In April 2016, output in the construction industry was estimated to have increased by 2.5% compared with March 2016.
All new work increased by 2.9% and all repair and maintenance increased by 1.9%.
Compared with April 2015, output in the construction industry decreased by 3.7%.
The underlying pattern as suggested by the 3 month on 3 month movement in output in the construction industry decreased by 2.1%.
New orders for the construction industry in Quarter 1 (Jan to Mar) 2016 were estimated to have decreased by 1.2% compared with Quarter 4 (Oct to Dec) 2015 and decreased by 1.2% compared with Quarter 1 (Jan to Mar) 2015.
The second estimate of UK gross domestic product (GDP) for Quarter 1 (Jan to Mar) 2016 published on 26 May 2016 included an estimate of construction which showed a decrease in output of 1.1% in Quarter 1 (Jan to Mar) 2016. This estimate has been not been revised in this release. More information on revisions are included in the Background notes section of this bulletin.Back to table of contents
There are no revisions to earlier periods in this release.
Output is defined as the amount charged by construction companies to customers for the value of work (produced during the reporting period) excluding VAT and payments to sub-contractors.
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).
Detailed estimates along with a longer run of time series data are available to download in the Output in the Construction Industry, April 2016 datasets. In these tables, you will find chained volume estimates back to Quarter 1 (Jan to Mar) 1997 and monthly estimates back to January 2010. Current price non-seasonally adjusted data are available back to Quarter 1 (Jan to Mar) 1955. More information on these statistics can be found in the “definitions and explanations” section in the background notes.
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 at NISRA.
National Statistics status
On 11 December 2014 the UK Statistics Authority announced its decision to suspend the designation of Construction Output and New Orders as National Statistics due to concerns about the quality of the Construction Price and Cost Indices used to remove the effects of inflation from the statistics.
We took responsibility for the publication of the Construction Price and Cost indices from the Department of Business Innovation and Skills (BIS) on 1 April 2015, introducing an interim solution for measuring output prices in June 2015 for all periods from January 2014 onwards. We are currently developing a long-term solution for the deflation of construction statistics.Back to table of contents
In April 2016:
- all work increased by 2.5% compared with March 2016; this was the largest month-on-month increase since January 2014 when it increased by 3.8%
- all work decreased by 3.7% compared with April 2015
- in the 3 months (February 2016, March 2016, April 2016) compared with the previous 3 months (November 2015, December 2015, January 2016) all work decreased by 2.1%
- all new work increased by 2.9% compared with March 2016
- repair and maintenance increased by 1.9% compared with March 2016
Figure 1 shows the 2 main components of all work; all new work and repair and maintenance. The chart shows that since the start of the monthly series in January 2010 the performance of the construction industry has been volatile and can be split into several distinct periods. Initially output increased in the early part of the time series before falling sharply in late 2011. From January 2013 to December 2014, output increased gradually, showing an underlying pattern of growth. Between January 2015 to April 2016, output has shown periods of growth and contraction. The rise in April 2016 of 2.5% follows a weaker than expected March and the level in April is now similar to the level seen in February 2016.
Figure 2 looks at the main components of all new work. There was sustained growth in new housing from early 2013 until early 2015 and after several months of contraction in mid-2015 there was a return to growth in late 2015 into 2016. After a decrease in March 2016, there was an increase of 1.6% in April 2016.
Infrastructure shows volatility throughout the time series with periods of growth and contraction. There was a fall in April 2016 compared with March 2016 of 1.1%; this is the fourth consecutive month where infrastructure output has shown a contraction and it is now at its lowest level since December 2014. Compared with the same period a year ago, there was a decrease of 18.0% in infrastructure.
Since early 2012, other new work has remained fairly flat. After 2 months of contraction in February 2016 and March 2016, there was a return to month-on-month growth in April 2016 of 5.7%. When compared with April 2015, there was a decrease of 0.6%.
Figure 3 looks at the 2 components of total new housing. It shows that private new housing is the main contributor for the overall trend in total housing, accounting for approximately 86% of all new housing (based on April 2016 data). Private new housing showed growth of 2.7% in April 2016 compared with March 2016 and is now at its highest level at £2.2 billion since records began in January 2010. Public new housing fell by 4.4% in April 2016 compared with March 2016.
On the year, total housing increased by 0.9% compared with April 2015. The main contributor was private new housing which increased by 5.8%, offset by public new housing which decreased by 20.7%. This was the 12th consecutive period of year-on-year decreases in public new housing.
Figure 4 looks at the 2 main components of all repair and maintenance. The level of both housing and non-housing repair and maintenance has been fairly consistent over the time series with both contributing a similar amount to all repair and maintenance.
In April 2016 compared with March 2016, all repair and maintenance increased by 1.9%. Non-housing repair and maintenance increased by 4.1% while housing repair and maintenance fell by 0.1%.
There was a decrease of 3.3% in all repair and maintenance compared with the same period last year; housing and non-housing repair and maintenance reported decreases of 4.2% and 2.5% respectively.Back to table of contents
Monthly growth rates of construction output show that the performance of the construction industry is somewhat erratic or volatile. In order to remove some of this volatility and to provide you with an understanding of the underlying pattern within the data, 3 month on previous 3 month growth rates are provided and shown in Figure 5 alongside the monthly series.
In April 2016, there was an increase of 2.5% compared with March 2016 in all work, however, there was a decrease of 2.1% in the rolling 3 month on 3 month movement between March 2016 and April 2016.
On the year, there was a decrease of 3.7% in all work while there was a smaller decrease of 2.8% in the rolling 3 month on a year earlier series.Back to table of contents
Table 1 provides a summary of growth rates across the different types of construction work in April 2016. Some main points from this table are as follows:
- all work increased in April 2016 compared with March 2016 due to increases in both all new work and repair and maintenance
- all work types reported month-on-month increases except public new housing, infrastructure and public housing repair and maintenance
- there were year-on-year decreases in all work types except private new housing and private commercial work
Table 1: Construction output summary tables, chained volume measures, seasonally adjusted
|Great Britain, April 2016|
|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|
|Total all work||-2.8||-2.1||-3.7||2.5|
|Total all new work||-2.5||-1.7||-3.8||2.9|
|Total repair and maintenance||-3.5||-2.7||-3.3||1.9|
|Other new work|
|Repair and maintenance|
|Source: Construction: Output and Employment – Office for National Statistics|
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Figure 6 shows the contribution of each sector to output growth in the construction industry between April 2016 and March 2016. In April 2016, all main work types except infrastructure, total housing repair and maintenance, and public new housing saw an increase in output. The largest contribution to the increase came from non-housing repair and maintenance.Back to table of contents
Output in the construction industry estimates are produced from the monthly business survey on the second Friday of the month, 2 months after the reporting month. Revised results, for previously published periods, are published in line with the National Accounts Revisions Policy. More information about the data content for this release can be found in the background notes.
Revisions are an inevitable consequence of the trade-off between timeliness and accuracy. The response rate in April 2016 was 71.7% of questionnaires, accounting for 78.1% of registered turnover in the construction industry. Therefore the estimate is subject to revisions as more data become available.
The monthly output in the construction industry time series now spans 76 months, however, you should note that this is the minimum time span recommended by Eurostat for seasonal adjustment. While the seasonal pattern is generally established after 60 months in a monthly time series, there is still potential for increased revisions until the seasonal pattern has matured. In future publications, we may see larger than average revisions to March 2016 and April 2016 as this is the first time since the monthly series began in 2010 that Easter has fallen wholly in a March. When we have more data available in the future we will be able to review the impact of Easter over a longer time span.
All estimates, by definition, are subject to statistical uncertainty and for many well-established statistics, we measure and publish the sampling error associated with the estimate, using this as an indicator of accuracy. For construction output we publish sample and non-sample errors in Table 11 of the Output in the construction industry dataset. It should be noted that we are continually working on methodological changes to improve the accuracy of the construction output estimates, progress on these can be found on the ONS continuous improvement page on our website.Back to table of contents
Construction estimates are a main component of the output approach to measuring GDP, along with the estimates of services, production and agriculture. As an aid to you, the short-term economic indicator releases that directly feed into GDP include an additional table of the GDP components. This table should help to inform you 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.
Each component of GDP has a weight within GDP based on its value in 2012. Construction has a weight of 59, which means that it is 59 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 quarter 2 (Apr to June) 2015 data:
Construction growth = 1.4
Weight in GDP = 0.059 (59/1000)
Effect on GDP = 1.4 * 0.059 = 0.08 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:
Index of Production (IoP) = between 0.3 and -0.3
Construction = between 0.9 and -0.9
Index of Services (IoS) = 0.0 (all values above or below 0.0 effect GDP due to the high weight of IoS in GDP)
IoP = 0.148*0.4 = 0.0592 or 0.1 to 1 dp
Construction = 0.059*0.9 = 0.0531 or 0.1 to 1 dp
IoS = 0.786*0.1 = 0.0786 or 0.1 to 1 dp
Table 2 shows the latest monthly and revised quarterly output figures that fed into the second estimate of GDP for Quarter 1 (Jan to Mar) 2016 published on 26 May 2016.
Table 2: GDP component tables, chained volume measure, seasonally adjusted
|Great Britain, April 2016|
|Percentage change (%)|
|Publication||Weight in GDP (%)||Publication date||Latest periods||Most recent period on a year earlier||Most recent period on the previous period|
|GDP||100.0||26 May||Q1 2016||2.0||0.4|
|Index of Production||14.9||8 June||Q1 2016||0.1||-0.4|
|Construction output||5.9||13 June||Q1 2016||-4.5||-3.6|
|Index of Services||78.6||26 May||Q1 2016||3.9||0.9|
|Agriculture||0.7||26 May||Q1 2016||1.3||0.1|
|Source: Office for National Statistics|
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The second estimate of GDP published on 26 May 2016 contained an estimate for quarterly construction of a decrease of 1.1%. This estimate has not been revised within this release.Back to table of contents
In Quarter 1 (Jan to Mar) 2016 the volume of all new orders:
- decreased by 1.2% compared with Quarter 4 (Oct to Dec) 2015
- decreased by 1.2% compared with Quarter 1 (Jan to Mar) 2015
There were decreases in the volume of new orders for private new housing, public other new work and private commercial work while all other work types showed increases.
The volume of new orders in new housing decreased by 14.6% between Quarter 4 (Oct to Dec) 2015 and Quarter 1 (Jan to Mar) 2016.
Private new housing decreased by 17.2% to a level of £2.7 billion: this is the lowest level since Quarter 1 (Jan to Mar) 2013 when it was £2.6 billion.
Public new housing decreased by 6.1%, however, it should be noted that the weight of public new housing is small at only 14% of total new housing (based on Quarter 1 (Jan to Mar) 2016 data).
The volume of infrastructure new orders increased by 27.4% in Quarter 1 (Jan to Mar) 2016 compared with Quarter 4 (Oct to Dec) 2015. Compared with the same period a year ago infrastructure increased by 15.8%. Infrastructure is a particularly volatile series due to the range of products such as electricity, gas, road, rail etc included within this type of work, therefore large movements are not unusual.
The volume of all new orders in Quarter 1 (Jan to Mar) 2016 decreased by 1.2% compared with the same period a year ago. There were decreases in all work types except public new housing, infrastructure and private commercial work.
Table 3: Volume of New Orders, Q1 2016, constant (2005) price, seasonally adjusted percentage change
|Great Britain, Quarter 1 (Jan to Mar) 2016|
|Type of work||Most recent quarter on a year earlier||Most recent quarter on previous quarter||Most recent level (£m)|
|All New Work||-1.2||-1.2||12,413|
|All New Housing||-13.0||-14.6||3,164|
|All Other Work||3.6||4.4||9,248|
|Source: Barbour ABI|
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You should note that there is a time lag between how long an order turns into output (if at all) and therefore an assumption that improved new orders data will result in an improved output picture is a difficult assumption to make.
Further, you should note that there may be some discontinuity in the data around Quarter 3 (July to Sept) 2013 where the Barbour ABI data were used for the first time to compile these statistics.Back to table of contents
Construction output rose by 2.5% between March and April 2016, the fastest monthly rise since January 2014. This follows contractions in total output of -3.6% and -0.9% in March 2016 and February 2016 respectively. The main contributions to the rise came from growth in non-housing repair and maintenance (making a contribution of 0.7 percentage points on the month), while private commercial work (0.6 percentage points) and other public work (0.6 percentage points) both fell.
Despite the latest monthly increase in construction output, looking over a longer period shows weakness in output. Comparing April 2016 with April 2015, construction output decreased by 3.7%. Falls in infrastructure, and repair and maintenance have more than offset the growth in new private housing work over this period. The Bank of England’s Agents’ Summary of Business Conditions cited reports of skills shortages constraining growth rates in the industry. As well as labour shortages, the RICS construction market survey also reports that financial constraints and planning delays may be constraining growth.
Output of new private housing continues to grow, despite a fall in demand in the latest month. According to HM Revenue and Customs there was a 45.2% decrease in the seasonally adjusted number of residential property transactions between March 2016 and April 2016. This was the lowest level of residential property transactions since March 2013, but follows a 41.5% increase between February 2016 and March 2016. The large movements between February 2016 and April 2016 are likely to be a result of the change in stamp duty rates for buy-to-let properties on 1 April 2016, which may have encouraged individuals to bring forward housing transactions.
The increase in demand for residential properties in March 2016 has come alongside increased price pressure in the housing market. The ONS House Price Index indicated UK house prices increased by 9.0% in the year to March 2016, up from 7.6% in the year to February 2016. This is consistent with the Nationwide report, which indicates that UK house prices increased by 5.7% in the year to March 2016, up from 4.8% in the year to February 2016. Halifax also reported that house prices increased 10.1% in the year to March 2016, up from 9.7% in the year to February 2016.Back to table of contents
Output in the construction industry follows the Eurostat Short Term Statistics (STS) regulation for production in construction. Before any comparisons are made with the Euro area or EU28, it is worth noting that the UK is the only member state to follow the A method for compiling production in construction statistics.
The latest release of production in construction showed that construction output in the euro area (EA19) decreased by 0.9% in March 2016 and decreased by 1.4% in the EU28 compared with February 2016. The Great Britain estimate for March 2015 showed that construction output decreased by 3.6%. It should be noted that an accurate comparison cannot be made as Eurostat data are calculated on a 2010 = 100 basis, while Great Britain data are calculated on a 2012 = 100 basis.
Outside of the EU, the US Census Bureau release Value of construction put in place published on 1 June 2016, showed provisional estimates of construction output in April 2016 decreased by 1.8% compared with March 2016 and increased by 4.5% compared with April 2015.
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.Back to table of contents
Contact details for this Statistical bulletin
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