Construction output in Great Britain: January 2021

• Construction output grew by 0.9% in the month-on-month all work series in January 2021; this return to monthly growth follows the 2.9% decline in December 2020.

• The level of output in January 2021 was 2.6% below the February 2020 level; the level of new work was 6.4% below this level, while repair and maintenance work was 4.5% above this level despite a monthly fall.

• New work increased by 1.7% in January 2021 and was driven by private commercial and infrastructure, which grew by 4.5% and 3.1% respectively.  

• Repair and maintenance decreased by 0.4% in January 2021 because of a 4.7% fall in private housing repair and maintenance, despite growth of 5.0% in public housing and 1.3% in non-housing repair and maintenance.

• Construction output grew by 1.7% in the three months to January 2021 compared with the previous three-month period, because of growth in both new work (2.2%) and repair and maintenance (0.8%).

Monthly construction output grew by 0.9% in January 2021 compared with December 2020, rising to £13,639 million. This follows the 2.9% fall in December 2020, prior to which there were seven consecutive periods of monthly growth, with the growth in January 2021 lower than any of those.

Table 1 shows the change in output for the types of construction work between February 2020 and January 2021. All work construction output in January 2021 remains below its pre-coronavirus level, at 2.6% below February 2020.

Despite the monthly fall in repair and maintenance in January 2021, all repair and maintenance sectors still remain above the February 2020 pre-coronavirus level. In comparison, infrastructure was the only new work sector where the level of work had recovered above the February 2020 level.

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.

The monthly growth in all work construction output in January 2021 was driven by new work, which offset the monthly fall in the level of repair and maintenance. Despite this, repair and maintenance remains above its February 2020 level before the coronavirus pandemic at 4.5%. In comparison, new work output remains 6.4% below its February 2020 level.

Construction output grew by 0.9% (£123 million) in January 2021 compared with December 2020 because of monthly growth in most sectors, following the 2.9% (£410 million) fall in December 2020. This meant the level of output in January 2021 was 2.6% (£369 million) below the February 2020 level.

New work grew by 1.7% (£145 million) in January 2021 compared with December 2020, because of increases in all new work sectors, except public new housing which fell by 4.7% (£20 million). The largest contributors to the monthly increase in new work were private commercial which grew by 4.5% (£86 million) and infrastructure which grew by 3.1% (£60 million).

Despite their contributions to monthly growth in January 2021, infrastructure and private commercial work have seen contrasting growth in output since 2016, as shown in Figure 4. While infrastructure output in January 2021 was the second highest in the monthly series, behind only November 2020, private commercial is comparatively weaker at 26.6% below its February 2017 peak.

Figure 5 shows the level of construction output in new work sectors since February 2020. Infrastructure output was the first to recover above its pre-coronavirus February 2020 level in August 2020, having now stayed above this level for several periods to January 2021. All other new work sectors have remained broadly flat since September 2020 and are yet to recover to their pre-coronavirus level, with the exception of private new housing which briefly recovered above this level in November 2020.

Repair and maintenance output fell by 0.4% (£22 million) in January 2021 because of a 4.7% (£89 million) decrease in private housing repair and maintenance. This more than offset growth of 5.0% (£34 million) in public housing repair and maintenance and 1.3% (£33 million) in non-housing repair and maintenance.

This fall (0.4%) is the third consecutive month-on-month decline in repair and maintenance output, following the 1.3% fall in November 2020 and 1.5% in December 2020. Despite these falls, output in every repair and maintenance sector in January 2021 remains above the pre-coronavirus February 2020 level as shown in Figure 6.

Figure 7 shows how the fortnightly construction net balance turnover estimates from the Business Impact of Coronavirus (COVID-19) Survey (BICS), broadly reflect the published construction output all work estimates. Both suggest broadly flat growth in construction output since August 2020.

Figure 7: Fortnightly turnover estimates from BICS broadly reflect the monthly construction output estimates since August 2020

Construction net turnover balances of businesses currently trading against all work construction output monthly estimates, UK, 1 February 2020 to 7 February 2021

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Notes

1. Construction output estimates are for Great Britain, whereas Business Impact of Coronavirus (COVID-19) Survey (BICS) estimates are for the UK construction sector.
2. Final unweighted results, Wave 1 to Wave 6, and final weighted results, Wave 7 to Wave 24, of the Office for National Statistics (ONS) Business Impact of Coronavirus (COVID-19) Survey (BICS).
3. Weighted net balances have been calculated from Wave 7 onwards only. The sample redesign in Wave 7 improves our coverage for the small sized businesses, allowing for weighted results to be truly reflective of all businesses.
4. Net balances have been calculated by subtracting the weighted by turnover number of construction businesses who have reported a decrease in turnover from the weighted by turnover number of construction businesses with an increase in turnover, all divided by the total weighted number of construction businesses currently trading for that wave then scaled up using a scaling factor.

Construction output grew by 1.7% (£681 million) in the three months to January 2021 compared with the previous three-month period because of increases across the majority of sectors (Figure 8). This is the sixth consecutive growth in the three-month on three-month series though the lowest growth in that time.

New work grew by 2.2% (£554 million) in the three months to January 2021 driven by large contributions from infrastructure and private new housing which grew by 7.4% (£404 million) and 2.7% (£235 million) respectively.

Repair and maintenance grew by 0.8% (£127 million) in the three months to January 2021, driven by increases of 4.1% (£305 million) in non-housing and 11.2% (£212 million) in public housing repair and maintenance. This more than offset the 6.5% (£391 million) fall in private housing repair and maintenance in the three months to January 2021.

Figure 9 shows construction industry response to Business Impact of Coronavirus (COVID-19) Survey (BICS) Wave 23, for businesses currently trading. Businesses were asked to indicate how turnover had been affected between the period 11 to 24 January 2021 compared with normal expectations for that time of year. A greater proportion of UK SIC 2007 divisions 41: Construction of buildings and 42: Civil engineering respondents indicated turnover was unaffected, which includes businesses primarily operating in the housing and infrastructure sectors, than industry 43: Specialised construction activities. This is reflected in monthly construction output data where infrastructure, and to a lesser extent, private housing activity have driven the recovery since May 2020.

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.

Feedback survey

In this publication we have a short survey about the monthly construction output bulletin to gain feedback on its content. The survey should take less than five minutes to complete and we would be grateful for any responses.

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.

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 2 (Apr to June) 2016 to Quarter 2 (Apr to June) 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

Coronavirus impact on ONS construction output in January 2021

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 have 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) moved to an online data collection platform for April 2020 onwards, allowing respondents to log on from any location and submit their data at an appropriate time.

Response rates at first response 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.

Table 3 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.

Response rates at first estimate rose to for January 2021 improved following two consecutive declines, by both questionnaire and turnover response. Turnover response was 75.0% in January 2021 which was the highest since January 2020, and was 57.0% by questionnaire response which was the highest since October 2020.

While international best practice is used to impute for non-response, with the lower response rates highlighted in Table 3, 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 present, followed by a sharp increase in April 2020. Since April 2020, the proportion of zero returns declined until November 2020. Since then there have been three consecutive increases in the proportion of zero returns, to 13.6% in January 2021.

This is the highest proportion of zero returns since June 2020 when it was 17.4%, and likely because of the national lockdown that came into effect on 6 January 2021. However, the construction industry was able to remain broadly open unlike during the first lockdown, with the proportion of zero returns substantially lower than in April 2020 as a result.

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.

Coronavirus impact on the January 2021 seasonal adjustment

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, time series analysis experts are regularly asked to review the seasonal adjustment when required. This approach has been adopted for all months over the pandemic period and has resulted in changes to seasonal adjustment specification files to ensure the seasonal adjustment parameters are appropriate.

End of EU exit transition period

The transition period ended on 31 December 2020. The UK statistical system will continue to collect and produce our wide range of economic and social statistics about the UK. We are committed to continued alignment with international standards, enabling comparability both over time and internationally and we will work with users of statistics to make sure they have the data they need to support the decisions they have to make.

Additionally, 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 EU budget contributions are finalised for the years in which we were a member, and making budget contributions during the transition period. To ensure this comparability during this period, the national accounts will continue to be produced according to European System of Accounts (ESA) 2010 definitions and standards.

As the shape of the UK's future statistical relationship with the EU becomes clearer over the coming period, the ONS is making preparations to assume responsibilities that as part of our membership of the EU, and during the transition period, were delegated to the statistical office of the EU, Eurostat. This includes responsibilities relating to international comparability of economic statistics, deciding what international statistical guidance to apply in the UK context and to provide further scrutiny of our statistics and sector classification decisions.

In applying international statistical standards and best practice to UK economic statistics, we will draw on the technical advice of experts in the UK and internationally, and our work will be underpinned by the UK's well-established and robust framework for independent official statistics, set out in the Statistics and Registration Service Act 2007. Further information on our proposals will be made available later this year.

There was limited anecdotal information received for January 2021 regarding the impact of the end of the EU exit transition period on 31 December 2020, with other factors in January 2021 making difficult to quantify the exact impact on the industry.

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

Headline volume estimates of construction output are assessed against international guidelines such as Eurostat's handbook on price and volume measures in national accounts. Organisation for Economic Co-operation and Development (OECD) production in construction estimates are also available, for both OECD and non-OECD countries.

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.