Construction output in Great Britain: March 2020 and new orders January to March 2020

• Construction output fell by 5.9% in the month-on-month all work series in March 2020; this was driven by a 6.2% decrease in new work and a 5.1% decrease in repair and maintenance; all of these decreases were the largest monthly falls on record since the monthly records began in January 2010.

• Anecdotal evidence received from across the industry suggested the coronavirus (COVID-19) pandemic was a significant factor to these large falls as construction activity ceased or reduced significantly in March 2020; the Office for National Statistics (ONS) has released a public statement on the coronavirus and the production of statistics.

• The decrease in new work (6.2%) in March 2020 was because of falls in all new work sectors; private new housing and private commercial were the largest contributors, falling by 6.4% and 7.1% respectively.

• The decrease in repair and maintenance (5.1%) in March 2020 was because of falls in all repair and maintenance sectors; the largest contributor was private housing repair and maintenance, which fell by 8.6%, the largest month-on-month fall on record.

• Construction output fell by 2.6% in Quarter 1 (Jan to Mar) 2020, compared with Quarter 4 (Oct to Dec) 2019; this was driven by a 2.1% decrease in new work and a 3.5% decrease in repair and maintenance.

• New orders grew by 11.8% in Quarter 1 2020 compared with Quarter 4 2019; this rise was because of increases in both all other work and new housing, which rose 11.5% and 12.5% respectively.

Construction output decreased by 5.9% in March 2020 compared with February 2020, falling to £12,720 million. This is the largest month-on-month fall in growth since monthly records began in January 2010. The all work construction output series is at the lowest level since October 2016.

Monthly falls are seen in both new work, and repair and maintenance of 6.2% and 5.1% respectively, with decreases experienced in all types of work. This is the first time that all types of work have seen falls in monthly growth since the monthly records began in January 2010.

The significant decline in construction output in March 2020 was affected by the coronavirus (COVID-19). We received a large amount of anecdotal information from survey respondents regarding this although it is difficult to quantify the exact impact on the industry.

For Quarter 1 (Jan to Mar) 2020, construction output decreased by 2.6% compared with Quarter 4 (Oct to Dec) 2019. This follows a fall of 0.1% in Quarter 4 2019. This is the largest decrease in quarterly growth since Quarter 2 (Apr to June) 2012 where it decreased by 2.9% (Figure 1). Quarter 2 2012 also had exceptional factors contributing to the large quarterly fall, with an additional Bank Holiday because of the Queen's Jubilee, and unseasonal weather.

The monthly profile of growth within Quarter 1 2020 is also noteworthy as not all the decrease is coming from the coronavirus-impacted, weak March 2020. While January 2020 saw 0.1% growth, February 2020 experienced a large decline in monthly growth of 2.1%. This was because of the adverse weather (PDF, 51KB) and flooding experienced throughout the month, February 2020 being the wettest February since Met Office records began in 1862.

Figure 2 shows the monthly and quarterly indexed chained volume measure, seasonally adjusted series. The quarterly series provides a smoother and more comprehensive view of trends within the construction industry compared with the more volatile monthly series.

Coronavirus (COVID-19) in March 2020

On 23 March 2020, the UK and devolved governments announced official guidance on restrictions in movement for Great Britain as a result of the coronavirus (COVID-19) pandemic. Data collection for the Monthly Business Survey for construction and allied trades (MBS) for March 2020 was via paper questionnaire and covers the reference period 1 to 31 March 2020.

The closure of work sites and premises during April 2020 has led to response for March 2020 being lower in comparison with other months. For further information please see Section 10, Measuring the data, under the coronavirus impact on March 2020 response rates subheading.

We have worked closely with our respondents and data suppliers, and have used additional data sources to inform the estimates in this publication. Qualitative information sourced from construction industry respondents to the Business Impact of Coronavirus (COVID-19) Survey (BICS) was used to quality assure response we received for March 2020. Anecdotal evidence from responders to both BICS and/or the MBS suggests a fall in activity across all construction industries.

We closely monitor response rates in each publication and use statistical methods to deal with non-response. To assist with this, the mode of data collection will change for April 2020 to online data collection. For further information please see Section 10, Measuring the data.

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

As illustrated in Table 1 we see record falls in the different measures of growth for numerous types of work in March 2020.

Most notably the decreases experienced in March 2020 in the total repair and maintenance series are record falls for all growth measures published. This is mainly being driven by record falls in all four growth series by private housing repair and maintenance work.  

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 3. All new work accounts for approximately two-thirds of all work, while repair and maintenance accounts for approximately one-third of all work.

Significant falls in both new work, and repair and maintenance can be seen in March 2020. This is illustrated in the monthly series, with new work activity being at its lowest since November 2016 and repair and maintenance being at its lowest since February 2015.

Construction output decreased by 5.9% (£791 million) in March 2020 compared with February 2020 because of declines across all construction sectors. This is the largest monthly fall since monthly records began in 2010, and the first time all sectors have declined in the same month.

Figure 4 shows the month-on-month output growth in March 2020 for the different construction sectors, taken from our seasonally adjusted, chained volume measure series.

New work fell by 6.2% (£559 million) and repair and maintenance fell 5.1% (£233 million) in March 2020, both of which were record falls in the month-on-month series.

Figure 5 shows this led to the largest month-on-month fall in all work since monthly construction output records began in 2010.

The record 6.2% (£559 million) fall in new work in March 2020 was driven by declines across all sectors. The largest contribution came from private new housing, which fell by 6.4% (£182 million), following the record 8.2% (£254 million) fall in the weather-impacted February 2020, as shown in Figure 6. This combined £436 million fall in private new housing output since January 2020 means private new housing is at its lowest level since April 2017.

Other large contributions to the record decrease in new work came from private commercial new work, which fell 7.1% (£164 million), and public other new work, which decreased 12.8% (£111 million) and was a record monthly fall in growth.

The record 5.1% (£233 million) fall in repair and maintenance was also driven by declines across all sectors, with the largest contribution coming from private housing repair and maintenance, which fell by a record 8.6% (£136 million).

The large monthly decreases in March 2020 are backed up further using the results from the Business Impact of Coronavirus (COVID-19) Survey (BICS). Among those construction firms that reported to BICS for wave 1, which covered the period 9 March to 22 March (XLSX, 35KB), approximately 33% of businesses reported turnover being lower than expected for the period, with little difference by size of firm.

Using data from wave 2 for BICS, which covered the period 23 March to 5 April (XLSX, 23KB), so is partially comparable with construction output data for March 2020, it is clear how quickly the impact of the official government advice announced on 23 March impacted the industry. Among construction firms, 70.8% reported "turnover being substantially lower than normal"' for this two-week period and of these firms nearly all (98.6%) reported the coronavirus as the reason for turnover being outside of the normal range.

It is worth noting how construction firms were operating in the period at the end of March. Using wave 2 data (XLSX, 75KB) a large proportion of construction businesses were continuing to trade (70.9%), however, many firms had taken steps to reduce the workforce. Among construction firms, 63.3% reported having to lay off staff in the short-term, with just over a third also reporting a decrease in working hours (34.4%).

Figure 7 shows the difference in Quarter 1 (Jan to Mar) 2020 output compared with Quarter 4 (Oct to Dec) 2019 from the different construction sectors, taken from our seasonally adjusted, chained volume measure series. Construction output fell by 2.6% (£1,059 million) in Quarter 1 2020, compared with the previous quarter.

New work fell by 2.1% (£579 million) in the quarter-on-quarter series in Quarter 1 2020, driven by falls across most sectors. The largest declines in new work were a 5.3% (£386 million) fall in private commercial new work and a 4.2% (£381 million) fall in private new housing.

Repair and maintenance saw a decrease of 3.5% (£480 million) in March 2020, which was the largest three-month on three-month decline on record. Private housing repair and maintenance fell by a record 7.5% (£369 million) and has not seen growth for 11 consecutive periods in the three-month on three-month series.

Unlike the monthly series, three sectors saw growth in work for Quarter 1 2020. These were infrastructure, public other new work, and public housing repair and maintenance, which saw growth of 3.7% (£210 million), 5.3% (£123 million) and 1.6% (£32 million) respectively. As shown in Figure 8 the growth for all three series is coming from either a relatively strong January 2020 or a relatively weak Quarter 4 2019 in the comparison period.

In this release there are revisions to construction output, first published within the Construction output in Great Britain: February 2020 release published on 9 April 2020, to January and February 2020.

Details of why revisions can be seen across the whole period are available in the Measuring the data section.

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.

Total new orders increased by 11.8% (£1,373 million) in Quarter 1 (Jan to Mar) 2020 compared with Quarter 4 (Oct to Dec) 2019. This was because of increases in both new housing new orders by 12.5% (£435 million) and all other new work new orders by 11.5% (£939 million).

The level of new orders in Quarter 1 2020 is at its highest point since the High Speed 2 (HS2) impact in Quarter 3 (July to Sept) 2017. Excluding Quarter 3 2017, the growth of total new orders (11.8%) in Quarter 1 2020 is the largest since Quarter 2 (Apr to June) 2016 (12.3%) (Figure 9).

The increase in Quarter 1 2020 in new orders mainly came from increases in January and February, with these months recording 42% and 39% respectively of the overall total within the quarter. It was therefore noticeable that once the coronavirus (COVID-19) started to spread across Great Britain in March the number of new orders decreased significantly as uncertainty increased. This is seen with March 2020 only contributing 19% of the overall total for Quarter 1 2020. This is significantly lower compared with March 2018 and March 2019, as shown in Table 5.

The main contributor to the growth in Quarter 1 2020 was infrastructure, which increased 77.7% in the quarter-on-quarter series and is the largest increase in this series since the HS2-affected quarter in Quarter 3 2017. This increase in infrastructure came from large one-off orders in the roads and electricity series.

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.

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 a questionnaire by post 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

Revisions in the release are a result of:

• late responses to surveys 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

With the lower response rates as highlighted in Section 2 it is important to note revisions to March 2020 and Quarter 1 (Jan to Mar) 2020 may be larger than previously observed as actual data and revised data replace the larger than normal number of imputations for non-response.

Construction new orders data collection

New orders data are sourced from Barbour ABI who web scrape planning application data from all local authorities in England, Scotland and Wales; this method allows identification of planning applications as soon as they are published, while projects outside the planning application process are captured via investigations from Barbour's in-house team of researchers. These data are then validated firstly by Barbour ABI and supplied to the Office for National Statistics (ONS), who also further validate, process and quality assure the data before new orders in the construction industry estimates are published.

Revisions to new orders data

Revisions in the release to new orders are as a result of:

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

• revisions to the input series for the Construction Output Price Indices; please note because of minor revisions in the Construction Output Price Indices minor revisions can be seen in Tables 1 to 3 and 8 to 9

• as announced in the previous new orders release, we will also be open for revision in the current price, non-seasonally adjusted data (Tables 4 to 6) for the previous quarter; because of a revaluation of a project in Quarter 4 (Oct to Dec) 2019 we have revised up new orders by £200 million in the infrastructure series

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 and New orders in construction 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 3 (July to Sept) 2019.

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 (COVID-19) impact on ONS construction output and new orders data

Temporarily ceasing 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 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.

Monthly Business Survey – anecdotal evidence from businesses

Because of the closure of work sites and premises during April 2020, response to the Monthly Business Survey (MBS) was lower for March 2020 in comparison with other months, though we received considerably more anecdotal information.

Anecdotal information from respondents to the MBS regarding the coronavirus was from across construction industry groups in a similar proportion to the overall composition of the sample, as shown in Table 7.

This was also the case for employment and turnover sizes where the proportion of comments from businesses with more than or less than 100 registered employment, and more than or less than £65 million registered turnover, was similar to the proportion of the MBS.

The coronavirus impact on March 2020 response rates

As highlighted in Section 2, the coronavirus has impacted on response rates in this release and is likely to be a factor in reduced response for future releases.

Table 8 shows the response rates to the MBS at time of publishing for each reference period. Response rates were considerably lower in March 2020 compared with other months, when measured by both the turnover coverage of the industry and proportion of questionnaire forms returned.

Construction output impute for non-response 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.

Online data collection for April 2020

The monthly construction output questionnaire was collected via paper data collection for March 2020. However, like other ONS business surveys, from April 2020 we will move the questionnaire to online data collected. This means that construction firms can log on from any location and submit their data at an appropriate time.

Coronavirus impact on the Quarter 1 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 March 2020 are significantly lower (Table 8), 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 March 2020.

Links to additional ONS sources of coronavirus information

Since the last monthly output publication various articles have been published, which help describe the ONS response to how the coronavirus might be seen in our estimates:

Meeting the challenge of measuring the economy through the COVID-19 Pandemic (published 6 May 2020)

Coronavirus and the effects on UK GDP (published 6 May 2020)

Real-time turning point indicators: a UK focus (published 27 April 2020)

Communicating gross domestic product (published 27 April 2020)

Our latest data and analysis on the impact of how the coronavirus on the UK economy and population is also now available on a new webpage. This will be the hub for all special virus-related publications, drawing on all available data.

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.

National accounts

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.

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).

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.

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. 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:

• Housing in construction output statistics, Great Britain: 2010 to 2019 (30 March 2020)

• Comparing ONS's economic data with IHS Markit and CIPS Purchasing Managers' Index surveys (published 21 October 2019)

• Conceptual and methodological differences between private housing construction output and gross fixed capital formation private sector dwellings (published 31 May 2019)

• Construction statistics development: improving the understanding of new orders in the construction industry and the gap between output and new orders (published 30 October 2018)

Further articles on other construction statistics development work and analysis are available.