Construction output in Great Britain: July 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:
11 September 2020

Cyhoeddiad nesaf:
9 October 2020

1. Main points

  • Monthly construction output grew by 17.6% in July 2020, following the record monthly growth of 23.5% in June 2020; the level of construction output in July 2020 was 11.6% below the February 2020 level.

  • Construction output fell by 10.6% in the three months to July 2020, compared with the previous three-month period; this was driven by falls in both new work (9.7%) and repair and maintenance (12.4%).

  • The decrease in new work (9.7%) in the three months to July 2020 was because of falls in every new work sector, apart from infrastructure, which grew by 6.0%; the largest negative contributor was private new housing, which fell by 17.0%.

  • The decrease in repair and maintenance (12.4%) in the three months to July 2020 was because of falls in all repair and maintenance sectors; the largest contributor was private housing repair and maintenance, which fell by 17.9%.

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2. Construction output in July 2020

Monthly construction output increased by 17.6% in July 2020 compared with June 2020, rising to £11,922 million, because of growth in all construction sectors. However, output remains at a lower level than the all work construction output series prior to February 2020, before the full impact of the coronavirus (COVID-19) pandemic. This is shown by total construction output in July 2020 being 11.6% (£1,561 million) lower when compared with February 2020.

The growth in July 2020 is the third consecutive month of growth since the record monthly decline of 40.2% in April 2020, with then record monthly growth of 7.6% in May 2020 followed by record monthly growth of 23.5% in June 2020. July 2020 monthly growth of 17.6% is the second-largest monthly growth since monthly records began in January 2010.

Figure 1 shows the monthly indexed chained volume measure, seasonally adjusted series.

Table 1 shows the change in output for the types of construction work between February 2020 and July 2020, showing that all types of work, with the exception of infrastructure, have yet to recover to their February 2020 pre-pandemic level.

Impact of the coronavirus in July 2020

We have worked closely with respondents to the Monthly Business Survey (MBS) for construction and allied trades and have used additional data sources to inform the estimates in this publication. We have also used qualitative information sourced from construction industry respondents to the Business Impact of Coronavirus Survey (BICS) to quality assure responses we received for July 2020.

Anecdotal evidence from responders to both BICS and the MBS suggested continued increase in activity across the construction sector. However, health and safety measures such as social distancing, where businesses are working on premises and sites, have meant that the capacity and level of output are not at the same level of work experienced prior to the coronavirus pandemic.

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

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3. Detailed growth rates

Table 2 illustrates that despite the strong month-on-month growth, the other growth measures show the level of output remains substantially lower, reflecting the impact of the coronavirus (COVID-19) pandemic in recent periods. The exception is infrastructure, where the fall in the level of output was comparatively lower and has already recovered above the pre-pandemic level of output.

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.

There was strong growth in both new work, and repair and maintenance in July 2020. New work saw a comparatively stronger rebound in May 2020 than repair and maintenance, with both seeing a large increase in the level of output in June and July 2020. Construction output has yet to recover to levels seen prior to March 2020, before the full impact of the coronavirus.

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4. Three-month on three-month construction growth in July 2020

Construction output fell by 10.6% (£3,591 million) in the three months to July 2020, compared with the previous three-month period, because of declines in all sectors apart from infrastructure (Figure 3).

New work decreased by 9.7% (£2,160 million) in the three months to July 2020, the largest single contributor to which was private new housing, which fell 17.0% (£1,130 million).

Infrastructure was the only sector to see growth, increasing by 6.0% (£310 million) in the three months to July 2020 compared with the previous three-month period. This is the largest increase in infrastructure in this series since February 2018, when infrastructure grew by 7.8% (£392 million), as shown in Figure 4. This may have been because of social distancing measures being more easily implemented on larger sites.

Repair and maintenance fell by 12.4% (£1,432 million) in the three months to July 2020, driven by falls in all repair and maintenance sectors. The largest contributor to the fall in repair and maintenance was private housing repair and maintenance, which decreased 17.9% (£688 million) in the three months to July 2020. Repair and maintenance has not seen growth in the three-month on three-month series for 14 consecutive months (since May 2019).

Figure 5 shows the contribution from total housing to the decline in growth of all work, compared with all other construction sectors combined, in the three-month on three-month series. From anecdotal evidence received from survey respondents, as well as respondents to the Business Impact of Coronavirus Survey (BICS), housebuilders continued to return to work on construction sites in July 2020, though because of measures such as social distancing they were not operating at full capacity.

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5. Month-on-month construction output growth in July 2020

Construction output grew by 17.6% (£1,782 million) in July 2020 compared with June 2020, because of increases in all construction sectors, as shown in Figure 6. New work grew by 17.6% (£1,180 million) in July 2020, with repair and maintenance also growing by 17.6% (£602 million).

This is the third consecutive month of relatively large growth in all work, following growth of 7.6% (£582 million) in May 2020 and 23.5% (£1,929 million) in June 2020, though the level of output remains 11.6% (£1,561 million) lower in July 2020 compared with the pre-coronavirus (COVID-19) pandemic level in February 2020.

The 17.6% (£1,180 million) growth in new work in July 2020 was driven by increases in all new work sectors, the main driver being private new housing, which grew by 30.3% (£555 million). Elsewhere, public new housing had a third consecutive month of record monthly growth, increasing by 42.4% (£133 million) in July 2020.

Further evidence to suggest the increase in housebuilding activity is the Building Materials and Components July 2020 data published by the Department for Business, Energy and Industrial Strategy. Table 3 illustrates the monthly increase in bricks and concrete blocks in July 2020, however, this is still significantly down on July 2019 and the pre-pandemic level in February 2020.

Figure 7 shows that infrastructure is the only sector to have recovered above its pre-pandemic level in July 2020, with the decline in this sector comparatively less severe in April 2020 than other sectors, and likely to have been because of larger sites remaining partially open as social distancing measures were implemented more easily.

In all other new work sectors, the level of output remains lower than February 2020. Also, public other new work and private industrial, while still growing in recent months have not at the same rate as the other new work sectors.

The 17.6% (£602 million) growth in repair and maintenance in July 2020 was because of increases in all repair and maintenance sectors. Private housing repair and maintenance grew by 24.6% (£265 million) and non-housing repair and maintenance grew by 11.2% (£219 million).

Public housing repair and maintenance had a second consecutive month of record monthly growth, increasing 30.2% (£118 million) in July 2020 compared with June 2020. However, output remains well below levels seen prior to February 2020 as shown in Figure 8.

Business Impact of Coronavirus (COVID-19) Survey (BICS)

The Business Impact of Coronavirus (COVID-19) Survey (BICS) showed evidence of continued increase in activity in the construction industry in July 2020. Qualitative information sourced from this survey was used to quality assure responses we received for the Monthly Business Survey for construction and allied trades (MBS) for July 2020.

BICS Wave 9 data, which relate to the period 29 June to 12 July 2020, show that construction industry respondents had the third-highest proportion of workforce returning from furlough leave, with 14.8%, which was well above the 7.2% average for all industries, as shown in Table 4.

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6. Construction in Great Britain data

Output in the construction industry: sub-national and sub-sector
Dataset | Released 11 September 2020
Quarterly non-seasonally adjusted sub-national and sub-sector data at current prices, Great Britain (suspended – see Section 8. Measuring the data for further information).

Construction output price indices
Dataset | Released 12 August 2020
Monthly Construction Output Price Indices (OPIs) from July 2014 to June 2020, UK.

New orders in the construction industry
Dataset | Released 12 August 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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7. 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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8. 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 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.

Revisions to construction output data

Compared with the previous Construction output in Great Britain: June 2020 and new orders and Construction Output Price Indices, April to June 2020 publication released on 12 August 2020, today's publication contains no revisions. This is in line with the National Accounts revisions policy.

Blue Book 2020

Each year we produce an annual update to the UK National Accounts in the Blue Book and Pink Book and the associated releases. As already announced, the Blue Book and Pink Book 2020 consistent datasets will be published on 30 September 2020 as part of the Quarterly national accounts.

Details have already been provided on the scope in the article Latest developments and changes to be implemented in Blue Book and Pink Book 2020. Indicative impacts on headline gross domestic product (GDP) components for the years 1997 to 2018 were published on 20 July 2020 in the article Impact of Blue Book 2020 changes on current price and volume estimates of gross domestic product.

The next monthly publication on 9 October 2020 will incorporate revisions consistent with Blue Book 2020, where the reference year and last base year for all chained volume measure series will be updated to 2018.

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 1 (Jan to Mar) 2016 to Quarter 4 (Oct to Dec) 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) impact on ONS construction output in July 2020

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 will be 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) have been collected via online questionnaire since April 2020. This has meant that respondents can log on from any location and submit their data at an appropriate time. The paper questionnaire was moved to an online data collection platform, with minimal changes made to the questionnaire design. The only notable change has been the reclassification of housing associations as private housing, rather than public housing as previously on paper. For further information on this classification decision please see this statement for England and this article for Scotland, Wales and Northern Ireland.

Response rates 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. This illustrates the benefits of the move to electronic data collection, though response rates remain lower when compared with reference periods prior to February 2020.  

Table 5 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. For July 2020, the response rates at first estimate are the highest they has been since January 2020, and the highest since moving to the electronic questionnaire.

To deal with non-response we impute for missing data 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.

While international best practice is used to impute for non-response, with the lower response rates highlighted in Table 4, 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 Monthly Business Survey for construction and allied trades (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 9 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. This partially increased in March 2020, but significantly increased into April 2020 as sites were closed because of restrictions on movement in Great Britain. Since then the proportion of zero returns has continued to decline, falling to 12.9% in July 2020.

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 pandemic-impacted period.

Impact on seasonal adjustment of July 2020

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 in recent months, time series analysis experts are consulted to review the seasonal adjustment. This has resulted in changes to seasonal adjustment specification files to ensure the seasonal adjustment parameters are appropriate. All types of work were treated as an additive outlier in these specification files for April to July 2020, apart from infrastructure in May 2020, and public other new work in July 2020.

Coronavirus impact on the July 2020 bias adjustment

Typically, an adjustment to address any bias in survey responses for construction output is applied to the early construction output monthly estimates. See Improvements to construction statistics: addressing the bias in early estimates of construction output, June 2018 published on 4 June 2018. The bias adjustment methodology is based on historical data. As the response rates for July 2020 are lower in comparison with months prior to February 2020 (Table 4) and no comparable historical data are available at the time of the first estimate for a reference month, no bias adjustment has been applied for July 2020.

Links to additional ONS sources of coronavirus information

Our latest data and analysis on the impact of COVID-19 on the UK economy and population are also now available on a new webpage. This will be the hub for all special virus-related publications, drawing on all available data. A Coronavirus (COVID-19) roundup is also updated as and when data become available.

Recent releases thathelp describe the ONS response to the coronavirus might be seen in our estimates:

The Office for National Statistics (ONS) has released a public statement on the coronavirus and the production of statistics and any specific queries can be directed to the Media Relations Office.

Exiting the EU

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 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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9. 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).

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

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.

Eurostat has also developed short-term business statistics (STS) indicators on the impact of the coronavirus (COVID-19) pandemic in Impact of Covid-19 crisis on construction.

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.

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