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Statistical bulletin: Output in the Construction Industry, January 2015 and New Orders, Quarter 4 October to December 2014

Released: 13 March 2015 Download PDF

Main points

  • This statistical bulletin provides users with the latest estimates of output in the construction industry for January 2015 and for new orders for quarter 4, October to December 2014. Output is defined as the amount charged by construction companies to customers for value of work (produced during the reporting period) excluding VAT and payments to sub-contractors.
  • In January 2015, output in the construction industry decreased by 2.6% compared with December 2014, after increasing by 0.6% in December. New work fell by 4.2% while repair and maintenance showed no growth.
  • Within the all new work category, all work types except private industrial work reported decreases in January 2015, private commercial falling by 6.6%, infrastructure by 2.7% and total housing by 5.0%, with public and private housing reporting decreases of 18.4% and 1.3% respectively.
  • The second estimate of gross domestic product (GDP) for quarter 4, October to December 2014 published on 26 February 2015 included an estimate of construction which showed a fall in output of 2.1%. This estimate has been revised within this release based on updated survey responses and output is now estimated to have fallen by 2.2%. This downward revision of 0.1% provides no change to the growth rate of GDP.
  • Compared with January 2014, output in the construction industry decreased by 3.1%. This was the first year-on-year decrease since May 2013 when it fell by 2.8%.
  • All new work and repair and maintenance fell by 2.7% and 3.7% respectively on the year. Within all new work, private commercial provided the largest contribution to the decrease compared with January 2014, falling by 8.9%. Smaller decreases were reported by infrastructure (-2.4%) and public other new work (-2.3%). The decrease in repair and maintenance was primarily due to total housing repair and maintenance which fell by 7.0%.
  • New orders for the construction industry in quarter 4, October to December 2014 were estimated to have decreased by 2.9% compared with quarter 3, July to September 2014 and by 2.3% compared with quarter 4, October to December 2013. There were decreases in all work types except private industrial new work. The largest decreases were reported by public new housing (-13.1%), private commercial (-8.5%) and private new housing (-5.7%).
  • The release for January 2015 has a revision period back to January 2014. Revisions in this release were caused by the incorporation of late data. More information on revisions can be found in the background notes.

Additional information

On 11 December 2014, the UK Statistics Authority announced its decision to suspend the designation of Construction Price and Cost Indices including Output and New Orders as National Statistics in respect of the Code of Practice for Official Statistics. Taken as a whole, the Code aims to ensure that official statistics meet the needs of users, are produced, managed and disseminated to a high standard and that statistics are well explained. The Authority has concluded that, despite the steps taken by the Office for National Statistics (ONS), this overall objective of the Code has not been met. The quality of the data in this release has not been affected.

Construction output estimates are a short-term indicator of construction output by the private sector and public corporations within Great Britain and are produced from a monthly survey of 8,000 businesses in Great Britain. The 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.

Detailed estimates along with a longer run of time series data are available to download in the Output in the Construction Industry, January 2015 reference tables. In these tables, users will find chained volume estimates back to quarter 1, January to March 1997 and monthly estimates back to January 2010. Current price non-seasonally adjusted data are available back to quarter 1, January to March 1955. More information on these statistics can be found in the definitions and explanations section in the background notes.

New orders in the construction industry estimates are a short-term indicator of construction contracts for new construction work awarded to main contractors by clients in both the public and private sectors within the UK. The estimates are produced and published both seasonally and non-seasonally adjusted at current prices (including inflationary price effects) and at constant prices (with inflationary effects removed). Since quarter 2, April to June 2013, these data have been supplied by Barbour ABI. Further details can be found in the background notes section of this bulletin.

Detailed estimates on new orders are available to download in the New Orders in the Construction Industry, quarter 4, October to December 2014 reference tables. In these tables, users will find volume estimates back to quarter 1, January to March 1964; current price data are also available for this time period. Value data is available for a more granular level of type of work back to quarter 1, January to March 1985 along with regional data for the main types of work.

The quality of the estimate of Output in the Construction Industry

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 January 2015 was 70.7% of questionnaires, accounting for 79.9% 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 61 months, however, users should note that 60 months 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.

Users should note that the deflators used in the production of chained volume estimates of output in the construction industry and volume measures of new orders in the construction industry have been created using a statistical model of the quarter 3, July to September 2014 tender price indices (TPIs) and output price indices (OPIs).  This is the second quarter where these deflators have been created using this statistical model and users should note that the confidence intervals surrounding these models are wide and caution should be taken when using the deflated estimates. More information on these statistical models can be found in the updated article Modelling Construction Statistics Deflators.

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 main reference tables. 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.

Economic context

Construction output fell by -3.1% in January 2015 compared to the same month a year earlier, a marked decline from 5.3% growth in December 2014 compared to December 2013. The recent weakness in construction output is due to an easing in the growth of housing output, the main driver of construction growth since quarter 2, April to June 2013. The performance of construction in quarter 4, October to December 2014 was weaker than the production and services industries.

Housing output fell by -5.0% on the month in January 2015, moderating the annual rate of growth to 0.8%. On a monthly basis, the fall in housing output was driven by both the public and private components. In contrast, the annual growth rate eased due to a sharp contraction in public housing.

The slowdown in housing output is consistent with a range of external indicators which have shown that both demand and supply side factors may be subduing housing construction. In January 2015, the number of mortgage approvals for house purchase fell by 19.6% from the same month a year earlier. The fall in mortgage approvals reflects a softening in demand and is consistent with the Bank of England's Credit Conditions Survey for quarter 4, October to December 2014, which highlighted that demand for credit from lenders for house purchase had fallen significantly in quarter 4, October to December 2014. Furthermore, the Bank of England's Inflation Report for February 2015 noted that existing homeowners’ weak demand for mortgages in 2014 was significantly below pre-crisis levels according to estimates from the Council of Mortgage Lenders. This is despite a slight increase in availability of secured lending for households in quarter 4, October to December 2014. 

Mortgage market activity is likely to impact on transaction levels. The Bank of England's Agents' Summary of Business Conditions for January 2015 reported that activity levels in the housing market were subdued, due to an earlier release of pent-up demand and high house prices deterring potential buyers. Although housing market activity is muted, the ONS House Price Index showed that UK house prices grew by 9.8% in the year to December 2014. This upward pressure on house prices, despite falling demand for mortgages in quarter 4, October to December 2014, may be due to the constrained supply of housing.

The Agents reported that construction output growth had eased slightly but remained robust. However, the limited supply of housing is one of a number of reasons that the Inflation Report highlights, which may be leading to weak transaction levels. On the supply side, the Agents’ Summary for January noted that some construction firms had maintained activity at current levels due to widespread skill shortages, and the Agents noted in February that small builders faced tight funding conditions.

Taken together, the factors constraining demand such as weak mortgage lending and high house prices, coupled with those constraining supply such as skill shortages and tight funding conditions, may have limited construction output growth in January 2015. This month's construction statistical bulletin also contains information on new orders for quarter 4, October to December 2014. New orders for all new housing output fell by 6.5% in quarter 4, October to December 2014 compared to the previous quarter, contributing to a fall of 7.1% in 2014 as a whole. This is in contrast to robust growth in 2013 of 37.7%. Housing investment – which includes spending on newly-built dwellings, improvements to existing dwellings and spending on services associated with property transactions – also fell in quarter 3, July to September 2014.

Output in the Construction Industry – January 2015

All work

In January 2015 all work:

  • decreased by 2.6% compared with December 2014

  • decreased by 3.1% compared with January 2014

Figure 1 shows the 2 main components of all work. The chart shows that the fall of 2.6% into January 2015 has been caused by all new work, which fell by 4.2% compared with December 2014. There was no growth in repair and maintenance.

Figure 1: All Work - monthly time series chained volume measures, seasonally adjusted (SA) index (2011 = 100)

Figure 1: All Work - monthly time series chained volume measures, seasonally adjusted (SA) index (2011 = 100)

Notes:

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

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Figure 2 shows the components that make up all new work. The chart shows that there were falls in all components in January 2015. Total new housing showed the largest decrease of 5.0% and while there had been sustained growth in this work type since early 2013, the past few months saw output fall. This may be indicative of a slowing of new orders for new housing in quarter 4, October to December 2014, with the value of new orders showing a fall of 6.5% compared with quarter 3, July to September 2014. Infrastructure remains broadly flat, falling by 2.7% in January 2015, while other new work showed a fall of 4.1%.

Figure 2: Components of all new work, monthly time series, seasonally adjusted chained volume measures, £ million

Figure 2: Components of all new work, monthly time series, seasonally adjusted chained volume measures, £ million

Notes:

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

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Figure 3 looks at the main components of repair and maintenance. In January 2015, there was no growth in all repair and maintenance. Housing repair and maintenance fell by 1.0% which was offset by non-housing repair and maintenance, which increased by 0.9%.

Figure 3: Components of repair and maintenance, monthly time series, seasonally adjusted (SA) chained volume measures, £ million

Figure 3: Components of repair and maintenance, monthly time series, seasonally adjusted (SA) chained volume measures, £ million

Notes:

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

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Table 1: Component comparison to previous levels (£million)

  Current volume £ million Lowest volume £ million Date Highest volume £ million Date Percentage change from lowest volume Percentage change from highest volume
New Housing              
Public 403 313 Jan 2013 494 Dec 2014 28.8 -18.4
Private  1,762 1,081 Jan 2010 1,837 Jul 2014 63.0 -4.1
Total 2,165 1,395 Jan  2010 2,317 Jul 2014 55.2 -6.6
               
Other New Work              
Infrastructrue 1,125 1,021 Dec 2010 1,402 Dec 2011 10.2 -19.8
Excluding Infrastructure              
Public 763 730 May 2014 1,248 Nov 2010 4.5 -38.9
Private Industrial 302 238 Sep 2013 373 Aug 2010 26.9 -19.0
Private Commercial 1,758 1,625 Sep 2012 2,104 Dec 2011 8.2 -16.4
All New Work 6,112 5,524 Mar 2013 6,709 Jun 2011 10.6 -8.9

Table notes:

  1. Monthly time series for these components begins in January 2010

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Summary of growth rates for all work types

Table 2 provides a summary of growth rates across the different types of construction work in January 2015. Some main points from this table are as follows:

  • All work types except private industrial, public housing repair and maintenance and non-housing repair and maintenance saw a fall month-on-month. The main contribution to the fall was private commercial work.

  • The month-on-month decrease in all new work was due to a fall in all sub-sectors, except private industrial. While public new housing showed the largest month-on-month fall since records began in 2010 of 18.4%, its contribution of 6.6% to all new work was much smaller than the contribution of private commercial work of 28.8%.

  • Year-on-year both all new work and repair and maintenance contributed to the decrease in all work.

Table 2: Construction output summary tables, chained volume measures, seasonally adjusted

January 2015

Percentage change
  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 Most recent level
Construction          
Total All Work 2.4 -2.8 -3.1 -2.6                           9,777
Total All New Work 2.9 -0.1 -2.7 -4.2                           6,112
Total Repair & Maintenance 1.6 -6.9 -3.7 0.0                           3,665
           
All New Work  
Total All New Work 2.9 -0.1 -2.7 -4.2                           6,112
New Housing          
  Public Corporations 5.3 -5.9 -8.4 -18.4                              403
  Private Sector 11.7 -1.5 3.2 -1.3                           1,762
Other New Work          
Infrastructure -0.4 3.0 -2.4 -2.7                           1,125
Excl Infrastructure          
Public Corporations -0.6 -0.5 -2.3 -0.3                              763
Private Sector           
Private Sector - Industrial 14.5 -4.5 10.6 2.4                              302
Private Sector - Commercial -3.2 1.9 -8.9 -6.6                           1,758
           
Repair & Maintenance  
Total Repair & Maintenance 1.6 -6.9 -3.7 0.0                           3,665
Housing          
Public Corporations -2.1 -1.4 -6.2 1.5                              590
Private Sector 0.9 -5.2 -7.4 -2.1                           1,246
Non-Housing 3.3 -9.6 -0.2 0.9                           1,828

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International Perspective

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 decreased by 0.8% in December 2014 and by 0.5% in the EU28 compared with November 2014. The Great Britain estimate for December 2014 showed that construction output increased 0.6%. 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 2011 = 100 basis.

Outside of the EU, the US Census Bureau release Value of construction put in place showed provisional estimates of construction output decreased by 1.1% in January 2015 compared with December 2014 and increased by 1.8% compared with January 2014.

Construction estimates in gross domestic product

Construction estimates are a key component of the output approach to measuring gross domestic product (GDP) along with the estimates of services, production and agriculture. As an aid to users, the short-term economic indicator releases that directly feed into GDP include an additional table of the GDP components. It is anticipated that this table will inform users 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 in Table 3 below.

Each component of GDP has a weight within GDP based on its value in 2011. Construction has a weight of 64, which means that it is 64 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, April to June 2014 data:

Construction growth  = 0.7
Weight in GDP  = 0.064 (64/1000)
Effect on GDP  = 0.7 * 0.064 = 0.0448 or 0.0 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 0.7 and -0.7
Index of Services (IoS) = 0.0 (all values above or below 0.0 effect GDP due to the high weight of IoS in GDP).

Because:

IoP =    0.146*0.4 = 0.0584 or 0.1 to 1 dp 
Construction =  0.064*0.8 = 0.0512 or 0.1 to 1 dp
IoS =    0.784*0.1 = 0.0784 or 0.1 to 1 dp

Table 3 shows the latest monthly and revised quarterly output figures that fed into the second estimate of GDP release for quarter 4, October to December 2014 published on 26 February 2015.

Table 3: GDP component table, chained volume measures, seasonally adjusted

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 1000 26 Feb Q4 2014 3.1 0.5
      Q3 2014 3.1 0.7
Index of Production 146 11 Mar Q4 2014 1.0 0.2
      Q3 2014 1.2 0.1
Construction output 64 13 Mar Q4 2014 4.5 -2.2
      Q3 2014 7.2 1.7
Index of Services 784 26 Feb Q4 2014 3.3 0.8
      Q3 2014 3.2 0.8
Agriculture 6 26 Feb Q4 2014 3.1 1.6
      Q3 2014 2.2 0.7

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The second estimate of GDP published on 26 February 2015 contained an estimate for quarterly construction of a fall of 2.1%. This estimate has been revised within this release based on updated survey responses and is now estimated to be a fall of 2.2%. This revision of 0.1 percentage points does not revise the growth rate of GDP.

New Orders for Construction – Quarter 4, October to December 2014

Users should note that all tender price indices used to deflate all new orders types of work are based on statistical models for quarter 4, October to December 2014.

Figure 4: New Orders, quarterly time series, constant prices, seasonally adjusted (SA) index (2005 = 100)

Figure 4: New Orders, quarterly time series, constant prices, seasonally adjusted (SA) index (2005 = 100)

Notes:

  1. Source: Barbour ABI

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Users 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.

It is estimated that the seasonally adjusted volume of all new orders decreased by 2.9% between quarter 3, July to September 2014 and quarter 4, October to December 2014, to £12.1 billion. There were decreases in the volume of new orders for public new housing, private commercial, private new housing, public other new work and infrastructure. Private industrial was the only work type to show an increase in the volume of new orders. 

The volume of new orders in new housing fell by 6.5% between quarter 3, July to September 2014 and quarter 4, October to December 2014, private new housing falling by 5.7% and public new housing by 13.1%. While public new housing accounts for only 10% of total housing, the level of new orders of £0.3 billion, was the lowest level on record.

On an annual basis, new orders in quarter 4, October to December 2014 decreased by 2.3% compared with quarter 4, October to December 2013. New orders for total new housing decreased by 17.9%, due primarily to public new housing which fell by 68.6%, while private new housing fell slightly by 1.2%. Other work increased by 5.8%, with private commercial new orders increasing by 22.4%. This was partially offset by decreased new orders in public and private other new work, falling 8.1% and 10.4% respectively.

Table 4: Volume of New Orders summary tables, quarterly time series, constant (2005) prices, seasonally adjusted

Type of Work Most recent quarter on a year earlier (% change) Most recent quarter on the previous quarter (% change) Most recent level (£m)
1. All New Work    
All New Work -2.3 -2.9 12,133
All New Housing -17.9 -6.5 3,494
All Other Work 5.8 -1.3 8,639
1.1  New Housing    
All New Housing -17.9 -6.5 3,494
Public -68.6 -13.1 332
Private -1.2 -5.7 3,162
1.2  Other New Work    
All Other Work 5.8 -1.3 8,639
Infrastructure 1.9 -3.3 1,914
Excl Infrastructure      
Public -8.1 -3.4 1,879
Private - Industrial -10.4 66.0 948
Private - Commercial 22.4 -8.5 3,898

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Users should note that these new orders statistics use data from Barbour ABI and are therefore produced using different methods from those in place at the time when the statistics were first assessed for compliance with the Code of Practice for Official Statistics. They are currently being reassessed as part of an ongoing assessment of our short-term economic output indicators, with a view to confirming their designation as National Statistics. Further details on the collaboration between the us and Barbour ABI can be found in the background notes section of this bulletin.

Further users should note that there may be some discontinuity in the data around quarter 3, July to September 2013 where the Barbour data were used for the first time to compile these statistics.

Background notes

  1. Future Developments

    The Department for Business, Innovation and Skills (BIS) and the Office for National Statistics (ONS) have agreed that responsibility for the Construction Price and Cost Indices (PCIs) will transfer to ONS from 1 April 2015.

    ONS will become responsible for managing the existing contract with AECOM, who are contracted to make improvements to the existing methodology and to collect data and compile the indices. ONS will also become responsible for setting out plans for improvements to methods and to reinstate regular publication of the Construction PCIs and their reassessment against the Code of Practice for Official Statistics.

    The full statement can be found on the ONS website.

  2. What’s new?

    We have published a summary of initial results of the short-term output indicators user survey (110 Kb Pdf) to the recent National Accounts Survey and we are continuing to gather views from users on how the construction output statistics and other short-term economic indicators data are used. If you have not yet contributed then we would welcome your views by completing the survey.

    Users expressed concern with the proposals made for new deflators, stating that "current deflators are not perfect but the proposals are not clear but appear seriously flawed". The methodological development of construction price and cost indices is now being managed by the construction prices steering group. This group is reviewing the methodological proposals and the effect they have on construction statistics. We are ensuring that minutes of each steering group are published and encourage other users to provide comments on latest developments as and when they occur. Users should note however, that despite us setting up this steering group, the overall responsibility for the development of construction price statistics lies with the Department for Business Innovation and Skills.

    With regards changes and improvements that users would like to see for construction statistics:

    • Pre-1997 data in the latest series; as stated in the construction output quality and methodology information report plans are in place to have a full historic time series available for users shortly.

    • We would like to see confidence restored in the all construction output price indicator (COPI). It is vitally important for our costing engines and valuation process that a robust COPI series is available. We are not responsible for the production of Construction Price statistics, this is the responsibility of the Department for Business Innovation and Skills.

    • Slightly finer subdivisions, especially infrastructure by client type (public, private, private finance initiative). Given the data we currently collect, it is not possible to achieve a more granular level of data than is already published.

  3. About this release

    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).

    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.

    New Orders in the Construction Industry estimates have been compiled using data supplied by Barbour ABI. These data have also been used in the compilation of tables 5 and 6 in the Output of the Construction Industry data tables. Full details of this change in data source can be found in the article, Announcement of Changes to New Orders in the Construction Industry.

  4. Revision policy

    Construction output conforms to the standard national accounts revision policy (41.6 Kb Pdf) , which can be found on our website. In line with this, the construction output release for January 2015 has a revision period back to quarter 1, January to March 2014.

    New orders data has a revision period back to quarter 2, April to June 2013 and is not covered by the National Accounts revisions policy due to not directly feeding the National Accounts.

    Figures for the most recent months are provisional and subject to revision in light of:

    • late responses to the monthly business survey (MBS)

    • revisions to seasonal adjustment factors which are re-estimated every period

  5. Statistical continuous improvement

    In March 2012, as part of our Statistical Continuous Improvement Programme, we published a Review of Sample Design and Estimation Methodology for Construction Output. This report evaluated the sample design and estimation methods used on the Construction Output Survey. The conclusions of the review were that the current sample is performing well and that the current methodology for estimation within the survey produces the smallest standard error.

    In response to user feedback and in line with the announcement made in the article Improvements to the methods used to compile Output in the Construction Industry statistics, this statistical bulletin now contains monthly seasonally adjusted chained volume estimates. Due to the potential for confusion when comparing constant price (volume) and chained volume measures, all references to constant price series for construction output have been removed from this, and future bulletins.

    A work plan for construction output statistics will be published shortly and will align with the National Accounts and related statistics work plan.

  6. Use of the data

    Output in the Construction Industry estimates are widely used both internally and externally and have been identified by legal requirement and user engagement surveys.

    The key users of data from the Output of the Construction Industry dataset are:

    • United Kingdom National Accounts.

    • Eurostat, the statistical office of the European Union, in order to comply with statutory legislation on short-term business statistics (STS). Short-term business statistics provide information on the economic development of four major domains: industry, construction, retail trade and other services.

    • Industry analysts requiring estimates of the construction industry output of Great Britain.

    • Trade associations making UK and international comparisons and to forecast trends in the construction industry.

    • Other government departments including: the Department for Business, Innovation and Skills (BIS), HM Treasury (HMT), Department for Communities and Local Government (DCLG) and the Office for Budgetary Responsibility (OBR).

    As well as being a key indicator of the performance of construction companies, the results of the survey also contribute to the estimate of the gross domestic product of the UK, contributing approximately 6.4% of GDP.

    More information on the uses made of short-term economic statistics is available on our website.

  7. Methods

    The ONS 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 £60m receiving a questionnaire by post every month. 

    Since the 1950s new orders in construction data had been collected from a sample survey of businesses; originally monthly and then quarterly. There were some known quality issues with the survey data as:

    • the coverage of the survey was unknown

    • new orders allocated to regions were not always accurately recorded.

    The new orders data are now supplied under contract to us by Barbour ABI. Barbour ABI provide us with improved coverage and regional splits of new orders in construction data.

  8. Quality

    The latest Quality and Methodology report for the Output of the Construction Industry estimates and Quality and Methodology report for New Orders in the Construction Industry (100.2 Kb Pdf) estimates can be found on our website.

  9. Revisions

    One indication of the reliability of the key indicators can be obtained by monitoring the size of revisions. Analysis of the previously published quarterly seasonally adjusted chained volume measure series has shown that revisions to construction data are small. Generally these quarterly revisions are less than 1 percentage point when compared with the final revised period five quarters after initial publication. This indicates that the published estimates are a reliable snapshot of the output in the industry at the date of publication.

    The size and pattern of revisions for both output and new orders data which have occurred in the open period can be found in the new revision triangles on the construction web page. Please note that these indicators only report summary measures for revisions. The revised data may be subject to sampling or other sources of error. Details about this revisions material can be found in the document "Revisions information in ONS First Release".

    It should be noted that due to seasonal adjustment taking place on a short span of data points used to interpret the seasonal effects, there is potential for increased revisions until the seasonal pattern is established within the time series. The seasonal pattern is generally established after 60 months in a monthly time series.

    Please note that a monthly seasonally adjusted chained volume series is not available pre-2010. This is due to monthly data not being available for this period. These data are a requirement for creating previous year’s prices from which chain linked volume measures are created.

  10. Relevant links

    Modelling Construction Statistics Deflators (84.5 Kb Pdf)

    Impact of quarterly employment question on monthly survey response (163.7 Kb Pdf)

    Government Statistical Service (GSS) uncertainty guidance

    Annual Construction publication Construction Statistics, No. 15, 2014 Edition

    International Comparisons

    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.

    Analysis of the construction industry

    An article on the UK construction industry was published by the Department of Business, Industry and Skills (BIS) in 2013.

    UK Statistics Authority assessment

    Assessment of the Construction Output and New Orders statistical bulletin

    Disclosure control policy

    The Disclosure control policy (337 Kb Word document) for tables produced from surveys.

    The circular flow of income

    14 ways ONS statistics help you understand the economy - A closer look at the circular flow of income

  11. Further information

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

  12. User Engagement

    The user engagement section of our website contains results of the survey held in April 2011 regarding users' satisfaction and use of the new orders and construction output surveys.

  13. GENERAL INFORMATION

    Understanding the data

    Interpreting the data

    When making comparisons it is recommended that users focus on chained volume measures or constant price (volume), seasonally adjusted estimates as these show underlying movements rather than seasonal movements.

    Construction output estimates are subject to revision because of:

    • late responses to the Construction Output Survey

    • revisions to seasonally adjusted factors which are re-estimated every quarter

    • annual updating of the inter-departmental business register (IDBR) that forms the basis of the sampling for the Construction Output Survey; this occurs in April and can have an effect on the results published in May

    Definitions and explanations

    Definitions of terminology found within the main statistical bulletin are detailed:

    Output

    Output is defined as the amount chargeable to customers for building and civil engineering work done in the relevant period excluding VAT. As well as work charged to customers, businesses are asked to include the value of work done on their own initiative on buildings such as dwellings or offices for eventual sale or lease, and of work done by their own operatives on the construction and maintenance of their own premises. The value of goods made by businesses themselves and used in the work is also included.

    In all returns, work done by sub-contractors is excluded to avoid double counting, since sub-contractors are also sampled. Output does not include payments made to architects or consultants from other firms – this would also cover engineers and surveyors. It would include wages paid to such people if they were directly employed by the business.

    Current price (value) (CP)

    Current prices are the actual or estimated recorded monetary value over a defined period. They show the value for each item expressed in terms of the prices of that period.

    Constant price (volume) (KP)

    A constant price or volume measure is a series of economic data from successive years expressed in real terms by computing the production volume for each year in the prices of a reference year. The resultant time-series of production figures has the effects of price changes removed (that is, monetary inflation or deflation). In other words, from the raw data a series is obtained which reflects only production volume. See the ‘Deflation’ section. Constant price series in this bulletin are based on the reference year 2005.

    Chained volume measures (CVM)

    A chained volume series is a series of data from successive years, put in constant price terms by computing the production volume for each year in the prices of the preceding year, and then chain-linking the data together to obtain a time-series of production figures from which the effects of price changes (that is, monetary inflation or deflation) have been removed. Further information on chain-linking can be found in the methodological article Annual chain-linking (58 Kb Pdf) .

    Seasonal adjustment (SA)

    Seasonal adjustment aids interpretation by removing effects associated with the time of the year or the arrangement of the calendar, which could obscure movements of interest.

    Deflation

    It is common for the value of a group of financial transactions to be measured in several time periods. The values measured will include both the change in the volume sold and the effect of the change of prices over that year. Deflation is the process whereby the effect of price change is removed from a set of values. The current reference year is 2010 for CVM data.

    Sectors

    Institutional sectors are defined in the System of National Accounts (SNA) glossary as;

    Units that are grouped together to form institutional sectors on the basis of their principal functions, behaviour, and objectives.

    The resident institutional units that make up the total economy are grouped into five mutually exclusive sectors:

    • non-financial corporations

    • financial corporations

    • general government

    • non-profit institutions serving households

    • households

    In the case of non-financial and financial sectors, these can be further broken down into public sector, those units either controlled by the state or funded from the public purse and include general government, local authorities, housing associations and nationalised industries and private sector, those units controlled by private individuals or groups and not by the public sector.

    Gross domestic product (GDP)

    Gross domestic product (GDP) is an integral part of the UK national accounts and provides a measure of the total economic activity in a region.

    GDP is often referred to as one of the main 'summary indicators' of economic activity and references to 'growth in the economy' are quoting the growth in GDP during the latest quarter.

    Construction estimates are a component of GDP from the output or production approach (GDP(O)) which measures the sum of the value added created through the production of goods and services within the economy (our production or output as an economy). This approach provides the first estimate of GDP and can be used to show how much different industries (for example, agriculture) contribute within the economy.

    Housing

    Housing is generally defined as ‘all buildings that are constructed for residential use’. Within the public sector this classification includes construction items such as local authority housing schemes, hostels (except youth hostels), married quarters for the services and police, old peoples' homes, orphanages and children’s remand homes and the provision within housing sites of roads and services for gases, water, electricity, sewage and drainage.

    Private sector housing includes all privately owned buildings for residential use, such as houses, flats and maisonettes, bungalows, cottages, vicarages, and the provision of services to new developments.

    Infrastructure

    Infrastructure is the generic term for the basic physical and organisational structures and facilities needed for the operation of a society or enterprise. These construction items include buildings, roads, power supplies, etc.

    Other new work

    Other new work excludes the housing and infrastructure sectors. This classification includes construction items such as factories, warehouses, schools and offices, etc.

    Non-housing

    Within the public sector, non-housing is classified as the construction of building such as schools and colleges, hospitals, universities, fire stations, prisons and museums. Private sector non-housing is comprised of the private /industrial and private/commercial classifications. Private - industrial is the economic activity concerned with the processing of raw materials and manufacture of goods in factories and includes construction items such as factories and shipyards while private - commercial includes all items not included in the previous categories such as embassies, theatres, retail units, warehouses and garages, etc.

    Repair and maintenance

    The repair and maintenance heading in the construction estimates comprises of housing, infrastructure and other new work. This concerns work which is either repairing something that is broken, or maintaining it to an existing standard. For housing output this includes repairs, maintenance, improvements, house/flat conversions, extensions, alterations and redecoration, etc. on existing housing. For non-housing this includes repairs, maintenance, redecoration, etc. on existing buildings/structures, which are not housing, for examples schools, offices, roads, shops.

    Table 2 of this bulletin aggregates infrastructure and other new work into non-housing.

  14. Code of Practice for Official Statistics

    National Statistics are produced to high professional standards which are set out in the Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure that they meet customer needs and are produced free from any political interference.

  15. Publication policy

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

  16. Accessing data

    The Output in the Construction Industry statistical bulletin and relevant time series datasets are available to download free from our website at 9.30 am on the day of publication.

    We allow a list of agreed officials to have access to data 24 hours before publication, which is available on the Output in the Construction Industry: Pre-Release page.

  17. Further information and user feedback

    As a user of our statistics, we would welcome feedback on this release, in particular on the content, format and structure. For further information about this release, or to send feedback on our publications, please contact us using the following information.

    Contacts:

    Media contact:
    Tel Media Relations Office  +44 (0)845 6041858
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    Email  press.office@ons.gsi.gov.uk

    Statistical contact:
    Name Kate Davies
    Tel +44 (0)1633 455617
    Email construction.statistics@ons.gsi.gov.uk

    Contact us:
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  18. 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

Statistical contacts

Name Phone Department Email
Kate Davies +44 (0)1633 456344 Office for National Statistics construction.statistics@ons.gsi.gov.uk
Get all the tables for this publication in the data section of this publication .
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