Construction output in Great Britain: January 2020

• Construction output increased by 1.4% in the three months to January 2020, compared with the previous three-month period; this was driven by 2.4% growth in new work but offset by a 0.6% fall in repair and maintenance.

• The rise in new work in the three months to January 2020 was because of growth in all sectors, with the largest positive contributions coming from private housing, private commercial and infrastructure, which increased by 2.4%, 2.1% and 1.7% respectively.

• In repair and maintenance, the fall in the three months to January 2020 was because of a fall in private housing, which decreased by 5.6%; in comparison public housing repair and maintenance, and non-housing repair and maintenance increased by 2.0% and 2.4% respectively.

• Construction output decreased by 0.8% in the month-on-month all work series in January 2020; this was driven by a 2.4% fall in repair and maintenance as new work saw flat growth (0.0%).

Construction output saw an increase of 1.4% in the three months to January 2020, partly because of the volatile monthly pattern of construction output in Quarter 4 (Oct to Dec) 2019. A decrease of 2.2% in October 2019 was followed by a 2.4% increase in November 2019.

For October 2019, we received some anecdotal information from a number of survey respondents who had been affected by adverse weather (PDF, 250.18KB), although it is difficult to quantify the exact impact on the industry. For three-month on three-month growth for January 2020, this October 2019 is now included in the base period.

In comparison, monthly construction output fell by 0.8% in January 2020 compared with December 2019 because of a 2.4% fall in repair and maintenance, and flat growth (0.0%) in all new work.

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 rather than the more volatile monthly series.

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.

Figure 3 shows the difference in the three-month on three-month growth from the different construction sectors, taken from our seasonally adjusted, chained volume measure series.

Construction output increased by 1.4% (£568 million) in the three months to January 2020 compared with the previous three months. This three-month on three-month growth is the strongest since April 2019 when the series grew by 1.7% (£691 million).

The increase seen in the three months to January 2020 is partly because of the volatile monthly pattern of construction output in Quarter 4 (Oct to Dec) 2019. For October 2019, we received some anecdotal information from a number of survey respondents who had been affected by adverse weather (PDF, 250.18KB) conditions, although it is difficult to quantify the exact impact on the industry.

All sectors within new work saw an increase in the three months to January 2020. The largest positive contributions to this increase were private housing and private commercial new work, which grew by 2.4% (£218 million) and 2.1% (£146 million) respectively.

In contrast, repair and maintenance saw a fall of 0.6% (£79 million), driven by a decrease of 5.6% (£286 million) in private housing repair and maintenance – the largest percentage decline in this series since October 2012 when it fell by 5.7% (£236 million), as shown in Figure 4. In comparison, non-housing repair and maintenance, and public housing repair and maintenance grew 2.4% (£167 million) and 2.0% respectively (£39 million).

Figure 5 shows the difference in construction output for construction sectors in January 2020 compared with December 2019, taken from our seasonally adjusted, chained volume measure series.

Construction output decreased by 0.8% (£110 million) in January 2020, driven by a 2.4% (£112 million) fall in total repair and maintenance, which contrasted with flat growth (0.0%) in all new work.

The flat growth in the new work monthly series was driven by positive contributions from some sectors being offset by negative contributions from others. The largest positive contribution to month-on-month growth was public other new work, which grew by 8.8% (£69 million).

Private industrial and infrastructure also provided a positive contribution, growing by 9.7% (£43 million) and 1.4% (£27 million) respectively.

The January 2020 monthly growth in public other new work is the highest since April 2016 where it increased by 11.7% (£103 million). Similarly, the monthly growth in the smaller, more volatile, private industrial new work series is the highest since June 2017 where it grew by 14.2% (£49 million).

In contrast, the main negative contributions in new work were from private commercial, which decreased by 3.9% (£98 million), with a smaller negative contribution from a 4.9% (£29 million) fall in public new housing.

Private commercial new work declined in January 2020, following growth across the second half of 2019 in the monthly series, as shown in Figure 6. The private commercial sector includes areas such as offices, entertainment venues, shops and private expenditure on schools and universities. This fall is the largest decrease that the private commercial series has seen since January 2019, when it fell by 5.4% (£128 million).

The monthly fall in repair and maintenance was driven by private housing and non-housing repair and maintenance, which decreased by 4.8% (£77 million) and 1.6% (£37 million) respectively. In contrast, public housing repair and maintenance grew by 0.3% (£1 million).

The three-month on year series in January 2020 grew 3.1% (£1,239 million), driven by growth of 4.7% (£1,243 million) in new work, which was the largest since December 2017 when it grew 5.6% (£1,407 million). In comparison, there was a decrease of £5 million in repair and maintenance, which resulted in flat growth (0.0%) because of rounding.

Figure 7 shows the difference in contributions to growth between new work and repair and maintenance in the three-month on year series and is particularly evident in more recent periods.

All new work sectors saw growth in the three-month on year series in January 2020, with public other new work increasing by £1 million but seeing flat growth (0.0%). The largest contribution came from private commercial, which grew by 5.0% (£349 million) – the largest percentage increase since August 2017 when it grew by 5.8% (£422 million).

Figure 8 shows the contribution to new work growth in the three-month on year series by sector, showing that all sectors contributed positively to growth for the first time since March 2017.

In repair and maintenance, non-housing repair and maintenance grew by 3.5% (£241 million) while public housing repair and maintenance grew 7.0% (£129 million). This was entirely offset by the 7.3% (£376 million) fall in private housing repair and maintenance – the largest percentage decrease in this series since February 2013 when it fell 8.2% (£355 million).

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, a leap year, or Easter moving between March and April) and seasonal effects (for example, increased spending in January as a result of Christmas) 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 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

Compared with the previous Construction output in Great Britain: December 2019 and new orders October to December 2019 publication released on 11 February 2020, today’s publication contains no revisions. This is in line with the National Accounts revisions policy.

Further to this release, the Quarterly national accounts, due to be published on 31 March 2020, will contain revised construction data from January 2019 to December 2019. These revised data will also include VAT data for the first time in Quarter 3 (July to Sept) 2019.

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.

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 2 (Apr to June) 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

New orders change of publication schedule

Because of the change of publication schedule for new orders in the construction industry, new orders data for Quarter 4 2019 (Oct to Dec) was published in last month’s release.

Because of the change to the earlier publication date, we have also reviewed the revisions schedule for new orders in the construction industry. New orders data in Table 4 to 6 will be published as a provisional estimate at the first time of release, which will then be finalised in the subsequent quarter. Further information on the change of publication schedule and revisions policy is available.

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 January 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.