Construction output in Great Britain: February 2020

Short-term measures of output by the construction industry and contracts awarded for new construction work in Great Britain.

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Cyswllt:
Email John Allcoat

Dyddiad y datganiad:
9 April 2020

Cyhoeddiad nesaf:
12 May 2020

1. Main points

  • Construction output fell by 0.2% in the three months to February 2020, compared with the previous three-month period; this was driven by a 1.7% fall in repair and maintenance but partially offset by 0.6% growth in new work.

  • The rise in new work in the three months to February 2020 was driven by growth in infrastructure and public other new work, which grew by 2.8% and 4.5% respectively; no other new work sectors saw growth.

  • In repair and maintenance, the fall in the three months to February 2020 was driven by a 5.6% fall in private housing repair and maintenance – the largest fall in this series since October 2012 when it fell 5.7%; in contrast, public housing and non-housing repair and maintenance increased by 2.2% and 0.1% respectively.

  • Construction output fell by 1.7% in the month-on-month all work series in February 2020; this was driven by a 3.4% fall in new work, which more than offset 1.7% growth in repair and maintenance; this is likely to have been impacted by the adverse weather experienced throughout February 2020.

  • The data collection for the period was completed by 29 February and is largely unaffected by recent developments with the coronavirus (COVID-19); for further information please see Section 6 and Section 10 of this bulletin and the Office for National Statistics (ONS) public statement on COVID-19 and the production of statistics.

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2. Construction output in February 2020

In the monthly series, construction output decreased by 1.7% in February 2020 to £13,522 million. This is the largest fall in monthly growth since October 2019 when it fell 2.4%.

Similar to October 2019, the decline in construction output in February 2020 may have been affected by adverse weather (PDF, 51KB). We received some anecdotal information from a number of survey respondents regarding the effect of this on their businesses, although it is difficult to quantify the exact impact on the industry.

February 2020 was the wettest February since records began in 1862 and this is likely to have contributed to the decline in month-on-month growth in new work, which decreased by 3.4%. This was driven predominately by private new housing, which fell 7.7% (£236 million) in comparison with January 2020. This is the second-largest fall in monthly growth in private new housing, with only January 2018 seeing a larger fall (8.0%) since monthly records began in January 2010.

Over the longer term, we have seen subdued growth in output over the last 12 months. However, since the 2.3% month-on-month growth in November 2019, which was a bounce-back from the weather-impacted October 2019, the industry has experienced three consecutive monthly falls. This is the first time we have seen this in total construction output since March 2018.

The data presented in this release cover the period 1 to 29 February and is largely unaffected by recent developments with the coronavirus (COVID-19). The data collection for February 2020 was via paper questionnaire, however, there are current plans to change the mode of collection for the April 2020 publication and collect these data via online collection. This is similar to the other Office for National Statistics short-term business surveys such as the Index of Production, Index of Services and Retail Sales Inquiry. For further information please see Section 10, Measuring the data.

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.

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3. Detailed growth rates

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.

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4. Three-month on three-month construction growth

Figure 3 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 0.2% (£73 million) in the three months to February 2020, compared with the previous three months.

New work rose by 0.6% (£160 million) in the three months to February 2020, driven by growth of 2.8% (£158 million) in infrastructure and 4.5% (£106 million) growth in public other new work. All other new work sectors saw declines, with the largest contribution coming from a 3.4% (£49 million) fall in private industrial.

Repair and maintenance saw a decrease of 1.7% (£235 million) in the three-month on three-month series, which contrasts with the 1.7% growth in the monthly series, and was driven by a 5.6% (£283 million) fall in private housing repair and maintenance. The decrease in the three-month on three-month growth in total repair and maintenance is the tenth consecutive decline in this series since June 2019.

Figure 4 shows this was the largest decline for the sector in the three-month on three-month series since October 2012 when it fell by 5.7% (£236 million) and shows that the decreases in both January 2020 and February 2020 were significant for the series. The February 2020 data also illustrate that private housing repair and maintenance has declined in three-month on three-month growth for 10 consecutive months.

Elsewhere in repair and maintenance, both public housing and non-housing repair and maintenance saw growth in the three months to February 2020, increasing by 2.2% (£44 million) and 0.1% (£5 million) respectively.

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5. Month-on-month construction growth

Figure 5 shows the month-on-month output growth in February 2020 for the different construction sectors, taken from our seasonally adjusted, chained volume measure series.

Construction output decreased by 1.7% (£237 million) in February 2020, driven by a 3.4% (£313 million) fall in new work, compared with 1.7% (£76 million) growth in repair and maintenance. This is the first time monthly growth has seen three consecutive periods of decline in all work since March 2018.

The 3.4% (£313 million) fall in new work in February 2020 was because of decreases in all new work sectors apart from public other new work, which grew by 1.8% (£15 million), with the largest negative contribution coming from private new housing, which fell by 7.7% (£236 million). This was the largest fall in the private new housing series since January 2018 when it decreased by 8.0% (£244 million).

Figure 6 shows the large decline in private new housing for February 2020, to take the series to its lowest level since June 2018.

In contrast, repair and maintenance saw growth of 1.7% (£76 million) in February 2020, with the largest positive contribution coming from 2.0% (£46 million) growth in non-housing repair and maintenance. This was the largest growth since January 2019 when it grew by 9.3% (£204 million).

Private housing repair and maintenance also grew in February 2020 compared with January 2020, increasing by 1.9% (£30 million) – the largest since May 2019 when it also grew by 1.9% – to recover from a 4.4% (£72 million) fall in January 2020.

Figure 7 illustrates the monthly growth in repair and maintenance. Both non-housing and private housing repair and maintenance saw increases in February 2020, which partially offset large monthly falls in January 2020 of 2.7% and 4.4% respectively.

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6. External influences on construction output in February 2020

Weather

The decline in construction output in February 2020 may have been affected by adverse weather (PDF, 51KB). We received some anecdotal information from a number of survey respondents regarding the effect of this on their businesses, although it is difficult to quantify the exact impact on the industry. Based on anecdotal evidence this is likely to be the main contributor to the monthly decrease in growth in February 2020.

February 2020 was the wettest February since records began in 1862 and this is likely to have contributed to the decline in month-on-month growth, specifically in new work, which decreased by 3.4%. We also received anecdotal evidence from firms operating in private new housing where significant reduced activity was undertaken on building new housing because of being unable to access sites.

Coronavirus (COVID-19)

The data collection for the period was completed by 29 February and the anecdotal evidence from businesses suggested the coronavirus (COVID-19) had limited impact on February 2020 data. Table 2 shows the response rates to the Monthly Business Survey for construction and allied trades, at first time of publishing. COVID-19 is likely to have led to reduced response for February 2020 because of data collection via paper. As premises started to close throughout March, we experienced difficulties in collecting data from these contributors. We closely monitor response rates and use statistical methods to deal with non-response.

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

Section 10, Measuring the data, describes the situation in relation to construction output in Great Britain.

Leap year

The month of February 2020 also included a leap year, meaning that there was an extra day of trading on 29 February. The estimates in this release have taken account of this and adjusted where necessary via the advice of ONS time series experts.

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7. Revisions

This is the first monthly release to incorporate the revisions made in the GDP quarterly national accounts, UK: October to December 2019 release, published on 31 March 2020. As a result, revisions have been made back to January 2019.

These revisions saw quarterly construction output growth revised for all quarters as shown in Table 3. Most notably Quarter 4 (Oct to Dec) 2019 is revised down by 0.6 percentage points, from 0.5% to negative 0.1%.

These revisions have also led to a downward revision in 2019 annual growth by 0.2 percentage points, from 2.5% to 2.3%.

In addition to the revisions to construction output first published within GDP quarterly national accounts, UK: October to December 2019 release, this bulletin also includes revisions to the January 2020 construction output estimates first published in Construction output in Great Britain: January 2020 on 11 March 2020 and the revised monthly path as a result of the GDP quarterly national accounts revisions.

Details of why revisions can be seen across the whole period are available in the Measuring the data section.

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.

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8. Construction in Great Britain data

Output in the construction industry: sub-national and sub-sector
Dataset | Released 9 April 2020
Quarterly non-seasonally adjusted sub-national and sub-sector data at current prices, Great Britain.

Construction output price indices
Dataset | Released 19 February 2020
Monthly construction Output Price Indices (OPIs) from July 2014 to June 2019, UK.

New orders in the construction industry
Dataset | Released 11 February 2020
Quarterly new orders at current price and chained volume measures, seasonally adjusted by public and private sector. Quarterly non-seasonally adjusted type of work and regional data.

Construction statistics annual tables
Dataset | Released 17 October 2019
The construction industry in Great Britain, including value of output and type of work, new orders by sector, number of firms and total employment.

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9. Glossary

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.

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10. Measuring the data

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 a questionnaire by post 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.

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.

Revisions to construction output data

Revisions in the release are a result of:

  • late responses to surveys replacing imputations, or revisions to original returns

  • revisions to seasonal adjustment factors, which are re-estimated every month and reviewed annually

  • HM Revenue and Customs (HMRC) Value Added Tax (VAT) returns replacing Monthly Business Survey (MBS) data for small- and medium-sized businesses for Quarter 3 (July to Sept) 2019 for the first time as well as potential revisions to previous VAT turnover data

  • revisions to the input series for the Construction Output Price Indices

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:

Coronavirus (COVID-19)

We are aware of the upcoming challenges relating to the pandemic outbreak, particularly for construction output, which will be impacted by closures of work sites and premises.

The monthly construction output questionnaire is currently collected via paper, however, like other ONS business surveys, plans are being made to move the questionnaire to online data collected. This means that construction firms can log on from any location and submit their data at an appropriate time. The current plan is to collect these data via online data collection for the first time in the April 2020 release.

As highlighted in Section 6, the coronavirus (COVID-19) has impacted on response rates in this release and is likely to be a factor in reduced response for future releases. Construction output impute for non-response 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.

Our latest data and analysis on the impact of COVID-19 on the UK economy and population is now available on a new webpage. This will be the hub for all special virus-related publications, drawing on all available data.

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

National accounts

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.

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11. Strengths and limitations

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:

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

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Manylion cyswllt ar gyfer y Bwletin ystadegol

John Allcoat
construction.statistics@ons.gov.uk
Ffôn: +44 (0)1633 456344