Construction output in Great Britain: December 2022, new orders and Construction Output Price Indices, October to December 2022

• Monthly construction output is estimated to be flat (0.0% growth) in volume terms in December 2022; this came from an increase in new work (0.5%), offset by a decrease in repair and maintenance (0.7% fall) on the month.

• At the sector level, the main positive contributors were seen in non-housing repair and maintenance, and infrastructure new work, which increased 5.4% and 3.7%, respectively; the main negative contributors were seen in private housing repair and maintenance, and private new housing, falling 8.5% and 2.3%, respectively.

• Quarterly construction output increased 0.3% in Quarter 4 (Oct to Dec) 2022 compared with Quarter 3 (July to Sept) 2022; the increase came from growth in both new work (0.4%) and repair and maintenance (0.1%).

• Annual construction output increased by 5.6% in 2022 compared with 2021, which follows a record increase in 2021 of 12.8%.

• Total construction new orders decreased 1.8% (£242 million) in Quarter 4 2022 compared with Quarter 3 2022; this quarterly fall came mainly from private commercial new orders and infrastructure, which fell 9.6% (£380 million) and 11.8% (£305 million), respectively.

• The annual rate of construction output price growth was 9.7% in the 12 months to December 2022; this has slowed slightly from the record annual price growth in May 2022 (10.5%).

Monthly construction output was flat (0.0% growth) in December 2022. This follows a downwardly revised 0.5% decrease in November 2022.

Anecdotal evidence received from returns for the Monthly Business Survey for Construction and Allied Trades (MBS) suggested that colder temperatures in early December 2022 extended regular Christmas shut-downs by longer than expected for many businesses. The Met Office confirmed in their Monthly climate summary (PDF, 142KB) that December 2022 was the UK’s coldest December since 2010. Businesses with less outdoor work were less affected by the adverse weather.

Additionally, businesses have continued to reference economic worries affecting their customers’ likelihood to request construction work. These comments have covered clients in households, businesses and the public sector.

Detailed growth rates

The level of construction output volume in December 2022 was 3.8% (£552 million) above the February 2020 pre-coronavirus (COVID-19) pandemic level. New work was 2.1% (£203 million) below, and repair and maintenance 15.0% (£755 million), above the February 2020 level.

Month-on-month construction output growth in December 2022

While monthly growth in construction output was flat (0.0% growth) in December 2022 there was a mixed picture within the sectors, with five out of the nine sectors seeing an increase on the month.

Private housing repair and maintenance and private housing new work were the largest negative contributors to the flat growth in December 2022, decreasing 8.5% (£200 million) and 2.3% (£77 million), respectively. The largest positive contributions were from non-housing repair and maintenance, and infrastructure new work, increasing 5.4% (£154 million) and 3.7% (£87 million), respectively.

The decreases in private housing repair and maintenance, and private new housing, follow decreases in November 2022, where both sectors were again the largest contributors to the decrease in monthly growth in November 2022. Anecdotal evidence suggests a general slow down in housing work in the latter part of 2022, though both are still above their pre-pandemic levels (Table 1).

Non-housing repair and maintenance reached its highest monthly level on record in December 2022. Anecdotal evidence suggested that the colder weather led to an increase in repair work.

Quarter-on-quarter construction output growth in Quarter 4 (Oct to Dec) 2022

Alongside the monthly flat growth, construction output rose by 0.3% (£133 million) in Quarter 4 2022. This is the fifth quarter of consecutive growth in the quarterly series since Quarter 3 (July to Sept) 2021, which had a 1.6% fall. However, across the second half of 2022, the quarterly rate of growth has slowed.

The quarterly growth came from increases in both new work (0.4%) and repair and maintenance (0.1%).

Of the nine sectors, five saw an increase in Quarter 4 2022, with the largest contributors being infrastructure new work, non-housing repair and maintenance, and public other new work. These sectors increased 6.5% (£425 million), 2.4% (£208 million) and 6.5% (£136 million), respectively.

Year-on-year change in construction output in 2022

Total annual construction output increased 5.6% in 2022 compared with 2021. This follows a record increase in 2021 of 12.8%.

The annual increase in 2022 was because of rises in both new work, and repair and maintenance, which rose 3.8% and 8.5%, respectively. Excluding 2021, this is the strongest annual growth for repair and maintenance since records began.

At a sector level, five of the nine sectors saw an increase in annual growth in 2022. In contrast to the monthly movements, private new housing and private housing repair and maintenance, were the largest positive contributors. Record annual growth was also seen in private industrial new work (42.6%). Of the negative contributors to annual growth, public other new work saw its sixth consecutive annual fall, and private commercial saw its fifth consecutive annual fall.

In Quarter 4 2022, total construction new orders decreased by 1.8% (£242 million) compared with Quarter 3 (July to Sept) 2022. This partly reverses the quarterly rise (6.7%) and sees three out of the four quarters in 2022 falling. See our New orders in the construction industry dataset for more detail.

Other new work new orders (that is, non-housing) was the main contributor to the decrease in Quarter 4 2022, as it fell by 6.2%. This mainly came from private commercial new orders and infrastructure, which decreased 9.6% (£380 million) and 11.8% (£305 million), respectively.

Housing new orders saw an increase of 10.3% (£357 million) in Quarter 4 2022. This came from similar contributions in both public and private housing of 67.3% (£183 million) and 5.5% (£175 million), respectively.

Total construction new orders in Quarter 4 2022 are now 11.4% above its pre-coronavirus (COVID-19) pandemic level (Quarter 4 2019) with all sectors now recovered to above their pre-pandemic level.

Within the annual series, new orders increased 1.2% in 2022, following a 26.3% increase in 2021.

Prices in the construction industry, as estimated by our Construction Output Price Index (OPI), increased to 9.7% in the 12-month period to December 2022. Although the rate of annual price growth has slowed slightly from the record increase seen in May 2022 (10.5%), prices still remain above historic price levels.

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. It excludes 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 2020) 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.

Quality and methodology

More quality and methodology information (QMI) is available in:

• Construction output QMI
• Construction output price indices (OPIs) QMI
• New orders in construction QMI

Reasons for revisions to construction output in this release

In this release, revisions to construction output estimates are back to January 2022.

Revisions in this release are a result of:

• nominal data revisions; this includes revisions to both the survey data and Value Added Tax (VAT) turnover data

• changes to the seasonal adjustment specification; this has an impact on the quarterly and monthly path of construction output estimates

For further information on the revisions profile, see our Output in the construction industry revisions triangle (one-month growth) dataset and our Output in the construction industry revisions triangle (three-month growth) dataset.

Reasons for revisions to new orders in this release

Revisions are recorded back to Quarter 2 (Apr to June) 2022 for new orders in the construction industry. This is an additional quarter outside the normal revision period and is because of a minor processing error. This only impacts Table 6 (sub-national new orders data).

Sub-national and sub-sector construction output

Data on new orders supplied by Barbour ABI, as explained in our methodology, Quality assurance of administrative data used in construction statistics, 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 our Construction output: sub-national and sub-sector dataset.

Bias adjustment

Since the move to monthly gross domestic product (GDP) estimates, an adjustment is applied to the early construction output monthly estimates to address any bias in survey responses for construction output. This was explained in our article, Improvements to construction statistics from June 2018.

While the response rate for December 2022 has improved and is nearing pre-coronavirus (COVID-19) pandemic levels of response, it is still below this level. As such, we have not applied a bias adjustment for December 2022.

Differences with Monthly GDP construction estimates

In Blue Book 2021, we introduced a new framework to improve how we produce volume estimates of GDP for balanced years as part of the supply use process. This was explained in our article, Producing an alternative approach to GDP using experimental double deflation estimates. This framework included the implementation of double-deflated industry-level gross value added (GVA) for the first time. This improvement was reflected in our GDP quarterly national accounts, UK: July to September 2022 bulletin and our GDP monthly estimate, UK: August 2021 bulletin for the first time.

As a result, volume estimates in the monthly GDP and construction outputs releases will differ for the period 1997 to 2020 because the construction publication measures the volume of construction work (output), while the GDP series measures GVA (that is, output minus intermediate consumption). Construction estimates will align, however, from January 2021 onwards on a growth basis.

Articles on the impact of double deflation and Blue Book changes provide information and indicative effects of this change to industry-level GVA volume.

Next release

The next construction output in Great Britain release on 10 March 2023 will be a headline release. This bulletin will consist only of the main points section, however all datasets will be published as normal.