Construction output in Great Britain: August 2020

• Monthly construction output growth slowed to 3.0% in August 2020, following record monthly growth of 21.8% in June 2020 and growth of 17.2% in July 2020.
• The level of construction output in August 2020 remains 10.8% below the February 2020 level.
• Construction output grew by a record 18.5% in the three months to August 2020 compared with the previous three-month period, following 10 consecutive periods of decline; this growth was driven by record three-month on three-month growth in both new work (17.5%) and repair and maintenance (20.3%).
• The increase in new work (17.5%) in the three months to August 2020 was because of growth in all new work sectors apart from private industrial, which fell by 6.5%; the largest contributor to the growth was private new housing, which grew by a 34.9%.
• The increase in repair and maintenance (20.3%) in the three months to August 2020 was because of record growth in all repair and maintenance sectors; the largest contributor was private housing repair and maintenance, which grew by 35.6%.
• In today’s release, the earliest period open to revision is January 1997, and is the first time the monthly path has been published that is consistent with the Quarter 2 2020 Quarterly National Accounts published on 30 September 2020.

Monthly construction output increased by 3.0% in August 2020 compared with July 2020, rising to £12,455 million. However, output remains at a lower level than the all work construction output series compared with February 2020, before the full impact of the coronavirus (COVID-19) pandemic. This is shown by total construction output in August 2020 being 10.8% (£1,509 million) lower when compared with February 2020.

The growth in August 2020 is the fourth consecutive month of growth since the record monthly decline of 41.2% in April 2020 since monthly records began in January 2010. This was followed by then record monthly growth of 9.1% in May 2020 and record monthly growth of 21.8% in June 2020. Growth then slowed slightly falling to 17.2% in July 2020, followed by growth of 3.0% in August 2020.

Table 1 shows the change in output for the types of construction work between February 2020 and August 2020, showing that all types of work, except for infrastructure, have yet to recover to their February 2020 pre-pandemic level.

Furthermore, even within sectors that have yet to recover, performance has not been uniform. While private new housing output in August 2020 was only 3.5% below the February 2020 level, it was more than 40% below for private industrial output.

Impact of the coronavirus pandemic in August 2020

We have worked closely with respondents to the Monthly Business Survey (MBS) for construction and allied trades and have used additional data sources to inform the estimates in this publication. We have also used qualitative information sourced from construction industry respondents to the Business Impact of Coronavirus Survey (BICS) to quality assure responses we received for August 2020.

Anecdotal evidence from responders to both BICS and the MBS suggested continued increase in activity across the construction sector. However, health and safety measures such as social distancing, where businesses are working on premises and sites, have meant that the capacity and level of work are still not at the same level experienced prior to the restrictions imposed as a result of the coronavirus pandemic.

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

Table 2 illustrates that despite month-on-month and three-month on three-month growth, the level of output remains low, with the month-on-year and three-month on year growth reflecting the impact of the coronavirus (COVID-19) pandemic since February 2020. The exception is infrastructure, where the fall in the level of output was comparatively lower and has recovered above the February 2020 level of output.

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.

There was growth in both new work and repair and maintenance in August 2020 though both grew at their slowest since the fall in April 2020.

Construction output grew by a record 18.5% (£5,440 million) in the three months to August 2020, compared with the previous three-month period. This was because of increases in every sector apart from private industrial new work, which fell by 6.5% (£65 million), as shown in Figure 3.

It is worth highlighting that for output in the three months to August 2020, March, April and May 2020 are included in the comparison period.

New work increased by a record 17.5% (£3,362 million) in the three months to August 2020, the largest single contributor to which was private new housing, which grew by a record 34.9% (£1,915 million).

Private industrial new work was the only sector to not see growth, falling by 6.5% (£65 million) in the three months to August 2020 compared with the previous three-month period. The private industrial sector includes factories and warehouses, and declined for the fifth consecutive period since March 2020, as shown in Figure 4.

Repair and maintenance grew by a record 20.3% (£2,078 million) in the three months to August 2020, driven by record growth in all repair and maintenance sectors. Private housing grew by 35.6% (£1,137 million) and non-housing repair and maintenance grew by 15.4% (£868 million). This is the first growth in total repair and maintenance in the three-month on three-month series following 13 consecutive periods of decline, as shown in Figure 5.

Construction output grew by 3.0% (£368 million) in August 2020 compared with July 2020, because of increases in most construction sectors, as shown in Figure 6. New work grew by 3.5% (£270 million) in August 2020, with repair and maintenance growing by 2.3% (£98 million).

This is the fourth consecutive month of growth in all work since the large fall in construction output in April 2020, though the level of output remains 10.8% (£1,509 million) lower in August 2020 when compared with the level in February 2020 (before restrictions were introduced as a result of the coronavirus (COVID-19) pandemic).

The 3.5% (£270 million) growth in new work in August 2020 was driven by growth of 12.0% (£310 million) in private new housing, offset somewhat by falls of 16.4% (£54 million) in private industrial new work and 2.0% (£40 million) in private commercial new work. Figure 7 shows the contribution from total new housing to growth of all work, compared with all other construction sectors combined. Total new housing drove most of the growth in August 2020, unlike in previous months.

Figure 8 shows that infrastructure is the only sector in new work to have recovered above its pre-pandemic level in August 2020, with the decline in this sector comparatively less severe in April 2020 than other types of work. This may have been because larger sites undertaking civil engineering work could remain partially open as social distancing measures were implemented more easily.

In all other new work sectors, the levels of output remain lower than February 2020, with a mixed profile in terms of their recovery since April 2020. Most notably, the level of output in private industrial new work is approximately 40.9% below its pre-pandemic level.

The 2.3% (£98 million) growth in repair and maintenance in August 2020 was because of growth in private housing repair and maintenance of 5.6% (£86 million), with public housing repair and maintenance growing by 7.6% (£38 million).

In comparison, non-housing repair and maintenance fell by 1.2% (£27 million) in August 2020 compared with July 2020. Overall, output in all repair and maintenance sectors remains below levels seen prior to February 2020, as shown in Figure 9.

Business Impact of Coronavirus (COVID-19) Survey (BICS)

Qualitative information sourced from the Business Impact of Coronavirus (COVID-19) Survey (BICS) survey was used to quality assure responses we received for the Monthly Business Survey for construction and allied trades (MBS) for August 2020.

Evidence from this survey shows that construction industry respondents had a lower proportion of their workforce on partial or furlough leave than the average for all industries. BICS Wave 12 data, which relate to the period 10 August to 23 August 2020, show that construction industry respondents had 7.5% of their workforce on partial or furlough leave compared with the 11.0% average for all industries, as shown in Table 3.

Estimates in this release are consistent with the GDP quarterly national accounts, UK: April to June 2020 publication on 30 September 2020 and will feed into the UK National Accounts, The Blue Book: 2020 publication, due to be released on 30 October 2020.

Revisions in this release have been incorporated back to January 1997 and have resulted from a variety of different methods and data changes. These changes include the following.

• Revisions in the nominal data; this includes revisions to both the survey data and Value Added Tax (VAT) turnover data.
• Revisions because of the annual seasonal adjustment review: this has an impact on the quarterly and monthly path of construction output estimates.
• Revisions to the input series for the Construction Output Price Indices; most notably the improvement in the methodology of business prices to implement chain-linking, which affects both the Producer Price Indices (PPI) and Service Producer Price Indices (SPPI).
• This release is also the first monthly release in which VAT turnover data have been used for Quarter 1 (Jan to Mar) 2020.
• The reference year and last base year for all chained volume measure series has been updated to 2018=100 from 2016=100.

These revisions have resulted in changes in the series back to January 1997. While revisions can be seen to growth rates, most notably to the quarterly and monthly paths, the trend of the all work series remains broadly similar across the period.

As shown in Table 4, all years back to 2011 see a minimal revision in annual growth.

For the quarterly path of the chained volume measure, seasonally adjusted, all work series we see revisions in varying magnitude and directionality across the series. These quarterly revisions up to Quarter 4 (Oct to Dec) 2019 are within a range of positive or negative 0.5 percentage points. The two quarters that are outside this range are Quarter 1 (Jan to Mar) 2020 and Quarter 2 (Apr to June). These quarters are revised down by 1.1 and 0.7 percentage points respectively.

For the monthly path of the chained volume measure, seasonally adjusted, all work series we see revisions of a larger magnitude than normal particularly to the previous monthly estimates of growth for the months in 2020. It should be noted that the lower than normal response rates as illustrated in Table 6 at the time of the first monthly estimate, means we are continuing to see further survey data returned later than usual.

In addition to the revisions to construction output first published within the GDP quarterly national accounts, UK: April to June 2020 publication on 30 September 2020, this publication also includes revisions to July 2020 data first published in Construction output in Great Britain: July 2020 on 11 September 2020.

The monthly growth for construction output, all work, chained volume measure, seasonally adjusted series for July 2020 is revised down 0.4 percentage points from 17.6% to 17.2%. This is mainly because of a combination of late survey returns replacing imputed values (which, in turn has affected those businesses who are still imputed for because of non-response) as well as revisions in the construction output price indices where the Blue Book 2020 consistent indices are used for the first time in the monthly release.

For further information on the revisions profile, please see the output in the construction industry revisions triangles published on a one-month and three-month growth basis.

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 online 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.

Blue Book 2020

Each year we produce an annual update to the UK National Accounts in the Blue Book and Pink Book and the associated releases. The Blue Book and Pink Book 2020-consistent datasets were published on 30 September 2020 as part of the Quarterly national accounts.

Details have already been provided on the scope in the article Latest developments and changes to be implemented in Blue Book and Pink Book 2020. Indicative impacts on headline gross domestic product (GDP) components for the years 1997 to 2018 were published on 20 August 2020 in the article Impact of Blue Book 2020 changes on current price and volume estimates of gross domestic product.

Today’s publication is the first to incorporate revisions consistent with Blue Book 2020, where the reference year and last base year for all chained volume measure series will be updated to 2018.

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.

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 1 2020.

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

The effect of the coronavirus (COVID-19) on ONS construction output in August 2020

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

The coronavirus (COVID-19) pandemic 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 the coronavirus. 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

Data for the Monthly Business Survey for construction and allied trades (MBS) have been collected via online questionnaire since April 2020. This has meant that respondents can log on from any location and submit their data at an appropriate time. The paper questionnaire was moved to an online data collection platform, with minimal changes made to the questionnaire design. The only notable change has been the reclassification of housing associations as private housing, rather than public housing as previously on paper. For further information on this classification decision please see this statement for England and this article for Scotland, Wales and Northern Ireland.

Response rates were comparatively low in March 2020 and since then have improved when measured by both the turnover coverage of the industry and proportion of questionnaire forms returned. This illustrates the benefits of the move to electronic data collection, though response rates remain lower when compared with reference periods prior to February 2020.

Table 6 shows the response rates to the MBS at time of publishing, for each reference period. While response rates are lower for the reference months in 2020 at the first time of publication, further responses have since been submitted and will be used subject to the National Accounts Revisions Policy. For August 2020, the response rates at first estimate are the highest they have been since January 2020, and the highest since moving to the online questionnaire.

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 lower response rates highlighted in Table 6, it is important to note that the revisions to the months in 2020 may be larger than the revisions profile prior to 2020, as actual data and revised data replace the larger than normal number of imputations for non-response at the time of the first monthly estimate.

Zero return responses to the 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. Figure 10 shows zero returns as a proportion of all returns at the time of the first estimate for a reference month. This is broken down by size of business as per registered turnover on the IDBR (Inter-Departmental Business Register).

Prior to March 2020, there was a stable element of approximately 7% to 10% of businesses reporting zero returns. This partially increased in March 2020 to 12.7%, but significantly increased into April 2020 as sites were closed because of restrictions on movement in Great Britain. Since then, the proportion of zero returns has continued to decline falling to 12.3% in August 2020, which was the lowest since February 2020.

It is worth noting small-sized (less than £1 million registered annual turnover) and medium-sized (£1 million to £10 million registered annual turnover) businesses make up the majority of these zero returns. This is the case both during and before the period affected by lockdown.

Impact on seasonal adjustment of August 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, because of the volatility of these statistics in recent months, time series analysis experts are consulted to review the seasonal adjustment. This has resulted in changes to seasonal adjustment specification files to ensure the seasonal adjustment parameters are appropriate.

Impact of the coronavirus on the August 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 August 2020 are lower in comparison with months prior to February 2020 (Table 6) and no comparable historical data are available at the time of the first estimate for a reference month, no bias adjustment has been applied for August 2020.

Our latest data and analysis on the effects of the coronavirus on the economy and society is available. A Coronavirus (COVID-19) roundup is also updated as and when data become available.

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 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).

Further information on Uncertainty and how we measure it for our surveys is available.

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.

Eurostat has also developed short-term business statistics (STS) indicators on the impact of the coronavirus (COVID-19) pandemic in Impact of Covid-19 crisis on construction.

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. Monthly 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.