repair and Maintenance

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

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Revisions

In general revisions will follow the standard revisions policy for construction statistics shown in the table below

Revisions Policy

Table source: Office for National Statistics

Revisions to the output series for the last 12 months are due to revised and late responses from contributors, revisions to the output price indices used to deflate the current prices to constant (2005) prices and due to seasonal adjustment, as outlined in the table above.

Revisions Table

Great Britain

Table source: Office for National Statistics

ONS has carried out further analysis of the estimation of non-responding businesses (imputation) and has introduced an improvement to the current methodology in this release. The previous method used to estimate for the non-response of previously responding businesses was to calculate the mean value of the growths for similar businesses between the values reported in the given month and the previous month. To remove the effect of any very large or small values, the top 20% values and bottom 5% were removed before calculating the mean movement between periods. The resulting link factor was applied to businesses who had responded in the previous period, but not in the current period. In practice, when returns were received from businesses, it was found that the imputation method used was understimating values. As a result, revisions were always in an upwards direction.

In order to mitigate this effect, a number of alternative methods were considered and the best performing method, based on the data received to date, was comparing the ratio of the means of each group of similar businesses without any trimming. The revised method has only been applied within our standard revisions policy (i.e. new month + revised 12 months) so there is the possibility of a small discontinuity in the series between August and September 2010.   
The survey design for the new monthly survey was introduced in January 2010. Since then, we have been able to build a profile of activity, providing us with more data to test the initial design. We will continue to monitor this revised imputation method and further improvements will be introduced if it is considered that they will further improve the accuracy of our estimates. 

Revisions have also been introduced in the Private Industrial series within the revisions period as a result of changes to the classification of businesses. As a result, care should be exercised when comparing any growths prior to September 2010 with growths after this period in the Private Industrial sector.

The figures for construction output are used in the calculation of GDP. The estimate of GDP growth (+0.5 per cent) for 2011 Q3 published on 1st November 2011 was based on an early estimate of construction output of -0.6 per cent growth in Q3, based on limited responses from businesses. While construction growth published today for 2011 Q3 has been revised to -0.2%, the contribution of this sector to GDP growth is unchanged from the GDP Preliminary estimate published on 1st November.

Earlier quarterly growths have also been revised. Q1 2011 to Q2 2011 growth has increased by 1.5% (1.1% to 2.6%) and Q4 2010 to Q1 2011 growth has increased from -2.7% to -1.9%. These changes may impact historical GDP growths which will be published in the National Accounts publication on 22 December 2011.

Background notes

1. Changes to Construction Statistics

   In June 2009 ONS announced major changes to the arrangements for producing construction statistics and indicated that the changes would take effect from the beginning of 2010. From January 2010, a new Monthly Business Survey has replaced the quarterly output surveys for construction, and a quarterly new orders survey has replaced the previous monthly new orders survey.

   Statistical Bulletins for output will continue to be produced quarterly. Monthly estimates are also produced but cannot be seasonally adjusted until a significant amount of monthly data has been collected.

   Publication dates in 2011 for the new surveys have been placed on the forward release calendar.     

   An explanation of the changes introduced from 2010 and the impact this has had on the published series is available.

2. Relevance to users

   The statistical bulletin brings together information on the output of the construction industry in Great Britain. It draws on data compiled from the Monthly Business Survey, with businesses selected from the Inter-Departmental Business Register (IDBR). The construction industry, which contributes to the overall estimate of Gross Domestic Product (GDP) by approximately 7.6 per cent, covers Sections 41, 42 and 43 of the Standard Industrial Classification 2007 (excluding section 41.1 (property developers)).

   Similar data for Northern Ireland is provided by the Northern Ireland Statistics and Research Agency.

   Information relating to employment in the construction industry is available in the Labour Market Statistics Statistical Bulletin.
   

3. Accuracy

   Revisions to previous periods: Figures for the recent months are provisional and subject to revision as later information becomes available.

4. Deflation and seasonal adjustment

   The headline data are given in constant 2005 prices, seasonally adjusted. Deflators adjust the value series to take out the effect of price changes to give the volume series. Deflation of output is carried out sectorally, and a range of relevant tender price and output price indices are used.
    
   Seasonal adjustment aids interpretation by removing annually recurring fluctuations, for example, due to climate, hours of daylight, holidays or other regular seasonal patterns. Unadjusted data are also available.The impact of extreme weather events, such as snow, is unpredictable as to when or if it occurs within the season. The industry suffered heavy snow in January and December during 2010. No specific allowance has been made to treat these events other than allowing standard seasonal adjustment methods to consider the seasonal effect.
   

5. Further information

   Spreadsheets containing the data published in this Statistical Bulletin, as well as further breakdowns and previous ONS releases can be found on the ONS website.
   

   Releases on construction output and employment prior to the transfer to ONS can be found on the BIS website.
   

   Related releases on new orders for construction in Great Britain are published on the ONS website.
   

   The Construction Statistics Annual publication brings together a wide range of statistics that are currently available on the construction industry from a number of different sources. 

   ONS launched a new website on 28 August 2011 which has improved the way users can access our statistics. However, many existing bookmarks and links no longer work and users will need to update them.

    

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7. Publication policy

   Details of the policy governing the release of new data are available from the Media Relations Office.

   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. They are produced free from any political interference.

   As a valued user of our statistics, we would welcome feedback on this release. In particular, the content, format and structure. Please send feedback to the following postal or e-mail address:

   Construction, Capex and Stocks Statistics, Room 2301, Office for National Statistics, Government Buildings, Cardiff Road, Newport, South Wales, NP10 8XG

   E-mail: construction.statistics@ons.gov.uk

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8. 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

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