Construction output in Great Britain: June 2021, new orders and Construction Output Price Indices, April to June 2021

• Monthly construction output fell by 1.3% in June 2021, because of a decline in repair and maintenance (4.2%) offset by a small increase in new work (0.5%).

• Construction output in June 2021 was 0.3% (£39 million) below the February 2020 pre-coronavirus (COVID-19) pandemic level; new work was 2.1% (£188 million) below this level, while repair and maintenance was 3.1% (£149 million) above.

• In contrast to the monthly fall, quarterly construction output grew by 3.3% in Quarter 2 (Apr to June) 2021 compared with Quarter 1 (Jan to Mar) 2021; both new work (3.9%) and repair and maintenance (2.3%) saw increases.

• Total construction new orders grew by 17.6% (£1,998 million) in Quarter 2 2021 compared with Quarter 1 2021; total new orders recovered in Quarter 2 2021 to above its pre-pandemic level for the first time at 1.6% (£214 million) above the Quarter 1 2020 level.

• The annual rate of construction output price growth was 3.4% in June 2021; this was the strongest annual rate of construction output price growth since August 2019 (3.5%).

Monthly construction output fell for the third consecutive month in June 2021, by 1.3%. This is the largest monthly decline since December 2020 when output fell 2.2%. As shown in Table 1, this monthly fall means output has returned to below the pre-coronavirus (COVID-19) pandemic level in February 2020 (0.3% below).

Despite the three monthly falls in growth for the months within Quarter 2 (Apr to June) 2021, quarterly growth increased by 3.3% which, apart from Quarter 3 (July to Sept) 2020, is the strongest quarterly growth since Quarter 3 2013 (3.6%). The strong quarterly growth is partly a by-product of the weak January 2021 in the base period.

Construction output fell by 1.3% (£178 million) in June 2021 compared with May 2021.

Non-housing repair and maintenance was the largest contributor to the monthly decline, falling by 4.5% (£123 million). Private housing also saw monthly falls in June 2021, with repair and maintenance, and new work falling by 4.6% (£85 million) and 3.2% (£97 million) respectively.

Infrastructure offset some of the monthly decline and saw monthly growth in June 2021, of 6.3% (£142 million).

Anecdotal evidence received from responses to the Monthly Business Survey for Construction and Allied Trades for June 2021 suggested a limited availability of certain construction products, most notably timber, steel, cement and tiles. This in turn is likely to have contributed to the price rises experienced in recent months in the industry and thus to the monthly decrease in output in June 2021 in volume terms.

Eight out of the nine sectors (Table 3) saw further weakness after the effects of these price increases have been removed, that is, the monthly growth in volume terms is weaker than monthly growth in value terms in June 2021. These price increases in recent months are further illustrated in Section 8 - Construction Output Prices in June 2021.

Construction output grew by 3.3% (£1,328 million) in Quarter 2 (Apr to June) 2021 compared with Quarter 1 (Jan to Mar) 2021.

New work grew by 3.9% (£983 million) in Quarter 2 2021 largely driven by infrastructure, which grew 15.9% (£926 million). Anecdotal evidence suggests the mixture of a strong pipeline of orders before the coronavirus (COVID-19) pandemic and being able to implement social distancing measures more easily on larger, outdoor civil engineering sites has meant infrastructure has performed relatively strong over the pandemic period (Figures 2, 4 and 5).

Repair and maintenance grew by 2.3% (£345 million), the largest contributor to which was growth of 5.2% (£401 million) in non-housing repair and maintenance.

The peak-to-trough fall in construction output for the 2020 coronavirus (COVID-19) pandemic was substantially larger relative to the 2008 to 2009 recession. However, it is noticeable how much quicker the industry has continued to recover in the second half of 2020 and 2021 compared with the 2008 to 2009 recession. 

The recovery from the pandemic has also been driven by the bounce-back in repair and maintenance output, which is 7% above its pre-pandemic level in Quarter 2 2021 in comparison with Quarter 4 2019. In comparison, following the 2008 to 2009 recession, new work recovered sooner than repair and maintenance, but took 29 quarters to do so.

Total construction new orders grew by 17.6% (£1,998 million) in Quarter 2 (Apr to June) 2021 compared with Quarter 1 (Jan to Mar) 2021.

All other work grew by 24.9% (£1,886 million) in Quarter 2 2021, driven by growth in both private commercial (48.3%) and infrastructure (24.1%) new orders. Most notably offices within private commercial saw strong growth likely to be caused by workers returning back to the office. The growth in infrastructure was driven by orders for both roads and rail projects.

New housing orders grew 2.9% (£112 million) in Quarter 2 2021, driven by a 4.6% (£158 million) increase in private new housing.

Prices in the construction industry, as estimated by the Construction Output Price Index (OPI), rose 3.4% in the 12-month period to June 2021. This was the strongest annual rate of construction output price growth since August 2019 (3.5%).

New work

The Construction OPI for new construction work grew by 3.8% in the year to June 2021. This is the strongest rate of growth for new work prices since September 2019 (4.0%).

Prices rose for all new work sectors, the largest of which was housing, which rose by 4.9%, the highest in the 12-month series since September 2017 when it grew by 5.0%.

Repair and maintenance

The Construction OPI for all repair and maintenance grew by 2.3% in the year to June 2021. This is the strongest rate of growth for repair and maintenance prices since June 2017 (2.3%).

Prices for both housing and non-housing repair and maintenance saw growth, increasing by 2.1% and 2.6% respectively.

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.

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,

• New orders in construction QMI

• Construction output price indices QMI.

Response rates

Response by turnover for construction industries for June 2021 was 66.8%, a small increase on the 66.0% achieved in June 2020. (Table 11 has further information on response rates).

Revisions to construction output data

Revisions in this release are a result of:

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

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

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

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.

Sub-sector and sub-national construction output estimates

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 sub-national data seen in Tables 1 and 2 of Construction output: sub-national and sub-sector.

As a result of improvements implemented in our March 2021 dataset, an article addressing these developments including the impact of the changes has been published on 20 July 2021.

Blue Book 2021

In Blue Book 2021 a new framework will be introduced to improve how we produce volume estimates of GDP for balanced years as part of the supply use process. This framework includes the implementation of double-deflated industry-level gross value added for the first time. This improvement will be reflected in the September quarterly national accounts and October monthly GDP estimates. On 28 June we published Blue Book 2021 indicative impacts of this change to industry-level gross value added volume.

Estimates for the construction industry from this new approach will differ to those published in this construction output release as they account for both the outputs produced and inputs consumed by the industry. There are also some coverage differences given the use of the Annual Business Survey in their compilation.

Comparability

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 in the following datasets: Monthly GDP and main sectors to four decimal places and Monthly gross domestic product: time series.

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.