1. Main points

  • In January 2017, construction output fell by 0.4% compared with December 2016. However, output grew on a 3 month on 3 month basis by 1.8%.

  • Repair and maintenance fell 1.3% month-on-month in January, with decreases in public housing and non-housing repair and maintenance.

  • All new work showed signs of flattening out with growth of 0.1% in January 2017, but continued to grow in the latest 3 months compared with the previous 3 months at a rate of 2.1%.

  • Despite falling month-on-year for the 13th consecutive month, infrastructure grew month-on-month for the third time in a row, increasing 3.5% in January 2017.

  • Overall annual construction output growth has increased for 2016, to 2.4% from 1.5%, due to upward revisions for all 4 quarters, including a revision of 0.8% in Quarter 4 (Oct to Dec) 2016, from 0.2% to 1%.

  • New orders fell by 2.8% in Quarter 4 of 2016, driven mainly by falls in private industrial and private commercial work.

  • Despite new orders falling in Quarter 4 of 2016, the annual volume of new orders is now at its highest level since 2008.

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2. Things you need to know about this release

The monthly business survey, Construction output, collects output by sector from businesses in the construction industry within Great Britain. Output is defined as the amount chargeable to customers for building and civil engineering work done in the relevant period excluding VAT and payments to sub-contractors.

The survey’s results are used to produce seasonally adjusted monthly, quarterly and annual estimates of output in the construction industry at current price and at chained volume measures (removing the effect of inflation). The estimates are widely used by private and public sector institutions, particularly by the Bank of England and Her Majesty’s Treasury to assist in informed decision and policy making. Construction output is an important economic indicator and is also therefore used in the compilation of the output measure of gross domestic product.

This January 2017 release contains revisions for January 2016 onwards. This means that we have incorporated additional data since this period.

Revisions can be made for a variety of reasons, the most common include:

  • late responses to surveys and administrative sources, or changes to original returns
  • forecasts being replaced by actual data
  • revisions to seasonal adjustment factors, which are re-estimated every month and reviewed annually.

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.

Summary information can be found in the Construction output summary Quality and Methodology information report.

New orders in construction measures the value of new orders of main contractors by type of work and region within Great Britain. Since April 2013, data has been supplied directly from Barbour ABI with a sample size of all local authorities in England, Scotland and Wales plus 10,000 contractors per year. It should be noted 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.

Summary information can be found in the New orders summary Quality and Methodology information report.

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3. Construction output slows in January 2017

In January 2017, construction output fell by 0.4% compared with December 2016. This negative month-on-month growth comes in the wake of 2 consecutive months of strong growth in the last 2 months of 2016, driven mainly by falls in repair and maintenance. Despite this, construction remains 2% higher in comparison with the same period in the previous year.

The monthly time series shows how volatile construction output can be, therefore the rolling 3 month time series is also shown in Figure 1, providing a more comprehensive picture of the underlying trends within the construction industry. Despite construction falling month-on-month, in terms of the rolling 3 month time series, construction output actually grew by 1.8%, in part due to strong infrastructure and housing growth.

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4. Contributions to growth

Construction output can be broken down by different types of work, these are categorised into new work, and repair and maintenance as shown in Figure 2. The graph shows that through to mid-2014, new work, and repair and maintenance followed a similar pattern but since reaching a level peak in August 2014, repair and maintenance has slowly contracted. Over the same period, new work has continued to increase steadily, largely down to a rise in new housing work.

The slight decrease in all work in January 2017 is mainly driven by the large decline in repair and maintenance of 1.3%. In comparison with the same period in the previous year, repair and maintenance has fallen 0.7%. This downward pressure on repair and maintenance is due to a 1.1% decrease in housing repair and maintenance and 1.6% decrease in non-housing repair and maintenance.

This fall is offset somewhat by an increase of 0.1% in all new work in January 2017 and 3.4% in comparison with the same period in the previous year. It is worth noting that all new work accounts for approximately 66% of all work, while repair and maintenance accounts for approximately 34%.

Figure 3 shows the difference in month-on-month volume from the different sectors in terms of growth. Housing as a whole has provided the most notable downward pressure on growth, with both public and private housing, as well as housing repair and maintenance falling month-on-month in January 2017.

However, this has been offset somewhat by marked positive growth in 2 sectors. Infrastructure exhibited the most notable growth in terms of volume in January 2017, rising for the third consecutive month, increasing by 3.5%. Public other new work also provided upward pressure on output, recovering from negative growth in December 2016 to grow by 4.1% in January 2017.

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5. Detailed growth rates

Table 1 provides a detailed description of the growth rates of each work type, alongside the seasonally adjusted chained volume measure level of output.

Table 1 shows the growth rate for each work type in terms of 3 month on 3 month, month-on-year and month-on-month.

Despite falling month-on-month in January 2017, the 3 month on 3 month rolling picture was more positive, with only private industrial, and non-housing repair and maintenance experiencing negative growth. Most notably, infrastructure, and private housing repair and maintenance continue to sustain strong 3 month on 3 month growth, increasing at rates of 4.0% and 5.4% respectively. Only private industrial work, and non-housing repair and maintenance provided downward pressure on 3 month on 3 month growth.

In regards to month-on-year, output has experienced strong growth at a rate of 2.0%. This has been driven by private new housing, which grew 7.4%, as well as private housing repair and maintenance, which increased by 9.7%. However, public housing provided some downward pressure on the growth rate, with public new housing falling 1.2% and public housing repair and maintenance falling by 13.1%. Despite recent growth, infrastructure has still fallen for the 13th consecutive month-on-year, at a rate of 0.7%.

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6. New orders

New orders fell quarter-on-quarter by 2.8% in Quarter 4 (Oct to Dec) of 2016 with all of its components down, with the exception of public other new work, which grew dramatically by 26.1%. As public other new work makes up for 15% of all new work, this increase has gone some way in cancelling out the negative growth experienced in all other components of new orders, with private industrial down 11.2% and private commercial falling 10.6%.

Infrastructure, despite being down in the latest quarter, is up 33.7% from Quarter 4 2015. Private new housing, another main component of new orders, is also up 1.8% from Quarter 4 2015. However, private commercial new work is down 24.1% quarter-on-year, which provides a downward drag on all new work. Overall, there is no significant change between Quarter 4 2016 and Quarter 4 2015.

New orders has been experiencing sustained growth on an annual basis since 2011 and is at its highest annual level since 2008. The main driver behind the growth is the previous 2 quarters in 2016, which were the strongest since 2009.

Other new work follows the same trend and has been growing since 2011 and had an annual growth rate of 2.1%. Housing new orders has not followed the same period of sustained growth, but grew by 5.1% in 2016 to reach its highest level since 2013.

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8. What has changed in this publication?

We have updated Table 6 for both our Output in the construction industry and New orders in the construction industry datasets. This ensures that the data is compliant with GSS Geography Policy.

These updates include changing the presentation order of regions, adding geography codes and ensuring that the recommended geography names are used for all regions.

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9. Quality and methodology

Our 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 £60 million receiving a questionnaire by post every month.

The Construction output Quality and Methodology Information document contains important information on:

  • the strengths and limitations of the data
  • the quality of the output: including the accuracy of the data and how it compares with related data
  • uses and users
  • how the output was created

The New orders Quality and Methodology Information document provides similar information for the New orders data.

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