Construction output in Great Britain: Feb 2017

• Output in the construction industry grew for the fourth consecutive period on a 3 month on 3 month basis, increasing by 1.5%.
• Despite growing 3 month on 3 month, output fell by 1.7% in February 2017 in comparison to January 2017.
• On the back of strong growth in January 2017, infrastructure provided one of the main downward pressures on output in February, decreasing by 7.3%.
• New housing also contributed to the monthly decrease in overall output, falling month-on-month by 2.6% in February 2017.
• Repair and maintenance grew in February, increasing month-on-month by 1.2%; month on year by 0.8%; and 3 month on 3 month by 0.6%.

The monthly business survey, Construction output, collects output by sector from businesses in the construction industry within Great Britain. Output is defined as the amount chargeable to customers for building and civil engineering work done in the relevant period excluding VAT and payments to sub-contractors.

The survey’s results are used to produce 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 inflation). The estimates are widely used by private and public sector institutions, particularly by the Bank of England and Her Majesty’s Treasury to assist in informed decision and policy making. Construction output is a key economic indicator and is also therefore used in the compilation of the output measure of gross domestic product.

This February 2017 release contains revisions for January 2017 onwards. This means that we have incorporated additional data since this period.

Revisions can be made for a variety of reasons, the most common include:

• late responses to surveys and administrative sources, or changes to original returns
• forecasts being replaced by actual data
• revisions to seasonal adjustment factors, which are re-estimated every month and reviewed annually.

On 11 December 2014 the UK Statistics Authority announced its decision to suspend the designation of Construction Output and New Orders as National Statistics due to concerns about the quality of the Construction Price and Cost Indices used to remove the effects of inflation from the statistics.

We took responsibility for the publication of the Construction Price and Cost indices from the Department of Business Innovation and Skills (BIS) on 1 April 2015, introducing an interim solution for measuring output prices in June 2015 for all periods from January 2014 onwards. We are currently developing a long-term solution for the deflation of construction statistics.

Summary information can be found in the Summary Quality and Methodology information.

In February 2017 construction output fell, decreasing by 1.7%. The drop was driven by a fall in all new work, mainly as a result of a sizeable fall in infrastructure.

After growing in January by 0.7%, all new work fell by 3.3% in February 2017. The fall in all new work was predominantly driven by the first month-on-month drop in infrastructure since October 2016, decreasing by 7.3%. This reverse from Januarys growth was driven by a drop in new housing, which fell for the second consecutive month by 2.6%, alongside the fifth consecutive month of negative growth in private industrial other new work, which decreased by 4.7%.

The monthly time series shows how volatile construction output can be, therefore the rolling 3 month time series is also shown in Figure 1, providing a more comprehensive picture of the underlying trends within the construction industry. Despite construction output falling month-on-month, the rolling 3 month time series exhibits considerably stronger consistent growth. Construction output grew by 1.5% in the past 3 months, driven mainly by strong growth of 2.2% in infrastructure and 0.6% growth in repair and maintenance.

Construction output can be broken down by different types of work, these are categorised into new work and repair and maintenance as shown in Figure 2. The graph shows that through to mid-2014, new work and repair and maintenance followed a similar pattern but since reaching a level peak in August 2014, repair and maintenance has slowly contracted. Over the same period, new work has continued to increase steadily, largely down to a rise in new housing work.

The large decline in all new work of 3.3% in February 2017 was driven by large falls in new housing and infrastructure. Repair and maintenance did exhibit growth, bouncing back from negative growth in January, increasing 1.2%. This growth was driven by rises across the board in all types of repair and maintenance, most notably in non-housing repair and maintenance which grew by 2% month-on-month. It is worth noting that all new work accounts for approximately two-thirds of all work, while repair and maintenance accounts for approximately one-third.

Figure 3 shows the difference in month-on-month volume from the different sectors in terms of growth. Infrastructure proved to be the most notable downward pressure on growth, decreasing by £113 million. Elsewhere, private housing provided a notable drag on output, falling by £66 million. In contrast, the only upward pressure on output came from repair and maintenance, with both non-housing repair and maintenance and total housing repair and maintenance growing by £37 million and £12 million respectively.

Table 1 provides a detailed description of the growth rates of each work type, alongside the seasonally adjusted chained volume measure level of output.

Table 1 shows both the growth rate for each work type in terms of 3 month on 3 month, month- on-year and month-on-month, as well as the value of work broken down by sector. Despite falling month-on-month on the back of an exceptionally strong end to 2016, the volume of total all work reached the fifth highest level on record at £11,520 million. In real terms, private housing repair and maintenance peaked at its highest ever level at £1,615 million, while non-housing repair and maintenance increased to its highest value since November 2016 at a value of £1,908 million.

On a 3 month basis, private industrial shrank considerably, decreasing by 12.0%. However, due to its relatively small value it had little effect on the overall level of output. In contrast, private commercial grew by 2.5% on a 3 month basis and due to its higher value had a greater effect on the overall level of growth.

With regards to month-on-year, infrastructure fell by 7.0% in comparison with the previous year. Elsewhere, public housing repair and maintenance and non-housing repair and maintenance also exhibited considerable downward pressure on growth, falling by 13.8% and 3.3% respectively. In contrast, private commercial work grew by 3.4%, along with private housing repair and maintenance which grew 12.7%.

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 published by Eurostat on 17 March 2017 for January 2017 showed the seasonally adjusted production in the construction sector decreased by 2.3% in the Euro area (EA19) and decreased by 1.5% in the EU28 when compared with December 2016. It should be noted that an accurate comparison cannot be made as Eurostat data are calculated on a 2010 equals 100 basis, while Great Britain data are calculated on a 2013 equals 100 basis.

Outside of the EU, the US Census Bureau release Value of construction put in place was published on 3 April 2017. They include the total dollar value of construction work done in the US.

Other useful links

• Department for Communities and Local Government (Housing starts and completions)
• Construction statistics in Northern Ireland

Our 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 £60 million receiving a questionnaire by post every month.

The Construction Quality and Methodology Information document contains important information on:

• the strengths and limitations of the data
• the quality of the output: including the accuracy of the data and how it compares with related data
• uses and users
• how the output was created