Construction output in Great Britain: April 2020

• Construction output fell by 40.1% in the month-on-month all work series in April 2020; this was driven by a 41.2% decrease in new work and a 38.1% decrease in repair and maintenance; all of these decreases were the largest monthly falls on record since the monthly records began in January 2010.

• The decrease in new work (41.2%) in April 2020 was because of record month-on-month falls in all new work sectors; private new housing and private commercial were the largest contributors, falling by 59.2% and 39.7% respectively.

• The decrease in repair and maintenance (38.1%) in April 2020 was because of record month-on-month falls in all repair and maintenance sectors; the largest contributor was private housing repair and maintenance which declined by 54.3%.

• Construction output fell by record 18.2% in the three months to April 2020, compared with the previous three-month period; this was driven by a 19.4% fall in new work and a 15.8% fall in repair and maintenance.

• Data for April 2020 was collected by online questionnaire for the first time rather than by paper questionnaire as previously; anecdotal evidence received from extensive contributor comments and the Business Impact of Coronavirus Survey (BICS) noted that the coronavirus (COVID-19) pandemic drove the large falls in construction output in April 2020. 

• The Office for National Statistics (ONS) has released a public statement on COVID-19 and the production of statistics.

Construction output decreased by 40.1% in April 2020 compared with March 2020, falling to £7,615 million. This is the largest month-on-month fall in growth since monthly records began in January 2010, with the all work construction output series also at its lowest level since monthly records began.

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, compared with the more volatile monthly series.

There were decreases in both new work and repair and maintenance of 41.2% and 38.1% respectively, with decreases experienced in all construction sectors. This is the second month in a row where every sector has seen a month-on-month decline, and only the second time this has happened since monthly records began in January 2010.

The monthly profile of construction output growth in 2020 is worth noting as this is the third consecutive month of decline. While January 2020 saw 0.2% growth, February 2020 experienced a decline in monthly growth of 2.1%. This was because of the adverse weather and flooding experienced throughout the month, which saw February 2020 as the wettest February since Met Office records began in 1862. March 2020 was significantly impacted by coronavirus (COVID-19) leading to then record falls in monthly growth, including in all work which fell 5.9%.

Construction output in April 2020 was also significantly affected by COVID-19. We received a large amount of anecdotal information from survey respondents through qualitative comments to the survey along with information from the Business Impact of Coronavirus Survey (BICS).  However, it is difficult to quantify the exact impact of COVID-19 alone on the industry.

Coronavirus (COVID-19) in April 2020

On 23 March 2020, the UK government announced official guidance on restrictions in movement for Great Britain as a result of the coronavirus (COVID-19) pandemic.

We have worked closely with respondents and data suppliers and have used additional data sources to inform the estimates in this publication. We used qualitative information sourced from construction industry respondents to the Business Impact of Coronavirus Survey (BICS) to quality assure response we received for April 2020. Anecdotal evidence from responders to both BICS and the Monthly Business Survey (MBS) suggests marked falls in activity across all construction sectors.

We also closely monitor business responses in each publication and use internationally recognised statistical methods to deal with non-response. To assist with this, the mode of data collection for April 2020 moved to online data collection for the first time. This led to improved response rates for April 2020 by both number of forms and turnover coverage of the industry when compared with March 2020, though response is still below levels seen prior to COVID-19. Further information on this can be found in Section 8, Measuring the data, under the Impact of online data collection on response rates subheading.

For further information, we have released a public statement on COVID-19 and the production of statistics.

Table 1 shows different measures of growth for all types of work in April 2020. Most notably, the decreases experienced in April 2020 in the total repair and maintenance, total new work, and total all work series are record falls for all growth measures published.

Table 2 shows previous record weakest growths in the month-on-month and three-month on three-month series. Only three-month on three-month growth for infrastructure and public other new work were not record weakest growths in April 2020.

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. All new work accounts for approximately two-thirds of all work, while repair and maintenance accounts for approximately one-third of all work.

Significant falls in both new work and repair and maintenance can be seen in April 2020. Both series are at their lowest level since monthly records began in January 2010.  

Construction output fell by 40.1% (£5,105 million) in April 2020 compared with March 2020 because of declines across all construction sectors. This is the largest month-on-month fall since monthly records began in 2010, and a considerably larger fall than the previous record fall of 5.9% (£791 million) in March 2020. April 2020 was the second consecutive month where every sector has seen a month-on-month decline, and only the second time this has happened since monthly records began in January 2010.

Figure 3 shows the month-on-month output growth in April 2020 for the different construction sectors, taken from our seasonally adjusted, chained volume measure series.

New work fell by 41.2% (£3,460 million) and repair and maintenance fell 38.1% (£1,644 million) in April 2020, both of which were record falls in the month-on-month series.

The record 41.2% (£3,460 million) fall in growth in new work in April 2020 was driven by large decreases across all new work sectors. The largest contribution came from private new housing which fell by 59.2% (£1,574 million), which was the third consecutive month of large declines in this series. The impact of adverse weather in February 2020 lead to an 8.2% (£254 million) monthly decrease, and was followed by a 6.4% (£182 million) monthly decrease in March 2020. This means private new housing work has decreased by 65.0% (£2,010 million) since January 2020 and is now at its lowest level since monthly records began in January 2010, as shown in Figure 4.

Other large contributors to the record decrease in new work came from private commercial new work, which fell by a record 39.7% (£859 million), with infrastructure and public new housing also seeing record monthly decreases of 20.3% (£378 million) and 66.5% (£361 million) respectively.

The record 38.1% (£1,644 million) month-on-month fall in repair and maintenance was also driven by large decreases across all sectors, with the largest contribution coming from private housing repair and maintenance, which fell by a record 54.3% (£782 million).

The large monthly decreases in April 2020 are corroborated by evidence from the Business Impact of Coronavirus (COVID-19) Survey (BICS). Construction industry respondents to BICS Wave 3, which relates to the period 6 April to 19 April 2020, were considerably more likely to respond that turnover decreased by more than 50%, and considerably less likely to respond that financial performance was unaffected, than all industries as a whole. This is shown in Table 3.

Data from BICS Wave 4, which relate to the period 20 April to 3 May 2020, are partially comparable with construction output data for April 2020. Table 4 shows the percentage of firms applying to the Coronavirus Job Retention Scheme. Of those who were still trading and responded to BICS Wave 4, construction industry respondents were the second most likely to apply to this initiative (89.4%), behind only the accommodation and food service activities industry (95.0%).

Figure 5 shows the difference in three-month on three-month output from the different construction sectors, taken from our seasonally adjusted, chained volume measure series. Construction output fell by 18.2% (£7,554 million) in the three months to April 2020, compared with the previous three months.

New work fell by a record 19.4% (£5,384 million) in the three-months to April 2020, driven by large declines across all sectors. The largest contributors to this decline were private new housing which fell 28.3% (£2,595 million) and private commercial new work which fell 19.6% (£1,415 million).

The two sectors where falls in three-month on three-month growth were not percentage fall records were infrastructure and public other new work. Infrastructure in the three months to April 2020 fell 9.1% (£531 million) and has seen larger falls in 2010, 2011 and 2012.

Public other new work fell by 5.3% (£128 million) in the three months to April 2020 following growth of 5.3% (£123 million) in the three months to March 2020. This is a comparatively smaller industry where growth rates tend to be volatile and changes of this magnitude are not uncommon.

Repair and maintenance saw a record decrease of 15.8% (£2,172 million) in the three months to April 2020, driven by record falls in all repair and maintenance sectors. Repair and maintenance has not seen growth in the three-month on three-month series for eleven consecutive months, driven by falls in private housing repair and maintenance, as shown in Figure 6.

Construction output estimates

Construction output estimates are monthly estimates of the amount of output chargeable to customers for building and civil engineering work done in the relevant period, excluding Value Added Tax (VAT) and payments to subcontractors.

Seasonally adjusted estimates

Seasonally adjusted estimates are derived by estimating and removing calendar effects (for example, leap years such as this year) and seasonal effects (for example, decreased activity at Christmas because of site shutdowns) from the non-seasonally adjusted estimates.

Value estimates

The value estimates reflect the total value of work that businesses have completed over a reference month.

Volume estimates

The volume estimates are calculated by taking the value estimates and adjusting to remove the impact of price changes.

Construction output data collection

Our monthly Construction Output Survey measures output from the construction industry in Great Britain. The survey samples 8,000 businesses, with all businesses employing over 100 people, or with an annual turnover of more than £60 million, receiving an electronic questionnaire every month. 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).

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: sub-national and sub-sector.

Revisions to construction output data

Compared with the previous Construction output in Great Britain: March 2020 and new orders January to March 2020 publication released on 13 May 2020, today's publication contains no revisions. This is in line with the National Accounts revisions policy.

The Quarterly national accounts, due to be published on 30 June 2020, will contain revised construction output data from January 2019 to March 2020. These revised data will also include VAT data for the first time in Quarter 4 (Oct to Dec) 2019.

Quality and methodology

More quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in the Construction output QMI and New orders in construction QMI.

Value Added Tax (VAT) data

Alongside the Monthly Business Survey (MBS), further information on output is gained from VAT turnover data, which are used to replace survey data for small- and medium-sized businesses. However, because of 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) 2019.

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

• VAT turnover data in National Accounts: background and methodology

• Quality assurance of administrative data (QAAD) report for VAT turnover data

Coronavirus (COVID-19) impact on ONS construction output in April 2020

Temporary ceasing of Output in the construction industry: sub-national and sub-sector data

The coronavirus (COVID-19) outbreak presents a significant challenge to the UK, and the Office for National Statistics (ONS) is working to ensure that the UK has the vital information needed to respond to the impact of this pandemic on our economy and society. This means we will need to ensure that information is provided faster, using new data sources and changing how our surveys operate, to ensure we provide the information necessary as the situation unfolds.

The effects of the outbreak on ONS capacity and capability during this period means we have reviewed the existing construction statistics releases and will be temporarily suspending the Output in the construction industry: sub-national and sub-sector dataset. This is to protect the delivery and quality of our remaining outputs as well as ensuring we can respond to new demands as a direct result of COVID-19. This is also partially a reflection of the limitations of the model used to apportion new orders data to produce sub-level output data.

Impact of online data collection on response rates

As highlighted in Section 2, the coronavirus (COVID-19) pandemic significantly impacted construction output in April 2020. Official quarantine rules and guidance on restrictions in movement for Great Britain, leading to the closure of work sites, have impacted response rates.

Data for the Monthly Business Survey for construction and allied trades (MBS) was collected via online questionnaire for the first time for April 2020. This meant that respondents could log on from any location and submit their data at an appropriate time.

Table 5 shows the response rates to the MBS at time of first publication, for each reference period. Response rates were considerably lower in April 2020 in comparison with April 2019 when measured by both the turnover coverage of the industry and proportion of questionnaire forms returned. However, response rates have improved when compared with March 2020, illustrating the benefits of the move to electronic data collection.

To deal with non-response we impute for missing data using ratio imputation. This is a simple but effective method, used as a standard internationally. The method calculates the growth in the industry based on those businesses that did respond and applies it to the last known value for the non-responder. This means that if output notably reduces in an industry from one month to the next, the imputed values for non-respondents in that industry will also notably reduce when compared with the last known value.

Further information on the imputation methods for non-response is available.

While international best practice is used to impute for non-response, with the  exceptionally lower response rates highlighted in Table 5, it is important to note that revisions to April 2020 and Quarter 1 2020 may be larger than previous revisions as actual data and revised data replaces the larger than normal number of imputations for non-response.

Zero return responses to the Monthly Business Survey for construction and allied trades (MBS)

A zero return refers to when a survey respondent reports figures of zero across all types of work, meaning the total value of work done is zero for that reference month. Table 6 shows zero returns as a proportion of all returns at the time of the first estimate for a reference month. Prior to March 2020 we had a stable element of approximately 7 to 10% reporting zero returns. This partially increased in March 2020, but significantly increased into April 2020 as sites were closed because of the official guidance on restrictions in movement in Great Britain.

Impact on seasonal adjustment of April 2020

The monthly chained volume measures are seasonally adjusted using a seasonal adjustment software tool (X-13-ARIMA-SEATS). The monthly series individual type of work series is then aggregated to form the quarterly seasonally adjusted chained volume measure series.

The seasonal adjustment parameters for output in the construction industry are reviewed annually. However, due to the volatility of these statistics, time series analysis experts are regularly asked to review the seasonal adjustment when required. This approach has been adopted for the latest months and has resulted in changes to seasonal adjustment specification files to ensure the seasonal adjustment parameters are appropriate. Most notably due to the large decline in April 2020, all types of work are being treated as an additive outlier in these specification files.

Coronavirus impact on the April 2020 bias adjustment

Typically, an adjustment to address any bias in survey responses for construction output is applied to the early construction output monthly estimates. See Improvements to construction statistics: Addressing the bias in early estimates of construction output, June 2018 published on 4 June 2018. The bias adjustment methodology is based on historical data. As the response rates for April 2020 are significantly lower (Table 5), and no comparable historical data are available at the time of the first estimate for a reference month, we have not applied a bias adjustment for April 2020.

Monthly Business Survey – anecdotal evidence from businesses

Data for the Monthly Business Survey for construction and allied trades (MBS) was collected through online questionnaire for the first time in April 2020, where we received considerably more anecdotal information in the form of qualitative comments.

We received anecdotal information regarding COVID-19 from across the construction industry, in a similar proportion to the make-up of the MBS sample as shown in Table 7. Similarly, anecdotal information from different employment and turnover sizes were comparable to the make-up of the MBS.

Links to additional ONS sources of COVID-19 information

Recent articles describe how COVID-19 might affect our estimates:

• Coronavirus and the effects on UK GDP (published 6 May 2020)

• Real-time turning point indicators:  a UK focus (published 27 April 2020)

• Communicating gross domestic product (published 27 April 2020)

Our latest data and analysis on the impact of COVID-19 on the UK economy and population is also available through a specific webpage.

The Office for National Statistics (ONS) has released a public statement on COVID-19 and the production of statistics and any specific queries can be directed to the Media Relations Office.

Incorporating Construction Output Prices from Quarter 2 (Apr to June) 2020

As announced in the article Coronavirus and the effects on UK prices, Construction Output Price Indices data will form part of the quarterly Construction Output in Great Britain bulletins. This change will be introduced from the April to June 2020 reference period, which will be published in August 2020 for the first time.

Exiting the EU

As the UK leaves the EU, it is important that our statistics continue to be of high quality and are internationally comparable. During the transition period, those UK statistics that align with EU practice and rules will continue to do so in the same way as before 31 January 2020.

After the transition period, we will continue to produce our national accounts statistics in line with the UK Statistics Authority's (UKSA's) Code of Practice for Statistics and in accordance with internationally agreed statistical guidance and standards.

The Withdrawal Agreement outlines a need for UK Gross National Income (a fundamental component of the national accounts, which includes gross domestic product (GDP)) statistics to remain in line with those of other EU countries until the EU budgets are finalised for the years in which we were a member. To ensure comparability during this cycle, the national accounts will continue to be produced according to European System of Accounts (ESA) 2010 definitions and standards.

Data quality

These estimates are widely used by private and public sector institutions, particularly by the Bank of England and HM Treasury, to assist in informed decision-making and policymaking. Construction output is an important economic indicator and is also therefore used in the compilation of the output measure of gross domestic product (GDP).

National Statistics status

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.

Comparability

Output in the construction industry follows the Eurostat short-term business 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.

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, a longer time series back to 1997 can be obtained in the monthly GDP datasets. Data prior to 2010 are derived using statistical methods from the available quarterly construction output data and should therefore be treated with some caution.

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.

Construction statistics recent engagement and development work

Further information on construction statistics development can be found in:

• Housing in construction output statistics, Great Britain: 2010 to 2019 (30 April 2020)

• Comparing ONS's economic data with IHS Markit and CIPS Purchasing Managers' Index surveys (published 21 October 2019)

• Conceptual and methodological differences between private housing construction output and gross fixed capital formation private sector dwellings (published 31 May 2019)

• 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)

Further articles on other construction statistics development work and analysis are available.