1. Main points
This statistical bulletin provides users with the latest estimates of output in the construction industry for February 2015. 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 February 2015, output in the construction industry was estimated to have decreased by 0.9% compared with January 2015. Both all new work and repair and maintenance contributed to the fall
All new work decreased by 0.6%, with all types of new work except public new housing and public other new work reporting decreases: infrastructure (-2.5%), private new housing (-1.6%), private industrial (-0.9%), private commercial (-0.1%)
Repair and maintenance (R&M) decreased by 1.4%. All work types reported decreases: private housing (-2.7%), public housing (-2.2%), non-housing R&M (-0.2%)
Compared with February 2014, output in the construction industry showed a decrease of 1.3%. Repair and maintenance fell by 4.3% while all new work increased by 0.5%
Comparing the 3 months, December 2014 to February 2015, with the previous 3 months, September to November 2014, construction output fell by 3.2%. Repair and maintenance and all new work decreased by 7.7% and 0.3% respectively
When comparing the 3 months, December 2014 to February 2015 with the same 3 months a year ago, construction output was estimated to have increased by 0.3%. All new work increased by 1.3% while repair and maintenance decreased by 1.4%
The only period open for revision is January 2015 which has been revised upwards 0.1%, from a fall of 2.6% to a fall of 2.5%. This was caused by the incorporation of late data. More information on revisions can be found in the background notes
2. 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, February 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.
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 February 2015 was 70.6% of questionnaires, accounting for 80.9% 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 62 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 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.
Nôl i'r tabl cynnwys3. Economic context
Construction output was 1.3% lower in February 2015 than in the same month a year earlier. While the fall in output on the year was the second successive annual reduction following continuous growth since mid-2013, it was a smaller contraction than in January 2015, when output fell by 3.0%. The slowdown is broadly consistent with external indicators such as the Agents' Summary of Business Conditions for March 2015 which noted that the easing in construction output reflected the strength of activity the same time a year ago.
On a monthly basis, construction output fell by 0.9%. Output from both major categories: new work, and repair and maintenance was lower in February 2015. The contraction in new work was driven by private housing, the output from which fell by 1.6% and this weakness was reflected by a range of external surveys. The Agents' Summary of Business Conditions for March noted that major house builders expected to raise output at a slightly slower rate in 2015 than in 2014. The report also suggested that demand and supply in the housing market are now more balanced and this may also be reflected in the easing of mortgage demand and house price growth.
The Credit Conditions Survey for quarter 1 Jan to Mar 2015 also indicated that demand for secured lending for house purchases fell significantly. The survey cited 3 reasons for falling demand: changes in regulatory policy, concerns about housing affordability and concerns about the outlook for the housing market. Our House Price Index showed that UK house prices increased by 8.4% in January 2015 on the same month a year earlier, compared to growth of 9.8% in December 2014. All of these factors may have contributed to a slight slowdown in housing market activity which may also have had an impact on new work for housing.
The weakness of new work was also reflected in the repairs and maintenance components, which contracted by 1.4% in February 2015. This fall was broadly based but the housing components were particularly weak. Repair and maintenance output on housing fell by 2.5%.
On an annual basis, this fall in repair and maintenance was a key driver of the fall in aggregate construction output. All sub-components of repair and maintenance contracted over this period, but consistent with the picture on the month, the main driver was repair and maintenance on private housing, which fell by 7.9%. The Agents’ noted that recent weakness in repair and maintenance was a reason for the slowdown in construction output growth. Our Consumer Trends quarter 4 Sep to Dec 2014 publication showed that household spending on repair and maintenance fell sharply in the latter half of 2014. This was driven by spending on services which fell 23.5% in quarter 4 Sep to Dec 2014 on the same quarter a year earlier. In contrast, household spending on materials grew in quarter 4 Sep to Dec 2014.
Nôl i'r tabl cynnwys4. Output in the Construction Industry – February 2015
All work
In February 2015 all work:
decreased by 0.9% compared with January 2015
decreased by 1.3% compared with February 2014
in the 3 months (December 2014, January 2015, February 2015) compared with the previous 3 months (September 2014, October 2014, November 2014) construction output fell by 3.2%
Figure 1: All Work – monthly time series, chained volume measure, seasonally adjusted (SA), index (2011 = 100)
Great Britain, January 2010 to February 2015
Source: Construction: Output & Employment - Office for National Statistics
Download this chart Figure 1: All Work – monthly time series, chained volume measure, seasonally adjusted (SA), index (2011 = 100)
Image .csv .xlsFigure 1 shows the 2 main components of all work. It is clear that the monthly path for construction output is a volatile one. Continuing on from the growth seen throughout 2013, construction output grew at a similar rate until the middle part of 2014. After this it fell and in more recent months the decline seen in construction output has now almost cancelled out all of the gains seen in early 2014.
Figure 2 looks at new work and repair and maintenance; we saw that the level of all new work has remained relatively flat with a slight decline in recent periods. However, repair and maintenance shows a different picture and it is this component that is behind the recent fall in all work.
Repair and maintenance work towards the end of each year normally falls, and picks up again in the early months of the year. This year has seen a different pattern and the fall in February 2015 of 1.4% compared with January 2015 is the fifth consecutive month where there has been a fall in all repair and maintenance. Since the introduction of the monthly series in 2010, this is the first time that there has been 5 consecutive falls.
Figure 2: Components of repair and maintenance, monthly time series, chained volume measure, seasonally adjusted (SA), £ million
Great Britain, January 2010 to February 2015
Source: Construction: Output & Employment - Office for National Statistics
Download this chart Figure 2: Components of repair and maintenance, monthly time series, chained volume measure, seasonally adjusted (SA), £ million
Image .csv .xlsFigure 2 shows the 2 components of repair and maintenance. Housing repair and maintenance and non-housing are of similar size, however, it is also clear that the non-housing component is more volatile than housing and the fall in recent months in non-housing provided the main contribution to the fall in repair and maintenance and all work.
Figure 3: Components of all new work, monthly time series, chained volume measure, seasonally adjusted (SA), £ million
Great Britain, January 2010 to February 2015
Source: Construction: Output & Employment - Office for National Statistics
Download this chart Figure 3: Components of all new work, monthly time series, chained volume measure, seasonally adjusted (SA), £ million
Image .csv .xlsAll new housing, while not the largest component of all new work, has provided the main contribution towards growth in all new work from 2013 onwards. In contrast, over the same period infrastructure and other new work have been relatively flat.
With non-housing repair and maintenance and all new housing providing the main contribution towards the longer-term pattern in all new work, these types of work provide the main contribution towards the contraction in growth in February 2015.
Figure 4 shows all types of work and their contributions to the contraction in all work. It shows that, other than public other and public housing, all types of work provided a negative contribution in February 2015.
The largest contribution came from private new housing, infrastructure and private housing repair and maintenance which fell by 1.6%, 2.5% and 2.7% respectively compared with January 2015. All provided 0.3 percentage points to the 0.9% contraction in all new work. The growth seen in public other new work, and public housing repair and maintenance negated the contractions seen in private industrial, private commercial, non-housing repair and maintenance, and private housing repair and maintenance.
Figure 4: Contributions to volume growth output in construction (February 2015 compared with January 2015)
Great Britain
Source: Construction: Output & Employment - Office for National Statistics
Notes:
- R&M = Repair and maintenance
Download this chart Figure 4: Contributions to volume growth output in construction (February 2015 compared with January 2015)
Image .csv .xls
Table 1: Component comparison to previous levels
| Current volume £million | Lowest volume £million | Date | Highest volume £million | Date | Percentage change from lowest volume | Percentage change from highest volume | |
| New Housing | |||||||
| Public | 433 | 313 | Jan-13 | 494 | Dec-14 | 38.3 | -12.3 |
| Private | 1,710 | 1,081 | Jan-10 | 1,837 | Jul-14 | 58.2 | -6.9 |
| Total | 2,143 | 1,395 | Jan-10 | 2,317 | Jul-14 | 53.6 | -7.5 |
| Other New Work | |||||||
| Infrastructrue | 1,124 | 1,021 | Dec-10 | 1,402 | Dec-11 | 10.1 | -19.8 |
| Excluding Infrastructure | |||||||
| Public | 743 | 719 | Jan-15 | 1,248 | Nov-10 | 3.3 | -40.5 |
| Private Industrial | 305 | 238 | Sep-13 | 373 | Aug-10 | 28.2 | -18.2 |
| Private Commercial | 1,793 | 1,625 | Sep-12 | 2,104 | Dec-11 | 10.3 | -14.8 |
| All New Work | 6,108 | 5,524 | Mar-13 | 6,709 | Jun-11 | 10.6 | -9 |
| Notes: | |||||||
| 1. Monthly time series for these components begins in January 2010 | |||||||
Download this table Table 1: Component comparison to previous levels
.xls (28.2 kB)Summary of growth rates for all work types
Table 2 provides a summary of growth rates across the different types of construction work in February 2015. Some main points from this table are as follows:
all work types except public new housing and public corporations saw a decrease in the month-on-month growth rate; the main contribution to the fall was housing repair and maintenance
the month-on-month fall was due to a fall in all three sub-sectors; however, year-on-year only repair and maintenance decreased with all new work and infrastructure increasing
year-on-year the decrease in all work was due to a fall in repair and maintenance; this was partly offset by a small rise in all new work
Table 2: Construction output summary tables, chained volume measures, seasonally adjusted
| Great Britain | |||||
| 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 | 0.3 | -3.2 | -1.3 | -0.9 | 9,704 |
| Total All New Work | 1.3 | -0.3 | 0.5 | -0.6 | 6,108 |
| Total Repair & Maintenance | -1.4 | -7.7 | -4.3 | -1.4 | 3,596 |
| All New Work | |||||
| Total All New Work | 1.3 | -0.3 | 0.5 | -0.6 | 6,108 |
| New Housing | |||||
| Public Corporations | 2.6 | -3.3 | -4.5 | 0.7 | 433 |
| Private Sector | 7.2 | -3.6 | 7.9 | -1.6 | 1,710 |
| Other New Work | |||||
| Infrastructure | 1.1 | 4.0 | 0.8 | -2.5 | 1,124 |
| Excl Infrastructure | |||||
| Public Corporations | -3.0 | -3.1 | -0.8 | 3.3 | 743 |
| Private Sector | |||||
| Private Sector - Industrial | 10.9 | -0.9 | 6.5 | -0.9 | 305 |
| Private Sector - Commercial | -3.8 | 2.6 | -5.1 | -0.1 | 1,793 |
| Repair & Maintenance | |||||
| Total Repair & Maintenance | -1.4 | -7.7 | -4.3 | -1.4 | 3,596 |
| Housing | |||||
| Public Corporations | -2.7 | -1.2 | -0.6 | -2.2 | 575 |
| Private Sector | -2.5 | -3.8 | -7.9 | -2.7 | 1,226 |
| Non-Housing | -0.2 | -12.1 | -2.9 | -0.2 | 1,794 |
Download this table Table 2: Construction output summary tables, chained volume measures, seasonally adjusted
.xls (28.7 kB)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 (EA19) increased by 1.9% and by 1.0% in the EU28 in January 2015 compared with December 2014. The GB estimate for January 2015 showed that construction output decreased by 2.5%. It should be noted that an accurate comparison cannot be made as Eurostat data are calculated on a 2010 = 100 basis, while GB 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 0.1% in February 2015 compared with January 2015 and increased by 2.1% compared with February 2014.
Nôl i'r tabl cynnwys5. Construction estimates in gross domestic product (GDP)
Construction estimates are a key component of the output approach to measuring 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 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:
IoP = between 0.3 and -0.3
Construction = between 0.7 and -0.7
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 quarterly national accounts release for quarter 4, October to December 2014 published on 31 March 2015.
Table 3: GDP component tables, chained volume measures, seasonally adjusted
| Great Britain | |||||
| 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 | 31-Mar | Q4 2014 | 3.0 | 0.6 |
| Q3 2014 | 2.7 | 0.6 | |||
| Index of Production | 146 | 10-Apr | Q4 2014 | 1.0 | 0.2 |
| Q3 2014 | 1.2 | 0.1 | |||
| Construction output | 64 | 10-Apr | Q4 2014 | 4.5 | -2.2 |
| Q3 2014 | 7.2 | 1.7 | |||
| Index of Services | 784 | 31-Mar | Q4 2014 | 3.4 | 0.9 |
| Q3 2014 | 3.1 | 0.7 | |||
| Agriculture | 6 | 31-Mar | Q4 2014 | 1.6 | 0.4 |
| Q3 2014 | 1.9 | 0.6 | |||
Download this table Table 3: GDP component tables, chained volume measures, seasonally adjusted
.xls (34.8 kB)The quarterly national accounts published on 31 March 2015 contained an estimate for quarterly construction of a fall of 2.2%. This estimate has not been revised within this release.
Nôl i'r tabl cynnwys