Construction output in Great Britain: Mar 2017 and Jan to Mar 2017

• Output in the construction industry grew 3 month on 3 month for the fifth consecutive period, rising by 0.2% in the first quarter of 2017; this is in line with the estimate for construction output included in the preliminary estimate of gross domestic product for January to March 2017.

• Despite growing on a quarterly basis, construction output fell for the third consecutive period month-on-month; decreasing by 0.7% in March 2017.

• New housing experienced strong growth in March, increasing month-on-month by 3.8%; month-on-year by 5.4%; and quarter-on-quarter by 0.2%.

• Repair and maintenance provided the main downward pressure on construction output, shrinking both month-on-month and quarter-on-quarter by 1.8% and 0.2% respectively.

• In comparison with the same period in 2016, construction output grew by 2.4% in March 2017, representing the 12th consecutive period of month-on-year growth.

The monthly business survey, Construction output, collects output by sector from businesses in the construction industry within Great Britain. Output is defined as the amount chargeable to customers for building and civil engineering work done in the relevant period excluding VAT and payments to sub-contractors.

The survey’s results are used to produce 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 inflation). The estimates are widely used by private and public sector institutions, particularly by the Bank of England and Her Majesty’s Treasury to assist in informed decision and policy making. Construction output is a key economic indicator and is also therefore used in the compilation of the output measure of gross domestic product.

This March 2017 release contains revisions for January 2017 onwards. This means that we have incorporated additional data since this period.

Revisions can be made for a variety of reasons, the most common include:

• late responses to surveys and administrative sources, or changes to original returns
• forecasts being replaced by actual data
• revisions to seasonal adjustment factors, which are re-estimated every month and reviewed annually

On 11 December 2014 the UK Statistics Authority announced its decision to suspend the designation of Construction Output and New Orders as National Statistics due to concerns about the quality of the Construction Price and Cost Indices used to remove the effects of inflation from the statistics.

We took responsibility for the publication of the Construction Price and Cost indices from the Department of Business Innovation and Skills (BIS) on 1 April 2015, introducing an interim solution for measuring output prices in June 2015 for all periods from January 2014 onwards. We are currently developing a long-term solution for the deflation of construction statistics.

Summary information can be found in the Summary Quality and Methodology information.

In March 2017, construction output fell by 0.7% compared with February 2017, resulting in the third consecutive period of negative month-on-month growth.

The monthly time series shows how volatile construction output can be, therefore the rolling 3 month time series is also shown in Figure 1, providing a more comprehensive picture of the underlying trends within the construction industry. As Figure 1 shows, despite these falls, the rolling 3 month series for March 2017 increased by 0.2% in comparison with December 2016 (which is equivalent to the quarter-on-quarter growth in this period). This increase occurred due to the fact that construction output in December 2016 reached a historic high. Therefore, although the subsequent months have decreased from that level, the 3 months to March 2017 have been stronger overall than the 3 months to December 2016.

The positive 3 month on 3 month growth in March 2017 results in the fifth consecutive period of growth in construction output, driven mainly by a rise of 0.4% in all new work; in particular new housing. This growth was slightly offset by a 0.2% fall in repair and maintenance.

Construction output can be broken down by different types of work, these are categorised into new work, and repair and maintenance as shown in Figure 2. The graph shows that through to mid-2014, new work, and repair and maintenance followed a similar pattern but since reaching a level peak in August 2014, repair and maintenance has slowly contracted. Over the same period, new work has continued to increase steadily, largely down to a rise in new housing work.

As seen in Figure 2, both repair and maintenance, and all new work have experienced negative month-on-month growth in March 2017. The 1.8% drop in repair and maintenance, which comes off the back of positive growth in February 2017, was predominantly driven by falls in housing repair and maintenance. All new work decreased slightly by 0.1%, despite new housing continuing to grow, due to a second consecutive month of notable negative growth in infrastructure, which fell 5.4%. It is worth noting that all new work accounts for approximately two-thirds of all work, while repair and maintenance accounts for approximately one-third.

Figure 3 shows the difference in month-on-month volume from the different sectors in terms of real value growth, taken from our chained volume measure series. When compared with February 2017, infrastructure provided the most notable downward pressure on construction output, in percentage terms and real value, dropping by 5.4% equating to a fall of £78 million. In addition, total housing repair and maintenance also attributed to the monthly negative growth, falling by £54 million in March 2017.

Elsewhere, housing continued to be the most notable increase within construction output month-on-month. Public housing increased sharply by 7.6%, resulting in an increase of £29 million. Despite private housing increasing at a relatively slower rate of 3.2%, in real terms it contributes more than two times that of public housing, increasing by £72 million. Aside from housing, the only other upward pressure on construction output came from private commercial work, which increased by £14 million in comparison with February 2017.

Table 1 provides a detailed description of the growth rates of each work type, alongside the seasonally adjusted chained volume measure level of output.

Table 1 shows both the growth rate for each work type in terms of 3 month on 3 month, month- on-year and month-on-month, as well as the value of work broken down by sector. For this month, the 3 month on 3 month series equates to the quarter-on-quarter series. Despite falling month-on-month in March 2017, the volume of all work remains at a relatively high level, at £11,479 million. Elsewhere, public new housing reached its highest level since April 2015 at £404 million, whereas private new housing reached its second highest level on record at £2,347 million.

Construction output grew for the fifth consecutive period on a 3 month on 3 month basis in March 2017, growing marginally by 0.2%. Upward pressure on growth came from all new work, which grew 0.4%; most specifically new housing, which increased for the eighth consecutive period, rising 0.2% in the 3 months to March 2017. Despite this, downward pressure on 3 month growth came from falls in repair and maintenance, and infrastructure, which fell 0.2% and 0.3% respectively.

With regards to month-on-year growth, construction output continues to grow. The 2.4% rise in March 2017 represents the 12th consecutive period of month-on-year growth. This growth has been consistently driven by rises in all new work, which hasn’t experienced negative growth since May 2013 and grew 2.6% in March 2017. Repair and maintenance also continued to grow in comparison with the previous year, increasing 2.1%. These rises were offset somewhat, most notably by infrastructure, which fell for the second successive month, dropping by 7.6%.

Output in the construction industry follows the Eurostat Short Term Statistics (STS) regulation for production in construction. Before any comparisons are made with the euro area or EU28, it is worth noting that the UK is the only member state to follow the A method for compiling production in construction statistics.

The latest release of production in construction published by Eurostat on 20 April 2017 for February 2017 showed the seasonally adjusted production in the construction sector increased by 6.9% in the euro area (EA19) and increased by 4.4% in the EU28 when compared with January 2017. It should be noted that an accurate comparison cannot be made as Eurostat data are calculated on a 2010 equals 100 basis, while Great Britain data are calculated on a 2013 equals 100 basis.

Outside of the EU, the US Census Bureau release Value of construction put in place was published on 1 May 2017. They include the total dollar value of construction work done in the US.

Other useful links

• Department for Communities and Local Government (Housing starts and completions)
• Construction statistics in Northern Ireland

Our Monthly Construction Output survey measures output from the construction industry in Great Britain. It 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 Construction Quality and Methodology Information document contains important information on:

• the strengths and limitations of the data
• the quality of the output: including the accuracy of the data and how it compares with related data
• uses and users
• how the output was created