Construction output in Great Britain: March 2019

• Construction output increased by 1.0% in Quarter 1 (Jan to Mar) 2019; this increase was driven by repair and maintenance output, which increased by 2.9%.
• The rise in repair and maintenance output in Quarter 1 2019 was driven by increases in both private housing repair and maintenance and non-housing repair and maintenance, which increased by 4.0% and 3.5% respectively.
• New work experienced no growth (0.0%) across Quarter 1 2019, as increases in infrastructure and public other new work of 5.6% and 3.3% respectively were offset by decreases in private commercial and housing new work of 4.7% and 1.2% respectively.
• Construction output decreased by 1.9% in the month-on-month all work series in March 2019; driven by falls in both new work and repair and maintenance, which fell by 1.8% and 2.2% respectively.
• In today’s release we also have a focus on private commercial new work in Section 6; while increasing in the month-on-month series for March 2019 by 2.2%, this series continues to perform poorly over recent months, as illustrated by a decrease of 5.4% in the month-on-year series.

Following the announcement by the UK Statistics Authority on 7 March 2019, Construction Output Price Indices, Great Britain construction output statistics and Construction new orders have been re-designated as National Statistics, in accordance with the Statistics and Registration Service Act 2007 and signifying compliance with the Code of Practice for Statistics. This means the independent regulator has judged that these statistics provide the highest levels of “trustworthiness, quality and value”. This announcement follows a long-term development programme, during which the Office for National Statistics (ONS) worked extensively with users to make significant improvements to the statistics. More information on these improvements can be found in Section 10.

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 Value Added Tax (VAT) and payments to subcontractors.

The survey’s results are used to produce non-seasonally and 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 changes in price). 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-making 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 (GDP).

Further information on output is gained from VAT turnover data, which are used to replace survey data for small- and medium-sized businesses. However, due to the delay in companies making VAT returns, these data are only taken on after a lag period. Currently, VAT turnover data are used for the period Quarter 1 (Jan to Mar) 2016 to Quarter 3 (July to Sept) 2018.

Furthermore, data on new orders supplied by Barbour ABI are used to model the breakdown of the overall output figures for Great Britain into the lower level and regional data seen in Tables 1 and 2 of Construction output: subnational and sub-sector.

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

Compared with the previous Construction output in Great Britain: February 2019 publication released on 10 April 2019, this publication contains revisions to January and February 2019 only.

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

• late responses to surveys replacing imputations, or revisions to original returns
• revisions to seasonal adjustment factors, which are re-estimated every month and reviewed annually
• HM Revenue and Customs (HMRC) VAT returns replacing Monthly Business Survey (MBS) data for small- and medium-sized businesses when VAT estimates become available each quarter (although for this release, no additional VAT data are available compared with the previous publication)
• revisions to the input series for the construction output price indices

Construction output increased by 1.0% in Quarter 1 (Jan to Mar) 2019. This follows a decrease in Quarter 4 (Oct to Dec) 2018 of 0.5%. The growth in Quarter 1 2019 was driven by repair and maintenance, which saw an increase of 2.9%, while new work experienced no growth (0.0%). The growth in Quarter 1 2019 should be viewed in the wider context of recent months, as the month-on-month series has been volatile through the end of 2018 and the beginning of 2019.

Construction output saw weakness throughout all months in Quarter 4 2018, particularly December 2018, which saw month-on-month growth of negative 2.5%. In contrast, the start of 2019 bounced back, specifically in January 2019, which recorded month-on-month growth of 3.3% and contributed significantly to the Quarter 1 2019 growth.

Figure 1 shows the monthly and quarterly indexed chained volume measure, seasonally adjusted series. The quarterly series provides a smoother and more comprehensive view of trends within the construction industry than the more volatile monthly series.

Today’s release sees a record high in the quarterly chained volume measure, seasonally adjusted series of £41,415 million since the quarterly records began in Quarter 1 1997. While the quarterly series has experienced growth in Quarter 1 2019, the monthly chained volume series decreased in March 2019 and is now at £13,648 million, which is down from its record high in the series recorded in February 2019.

Contributions to growth

Construction output can be broken down by different types of work; these are categorised into all new work, and repair and maintenance, as shown in Figure 2. It is worth noting that all new work accounts for approximately two-thirds of all work, while repair and maintenance accounts for approximately one-third.

The fall in new work in March 2019 was the bigger contributor to the decline seen in all work, due to the relative difference in the sizes of new work, and repair and maintenance. The month-on-month decrease of 1.8% in March 2019 in new work was driven by declines in private new housing, infrastructure, and public other new work, which fell by 5.1%, 4.2% and 2.9% respectively. This meant that despite an 8.6% month-on-month increase in the relatively smaller public new housing series this month, the new work series still fell to its lowest level since December 2018.

The month-on-month March 2019 decline in the repair and maintenance series, was driven by housing repair and maintenance, with private and public housing repair and maintenance experiencing falls of 3.1% and 8.9% respectively. Similarly to new work, the repair and maintenance series fell to its lowest level since December 2018.

As can be seen from Figure 3, all work has grown by £420 million in Quarter 1 2019, in comparison with the previous calendar quarter (Quarter 4 2018).

New work saw no growth (0.0%) in Quarter 1 2019. The largest growth within new work was £299 million, which was seen in infrastructure. More moderate growths of £81 million and £49 million, which were seen in public other and public housing new work respectively, were offset by sharp declines of £332 million and £112 million in private commercial and private housing new work respectively.

In contrast, following a decrease of 3.0% in Quarter 4 2018, repair and maintenance output increased by 2.9% in Quarter 1 2019, with both non-housing and private housing repair and maintenance increasing by £245 million and £208 million respectively. This offset the decline of £44 million in public housing repair and maintenance. The growth of £406 million seen in repair and maintenance is the highest quarter-on-quarter growth since Quarter 2 (Apr to June) 2018.

Figure 4 shows the difference in month-on-month levels from the different construction sectors, taken from our seasonally adjusted, chained volume measure series. Compared with the previous month, construction output decreased by £267 million in March 2019.

March 2019 saw decreases in most types of work, with the largest single decline in private new housing, which fell by £159 million. This sharp monthly decline, following two months of increases in the month-on-month series at the start of the year, resulted in the private housing new work series returning to the level seen in December 2018. Other notable declines in the month-on-month series were in infrastructure, which fell by £81 million, and in private and public housing repair and maintenance, which decreased by £58 million and £54 million respectively.

In contrast to the general trend of declines in the month-on-month series, private commercial new work grew by £48 million, recording the first growth seen in that series since November 2018. In addition, public housing new work also recorded notable growth of £46 million.

Total all work decreased to £13,648 million in March 2019 in comparison with February 2019, and construction output fell by 1.9%. The largest negative contributions to the month-on-month change in March 2019 came from private new housing and infrastructure, which fell by 5.1% (£159 million) and 4.2% (£81 million) respectively. These more than offset the notable increases of 2.2% (£48 million) in private commercial new work and 8.6% (£46 million) in public new housing.

When looking at the month-on-year series, the growth of 3.2% is due primarily to a 15.6% increase in infrastructure and a 6.2% increase in non-housing repair and maintenance. The strength of growth in the month-on-year series is likely in part to the adverse weather conditions seen in March 2018, although it is difficult to quantify the exact impact.

Most month-on-year series saw increases, with the exceptions being private industrial new work, private commercial new work and public housing repair and maintenance. Private commercial new work has now seen its 16th consecutive decline since November 2017, declining by 5.4% in this month’s series compared with a year ago. Private industrial new work had its first period-on-year decline since October 2018, falling by 0.7% in March 2019.

In the three-month on three-month series or the quarterly growth for Quarter 1 (Jan to Mar) 2019, despite the fall in the monthly series in March 2019, the month-on-month increase seen in January 2019 and February 2019 has seen the all work series grow by 1.0% compared with the period October 2018 to December 2018. The most significant contributor to the increase in the three-month on three-month series was infrastructure, which increased by 5.6%. This continues its recent good performance and represents its 9th consecutive growth in the series.

Growth was also seen in public new housing, which grew by 3.0%. This was the 10th consecutive period of growth in this series for public new housing, with each growth recorded at 3.0% or greater. The biggest fall in the three-month on three-month series for March 2019 was private commercial new work, which saw a decline of 4.7%, continuing its recent decline in growth for this series. Private new housing also decreased by 1.2% compared with Quarter 4 (Oct to Dec) 2018, making this the third consecutive period of decline in the three-month on three-month series.

In the three-month on year series, the growth of 2.8% in the all work series is driven by increases in both new work, and repair and maintenance of 2.0% and 4.3% respectively. Most types of work have experienced growth in the three-month on year series, with notable growth coming from both the infrastructure and public new housing series, of 11.4% and 19.1% respectively. The only two series that recorded negative growth in this measure were private commercial and public housing repair and maintenance, which saw declines of 8.3% and 0.3% respectively.

This March 2019 release contains revisions for January and February 2019. Month-on-month growth in January 2019 has been revised down 0.2 percentage points, from positive 3.5% to positive 3.3%. February 2019 has been revised up 0.1 percentage points, from positive 0.4% to positive 0.5%. These revisions are minimal and are due to the receipt of new survey data and changes in the seasonal adjustment factors. For further information on the revisions profile, please see the output in the construction industry revisions triangles published on a one-month and three-month growth basis.

While minimal revisions can be seen in top-level construction output estimates, some larger revisions can be seen at the lower type of work level.

Private commercial new work includes any work carried out for private sector clients. This type of work covers new construction work, demolition, site preparation and major alterations, including extensions to existing properties in the following sectors:

• offices
• agriculture
• health
• entertainment and sports facilities
• car parks
• educational institutions
• garages
• shops

Currently, based on today’s March 2019 publication (published 10 May 2019), private commercial new work equates to 16.8% of the construction industry and 25.8% of all new work. Over recent periods, the percentage of private commercial activity has decreased as a percentage of both all work and all new work, as illustrated in Figure 5.

As illustrated in Figure 6, throughout mid-2012 to early 2017, the private commercial new work sector experienced a trend of growth, similar to all new work. However, since the record monthly high in the chained volume measure seasonally adjusted series of £2,672 million recorded in March 2017, the private commercial new work series has experienced a trend of decline. This is illustrated with the series having recorded its 16th successive fall in the most recent month-on-year series in today’s release.

What is also noticeable is the divergence in recent periods in the series when analysed in comparison with the growth in the monthly all new work, chained volume measure, seasonally adjusted series. Recent growth in all new work has been driven by both private new housing and infrastructure work, as illustrated in Table 1. Figure 6 displays the monthly indices for both series from January 2012 to March 2019 as published in Table 1a in the Output in the construction industry dataset.

Output in the construction industry follows the Eurostat Short Term Statistics (STS) regulation for production in construction. Headline volume estimates of construction output are assessed against Eurostat’s handbook on price and volume measures in National Accounts. 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, published by Eurostat on 16 April 2019 for February 2019, showed the seasonally adjusted production in construction (PDF, 567KB) increased by 3.0% in the Euro area (EA19) and was at 2.3% growth in the EU28 when compared with January 2019.

It should be noted that an accurate comparison cannot be made, as Eurostat data are calculated on a 2015 equals 100 basis, while Great Britain data are calculated on a 2016 equals 100 basis.

Outside the EU, the US Census Bureau release Monthly Construction Spending (PDF, 216KB) for March 2019 was published on 1 May 2019. This includes the total dollar value of construction work done in the US.

The Construction statistics: Number 19, 2018 edition was published on 22 August 2018. This publication contains analysis on the construction sector in 2017, as well as information on sources and outputs in the industry.

Construction output data used within this release are also used in the compilation of the GDP monthly estimate. While monthly data are available in the output in the construction industry back to January 2010, it should also be noted that a longer time series can be obtained in the monthly gross domestic product datasets. Within this publication a monthly, all work chained volume measure, seasonally adjusted series can be obtained back to January 1997 in index form to four decimal places. This can be found in the following datasets: Monthly GDP and main sectors to four decimal places and Monthly gross domestic product: time series. Monthly data from the construction survey are only available from January 2010, therefore, the data prior to this period are derived using statistical methods from the available quarterly data and should therefore be treated with some caution.

• Ministry of Housing, Communities and Local Government (Housing starts and completions)
• Construction statistics in Northern Ireland

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 report (updated 16 November 2018) contains important information on:

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

Value Added Tax (VAT) turnover has been used to estimate the output of small- and medium-sized businesses. In this release, VAT turnover has been used for selected industries previously covered by the Monthly Business Survey from Quarter 1 (Jan to Mar) 2016 to Quarter 3 (July to Sept) 2018.

Further information on the use of VAT turnover in construction output estimates and its impact can be found in the following articles:

• VAT turnover implementation into national accounts article
• VAT turnover data in national accounts: background and methodology
• Quality assurance of administrative data (QAAD) report for Value Added Tax turnover data

As part of the ongoing Office for National Statistics (ONS) Construction Statistics Development Programme, we have worked closely with the Construction Statistics Steering Group. This group provides a forum for the ONS to engage with main users of construction statistics on the development of ONS-published construction statistics, including other government departments, industry experts and academics, to identify areas for improvement. These improvements have led to the re-designation of Construction output, Construction Output Price Indices and New orders as National Statistics. A letter concerning the re-designation is available. Please note: this National Statistics re-designation did not include the Output in the construction industry: subnational and sub-sector dataset.

We have also published a series of methodological articles to help communicate recent improvements:

• Construction output quality and methodology information (published 16 November 2018)
• New orders in construction quality and methodology information (published 30 October 2018)
• Construction statistics development: improving the understanding of new orders in the construction industry and the gap between output and new orders (published 30 October 2018)
• Impact of improvements to construction: June 2018 (published 29 June 2018)
• Improvements to construction statistics: Addressing the bias in early estimates of construction output, June 2018 (published 4 June 2018)
• Construction development: improvements to regional and sub-sector level estimates, June 2018 (published 4 June 2018)
• Construction development: Impact of improvements to construction statistics: September 2017 (published 29 September 2017)