Construction output in Great Britain: April 2019 and new orders January to March 2019

• Construction output increased by 0.4% in the three-month on three-month all work series in April 2019; this increase was driven predominately by the all repair and maintenance series, which grew by 1.0%.

• The increase in all repair and maintenance in the three-month on three-month series in April 2019 was driven by non-housing repair and maintenance, which increased by 2.3%.

• New work experienced minimal growth, increasing by 0.1% in the three months to April 2019, with the growth in infrastructure (3.6%) and public new housing (4.7%) being counterbalanced by falls in private commercial new work (negative 2.2%) and public other new work (negative 2.3%).

• Construction output decreased by 0.4% in the month-on-month all work series in April 2019; this was due to a 2.1% fall in repair and maintenance, which was offset with growth of 0.6% in new work.

• New orders grew 9.6% in Quarter 1 (Jan to Mar) 2019 against the previous quarter; this growth was driven by a 16.1% increase in other new work, offset slightly with a fall of 4.6% in housing new work.

Gross domestic product (GDP) publication model

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Great Britain construction output statistics and Construction new orders are designated as National Statistics, in accordance with the Statistics and Registration Service Act 2007 and signifying compliance with the Code of Practice for Statistics.

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: March 2019 publication released on 10 May 2019, this publication contains no revisions to the back series. Please note: in a change to our published National Accounts Revisions Policy, the upcoming GDP quarterly national accounts, UK: January to March 2019 publication due to be released on 29 June 2019 will be open for revisions in Quarter 1 (Jan to Mar) 2019 only.

While the last six months have seen volatility in the monthly series for construction output all work, the quarterly path shows a general trend of slowly sustained growth since Quarter 2 (Apr to June) 2017. That said, the growth seen since Quarter 2 2017 is markedly slower than the growth seen prior to that period, as is visible in Figure 1.

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.

Construction output grew by 0.4% in the three-month on three-month series in April 2019. This growth in the three-month on three-month series reflects the relative weakness of the period November 2018 to January 2019, as the monthly all work series has fallen by 0.4% in April 2019.

The growth in the most recent three-month period was driven by infrastructure, and non-housing repair and maintenance, which saw increases of 3.6% and 2.3% respectively. Private commercial new work was the strongest contributor to declines across the period, seeing a fall of 2.2%. However, despite the overall three-month on three-month growth, the declines seen in April 2019 in the month-on-month series bring all work to similar levels to those seen in mid-2018. This level remains 1.4% above the 12-month low seen in December 2018.

The monthly, chained volume measure seasonally adjusted all work series decreased in April 2019 and is now at £13,599 million, which is £316 million down from its record high 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 repair and maintenance in the month-on-month series in April 2019 was exclusively driven by private housing repair and maintenance, which declined by 7.4%. Despite public housing repair and maintenance growing by 5.2%, its small size relative to both private housing repair and maintenance, and non-housing repair and maintenance (which grew by 0.2%) meant that repair and maintenance saw an overall decline of 2.1%.

The month-on-month increase of 0.6% in new work in April 2019 was not enough to offset the decline in all work. The increase in new work was driven by housing and private commercial new work – both private and public new housing saw growths of 2.0% and 2.4% respectively, and private commercial new work grew by 0.9%. These growths were counterbalanced by declines in private industrial new work and public other new work of 3.2% and 2.6% respectively.

As can be seen from Figure 3, all work has grown by £153 million in February 2019 to April 2019, compared with November 2018 to January 2019.

New work saw minimal growth of £16 million in the most recent three-month on three-month period, following on from the flat growth seen in March 2019. Infrastructure saw growth of £191 million, which was the largest in new work. The only other type of new work that grew was public new housing, which increased by £77 million. All other types of new work declined, with the biggest falls being seen in private commercial new work and public other new work, which fell by £155 million and £59 million respectively.

Repair and maintenance saw stronger performance, with £136 million growth in the latest three-month period. This was driven largely by non-housing repair and maintenance, which grew by £164 million, with a smaller contribution from a £16 million growth in private housing repair and maintenance. In contrast to this, public housing repair and maintenance fell by £44 million.

Figure 4 shows the difference in month-on-month levels from the different construction sectors, taken from our seasonally adjusted, chained volume measure series. Construction output decreased by £49 million in April 2019 compared with March 2019. This was driven by a £99 million decline in repair and maintenance, with new work growing by £49 million in the same period.

As seen in Figure 4, private housing experienced a disparity between new work, and repair and maintenance. While private housing repair and maintenance decreased by £133 million month-on-month, private housing new work grew by £60 million in the same period. Private housing repair and maintenance also stands out as the only repair and maintenance series to see a month-on-month fall in April 2019.

The growth in private housing new work ended up being the largest contributor to the overall growth of £49 million in April 2019. This growth is reflective of a relatively balanced picture across all series, with three series increasing and three declining over the period. The largest growth other than private new housing was private commercial new work, which increased by £21 million. The largest declines were in public other new work and private industrial new work, which fell by £21 million and £13 million respectively.

Total all work decreased to £13,599 million in April 2019 in comparison with March 2019, and construction output fell by 0.4% (£49 million). The largest negative contributions to the month-on-month change in April 2019 came from private housing repair and maintenance, and public other new work, which fell by 7.4% (£133 million) and 2.6% (£21 million) respectively. The largest month-on-month growths were in private new housing, which grew by 2.0% (£60 million) and public housing repair and maintenance, which grew by 5.2% (£29 million).

When looking at the month-on-year series, we see a growth of 2.4% in the all work series in April 2019 in comparison with April 2018. This is predominately due to growth in new work of 3.3%, with the relatively smaller repair and maintenance series recording a lower growth rate of 0.7%.

Despite the 24.3% increase in public new housing, the largest contributors to the month-on-year growth in new work were infrastructure and private new housing, which grew by 10.2% and 4.7% respectively. The main factor dampening growth was private commercial new work, which fell by 6.2% and continues its period of decline, recording its 17th consecutive fall in this series.

In contrast to the decline in month-on-month series, in the three-month on three-month series for February to April 2019 it is repair and maintenance that drove the 0.4% growth in all work. Repair and maintenance grew by 1.0% across the period, while new work was almost flat at 0.1% growth. The growth in all work was driven by a 3.6% increase in infrastructure output, as well as a 2.3% increase in non-housing repair and maintenance.

Public new housing grew for the 11th consecutive period in the three-month on three-month series in April 2019 and continued the record of each growth recorded at 3.0% or greater, with an increase of 4.7%. As in March 2019, the biggest contributor to the fall in the three-month on three-month series for April 2019 was private commercial new work, which saw a decline of 2.2%.

In the three-month-on-year series in April 2019, the growth of 2.9% in the all work series was driven by increases in both new work, and repair and maintenance of 2.8% and 3.2% respectively. It is interesting to note that total housing repair and maintenance was flat across the period, growing 0.0%, with total repair and maintenance growth coming from the 6.5% increase in non-housing repair and maintenance. In new work, growth across the board was dampened at a top-level by a 6.9% fall in private commercial new work.

As seen in Figure 5, the value of total construction new orders has remained broadly stable from 2013 to 2017, with the noticeable exception of the spike in Quarter 3 (July to Sept) 2017. This was caused by the awarding of several high-value rail contracts awarded for the construction of High Speed 2 (HS2). Following Quarter 3 2017, the all new work series has decreased, however, the latest data for Quarter 1 (Jan to Mar) 2019 have seen a return to levels prior to Quarter 3 2017.

The all new work series saw growth in Quarter 1 2019, growing by 9.6% relative to Quarter 4 (Oct to Dec) 2018. This quarter-on-quarter growth was driven by all other work, which grew by 16.1%, more than offsetting the 4.6% decline in all new housing during the same period. Quarter 1 2019 was also the first quarter in which the all new work series saw a positive period on same period a year ago growth since Quarter 3 2017, having a growth of 6.6%.

The decline seen in all new housing was due to private new housing, which fell by 6.6% in Quarter 1 2019 compared with Quarter 4 2018. Private new housing made up most of all new housing, with 92.4% of new housing work being private in the most recent period. This resulted in the growth of 28.6% in public new housing having little impact to all new housing, which fell by £158 million from the previous quarter.

The growth seen in the all other work series was due primarily to an increase in private commercial and infrastructure new orders, which grew by 14.9% and 12.5% respectively in comparison with Quarter 4 2018. The infrastructure series has reached a high since Quarter 4 2017, reaching £2,279 million in the quarterly, constant prices, seasonally adjusted series.

As seen in Figure 6 and published in Table 5 in the new orders in the construction industry dataset, the rail series has driven this increase in the infrastructure series , having seen a 930.6% quarter-on-quarter increase. This was driven by a new order for work on London Euston terminal as part of the High Speed 2 (HS2) project, valued at £1,650 million.

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 17 May 2019 for March 2019, showed that seasonally adjusted production in construction (PDF, 566KB) fell by 0.3% in the Euro area (EA19) and decreased by 0.7% in the EU28 when compared with February 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, 531KB) for April 2019 was published on 3 June 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:

• Conceptual and methodological differences between private housing construction output and gross fixed capital formation private sector dwellings (published 31 May 2019)
• 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 statistics: June 2018 – implemented as part of Blue Book 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)