Construction output in Great Britain: June 2022, new orders and Construction Output Price Indices: April to June 2022

• Monthly construction output decreased 1.4% in volume terms in June 2022, following an upwardly revised 1.8% increase in May 2022, with both months affected by the timing of the Jubilee bank holiday; this is the first decrease since October 2021 (0.9%) following seven consecutive months of growth.

• The decrease in monthly construction output in June 2022 came from falls in both new work (2.0%) and repair and maintenance (0.2%).

• At the sector level, the main contributors to the decrease in June 2022 were private new housing and private commercial new work, which decreased 6.1% and 4.5%, respectively.

• The level of construction output in June 2022 was 2.9% (£414 million) above the February 2020 pre-coronavirus pandemic level; repair and maintenance work was 12.6% (£626 million) above the February 2020 level while new work was 2.2% (£212 million) below its February 2020 level.

• Despite the monthly decrease, construction output increased 2.3% in Quarter 2 (Apr to June) 2022, with increases seen in both new work and repair and maintenance (3.3% and 0.8%, respectively).

• Total construction new orders decreased 10.4% (£1,355 million) in Quarter 2 2022 compared with Quarter 1 (Jan to Mar) 2022; this is the largest quarterly fall in construction new orders since Quarter 4 (Oct to Dec) 2020 (11.7%).

• The annual rate of construction output price growth was 9.6% in the 12 months to June 2022; this was the strongest annual rate of price growth since records began in 2014.

Despite the monthly fall, construction output rose 2.3% (£1,014 million) in Quarter 2 2022. The growth in the quarter is mainly coming from May 2022 (1.8%) and also because of weakness in Quarter 1 2022, which was partly a result of the storms in February 2022. This is the largest quarterly rise since Quarter 2 2021 (4.0%). Increases in both new work and repair and maintenance (3.3% and 0.8%, respectively) contributed to the growth.

It is important to note that the Platinum Jubilee, and the move of the May bank holiday, led to an additional working day in May 2022 and two fewer working days in June 2022. Therefore, this should be considered when interpreting the seasonally adjusted movements involving May and June 2022. You can find more detailed information on this in the Measuring the data section in the GDP monthly bulletin.

Anecdotal evidence received from both returns for the Monthly Business Survey for Construction and Allied Trades and the Business Insights and Conditions Survey (BICS) continues the narrative around the high costs of products such as concrete and masonry, specifically concrete, cut and shaped finished stone, plaster, bricks and tiles. There were also mentions of product shortages, particularly for the smaller-sized firms. There were also continued significant mentions of higher fuel costs and VAT tax increases for red diesel, which have had an impact again this month.

These challenges are illustrated further in the Quarter 2 (Apr to June) 2022 construction output price index (see Section 3). June 2022 saw a record high for annual price growth (9.6%); this is the highest annual price growth since records began in January 2014.

Private industrial new work has seen strong growth again this month and continues the strong growth seen over the last year (Table 2). This has come from a rise in warehouses and distribution centres as illustrated in the new orders data for Quarter 2 2022. This is likely to be linked to consumers' change in shopping habits over the coronavirus (COVID-19) pandemic because of more online spending.

Monthly construction output in June 2022

The monthly fall of 1.4% in construction output in June 2022 represents a decrease of £204 million in monetary terms compared with May 2022. Five out of the nine sectors saw a decrease.

Private housing new work and private commercial new work were the largest contributors to the monthly decrease in June 2022, decreasing 6.1% (£217 million) and 4.5% (£88 million), respectively. It should be noted that both private commercial new work and private housing new work saw large increases of 10.2% and 7.5%, respectively, in May 2022.

Like in recent months, strong price growth for certain construction products continued to be an issue. Figure 3 compares total construction output in value terms (for instance, before the impact of price changes) and in volume terms (for instance, after the impact of price changes). Despite construction output in volume terms having recovered to above its pre-pandemic level since the start of 2022, the gap between value and volume estimates has continued to widen as prices continue to rise sharply.

Quarterly construction output growth in Quarter 2 2022

Despite the monthly fall, construction output rose 2.3% (£1,014 million) in Quarter 2 2022. The growth in the quarter is mainly coming from May 2022 (1.8%) and also because of weakness in Quarter 1 2022, which was partly a result of the storms in February 2022. This is the largest quarterly rise since Quarter 2 2021. Increases in both new work and repair and maintenance (3.3% and 0.8%, respectively) contributed to the growth.

Seven of the nine sectors saw an increase in Quarter 2 2022, with the largest contributors being private new housing, infrastructure new work, private industrial new work and non-housing repair and maintenance. These sectors increased 3.9% (£383 million), 3.9% (£258 million), 15.8% (£237 million) and 3.4% (£283 million), respectively.

Prices in the construction industry, as estimated by the Construction Output Price Index (OPI), increased to 9.6% in the 12-month period to June 2022. This was the strongest annual rate of construction output price growth since records began in January 2014.

Both total new work and total repair maintenance recorded their strongest rate of annual price growth in June 2022 since records began of 11.1% and 6.9%, respectively.

Please note that, in this release, various weights in the OPIs have been updated based on the latest available data as part of our normal annual process. Further information will be provided when the OPIs Quality and Methodology Information document is updated prior to the Quarter 3 (July to Sept) 2022 release in November 2022.

Total construction new orders decreased by 10.4% (£1,355 million) in Quarter 2 (Apr to June) 2022 compared with Quarter 1 (Jan to Mar) 2022. See our New orders in the construction industry dataset for more detail.

Other new work orders (non-housing new orders) was the main contributor to the fall, decreasing 13.1% (£1,223 million). The main sector causing the fall was private commercial, which fell 31.2% (£1,254 million). This is the largest quarterly fall since the start of the coronavirus (COVID-19) pandemic (Quarter 2 2020) where private commercial new orders fell 52.8%. Housing new orders saw a 3.7% fall in Quarter 2 2022 and has now fallen for three consecutive quarters.

Despite the largest quarterly fall in new orders since Quarter 4 (Oct to Dec) 2020, new orders are still at a higher level than before the pandemic in Quarter 2 2022. Compared with Quarter 4 2019, which was the last full quarter not affected by the coronavirus pandemic, new orders are now 1.2% (£137 million) higher. However, in this release, both private new housing and private commercial have fallen below their respective pre-coronavirus pandemic levels. 

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 2020) 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 (QMI) is available in our:

• Construction output QMI

• New orders in construction QMI

• Construction output price indices QMI

Revisions to construction output

In this release, revisions can be seen back to April 2022. Reasons for the revisions are:

• revisions in the nominal data -- this includes late and revised survey data

• 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 -- in this release, revisions have also been incorporated to the weights as part of the annual update process

For further information on the revisions profile, see our Output in the construction industry revisions triangle (one-month growth) dataset and our Output in the construction industry revisions triangle (three-month growth) dataset.

Sub-national and sub-sector construction output

Data for sub-national and sub-sector construction output are available in our Output in the construction industry: sub-national and sub-sector dataset and produced via a model using Barbour ABI's new orders data as the source.

In this release, revisions are seen for some series in these tables back to 2013. Like the previous release, these improvements are to reflect updates to the project-level input data start dates, finish dates and valuations that have changed since the time of the new order being placed. See our accompanying methodology article for more information.

Seasonal adjustment and treatment of Jubilee in May and June 2022

Previous experience  highlighted that the Jubilee and the timing of bank holidays might lead to more volatile movements in the monthly path of gross domestic product (GDP) and construction output in May and June. As part of our usual practice, prior adjustments are made for calendar effects (where statistically significant) such as returns that do not comply with the standard trading period, bank holidays, Easter and the day of the week Christmas occurs.

Adjustments for repeating and predictable effects are estimated and removed from the final seasonally adjusted series, for example, a permanent change in the seasonal pattern.

Adjustments for effects that do not repeat are estimated and removed during the seasonal adjustment process but are then put back into the final seasonally adjusted series, for example, the effect of the Jubilee. We will continue to review these adjustments on a monthly basis with Office for National Statistics (ONS) time series experts.

Bias adjustment for construction output

As the response rate for June 2022 is slightly lower (66.5% turnover response compared with a normal turnover response of approximately 70% for this month in the year, pre-coronavirus (COVID-19) pandemic), and no comparable historical data are available at the time of the first estimate for a reference month, we have not applied a bias adjustment for June 2022.

Blue Book 2021

In Blue Book 2021, a new framework was introduced to improve how we produce volume estimates of gross domestic product (GDP) for balanced years as part of the supply use process. This framework included the implementation of double-deflated industry-level gross value added (GVA) for the first time.

As a result, volume estimates in the monthly GDP and construction outputs releases will differ for the period 1997 to 2019 because the construction publication measures the volume of construction work (output) while the GDP series measures GVA (that is, output minus intermediate consumption). Construction estimates will align, however, from January 2020 onwards on a growth basis.