Construction output in Great Britain: November 2020

• Construction output grew by 1.9% in the month-on-month all work series in November 2020, because of a 3.5% increase in new work that more than offset the 0.6% fall in repair and maintenance; this was the seventh consecutive month of growth since the record decline (40.7%) in April 2020.

• The level of construction output in November 2020 was 0.6% above the February 2020; with repair and maintenance work 7.4% above and new work 3.1% below its pre-pandemic level.

• The monthly increase in new work (3.5%) in November 2020 was because of growth in all new work sectors apart from public new housing and public other new work, which fell by 2.4% and 2.8% respectively.

• The monthly decrease in repair and maintenance (0.6%) in November 2020 was because of a 6.0% fall in private housing repair and maintenance, despite growth of 5.7% in public housing and 1.9% in non-housing repair and maintenance.

• Construction output grew by 12.4% in the three months to November 2020 compared with the previous three-month period, because of growth in both new work (11.9%) and repair and maintenance (13.2%).

• We have a short survey for feedback about the content of this bulletin; the survey should take less than five minutes to complete and we would be grateful for any feedback.

Monthly construction output grew by 1.9% in November 2020 compared with October 2020, rising to £14,014 million. The monthly growth in November 2020 is the seventh consecutive month of growth since the record monthly decline of 40.7% in April 2020 and reverses the trend of slowing growth between June 2020 to October 2020.

All work construction output in November 2020 recovered above its pre-pandemic level for the first time, at 0.6% (£80 million) above the February 2020 level. While construction output is slightly above the February 2020 level it is still down by 0.3% (£40 million) on the level of output in January 2020 because of February being impacted by adverse weather.

Table 1 shows the change in output for the types of construction work between February 2020 and November 2020. While all repair and maintenance sectors have recovered above their February 2020 pre-lockdown level, most new work sectors are yet to do so except for infrastructure and private new housing.

It is notable that while the housing sectors (new work and repair and maintenance, both private and public sector) saw the largest falls in March and April 2020 they have since bounced back relatively strongly from April to November 2020 compared with the other types of work. However, public new housing work in November 2020 remains 22.1% (£122 million) below the February 2020 level.

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.

Despite the monthly fall in repair and maintenance, output in November 2020 was 7.4% above its February 2020 level, with all repair and maintenance sectors having recovered. In comparison, the level of new work output remains 3.1% below its February 2020 level, with only infrastructure and private new housing having recovered.

Anecdotal evidence received from respondents to the monthly business survey for construction and allied trades suggests a divergence in growth between repair and maintenance and new work since April 2020, likely to be as a result of a reduced amount of new orders, most notably in the private commercial and private industrial sectors. As a result of this reduced pipeline of new work, businesses may be undertaking increased repair and maintenance work to make up for a shortfall of new work.

Construction output grew by 1.9% (£264 million) in November 2020 compared with October 2020 because of increases in most sectors, as shown in Figure 3.

New work grew by 3.5% (£296 million) in November 2020 compared with October 2020, because of increases in most new work sectors, the largest contributors to which were infrastructure which grew by 9.6% (£174 million) and private new housing which grew by 4.7% (£138 million). In comparison, the two new work sectors that saw a monthly decrease were public other new work, which fell by 2.8% (£24 million) and public new housing work, which fell 2.4% (£10 million).

Figure 4 shows the level of construction output in new work sectors since February 2020. Infrastructure output recovered to its pre-lockdown February 2020 level in August 2020, falling below this level since then until November 2020.

Similarly, private new housing, which recovered above its February 2020 level in September 2020, returned below this level October 2020, and has recovered again above it in November 2020. The recent strength in housing activity is corroborated by Ministry of Housing, Communities and Local Government data, which shows that the number of energy performance certificates issued for new dwellings for England and Wales in the week commencing 23 November 2020 was just over 6,500 energy performance -the highest in 2020 and a 3.4% increase on the corresponding week in 2019.

In contrast, all other new work sectors remain below their February 2020 level with growth broadly flat in recent periods.

Repair and maintenance output fell by 0.6% (£33 million) in November 2020 because of a 6.0% (£120 million) decrease in private housing repair and maintenance. This more than offset growth of 1.9% (£48 million) in non-housing repair and maintenance and 5.7% (£39 million) in public housing repair and maintenance.

This is the first monthly decrease in repair and maintenance output since April 2020 when it fell 37.9% (£1,769 million). Despite this, output in every repair and maintenance sector in November 2020 remains above the pre-lockdown February 2020 level as shown in Figure 5.

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

Qualitative information sourced from the Business Impact of Coronavirus (COVID-19) Survey (BICS) was used to quality assure response we received for the Monthly Business Survey for construction and allied trades (MBS) for November 2020. Health and safety measures such as social distancing, where businesses are working on premises and sites, continue to reduce capacity and level of work.  However, unlike the government guidelines on restrictions in movement during the first lockdown in April and May, the construction industry remained broadly open across Great Britain in November 2020.

Figure 6 shows how the fortnightly construction net balance turnover estimates from the BICS, broadly reflect the published construction output all work estimates. Both suggest a slowing of construction output growth in the most recent periods to November 2020.

Figure 6: Fortnightly turnover estimates from BICS broadly reflect the monthly construction output estimates in the periods to November 2020

Construction net turnover balances of businesses currently trading against all work construction output monthly estimates, UK, 1 February to 27 December 2020

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Notes

1. Construction output estimates are for Great Britain, whereas Business Impact of Coronavirus (COVID-19) Survey (BICS) estimates are for the UK construction sector.

2. Final unweighted results, Wave 1 to Wave 6, and final weighted results, Wave 7 to Wave 21, of the Office for National Statistics (ONS) Business Impact of Coronavirus (COVID-19) Survey (BICS).

3. Weighted net balances have been calculated from Wave 7 onwards only. The sample redesign in Wave 7 improves our coverage for the small sized businesses, allowing for weighted results to be truly reflective of all businesses.

4. Net balances have been calculated by subtracting the weighted by turnover number of construction businesses who have reported a decrease in turnover from the weighted by turnover number of construction businesses with an increase in turnover, all divided by the total weighted number of construction businesses currently trading for that wave then scaled up using a scaling factor.

Evidence from BICS also shows that construction industry respondents had a lower proportion of their workforce on partial or furlough leave than the average for all industries, as well as a greater proportion working at their normal place of work. BICS Wave 18, which covered the reference period 2 to 15 November 2020, shows that construction industry respondents had 2.7% of their workforce on partial or furlough leave compared with the 15.1 % average for all industries, as shown in Table 3. Furthermore, construction industry respondents indicated that 64.5% of their workforce was at their normal place of work, compared with 50.8% for all industries.

ONS Vacancy Survey - Construction

While the construction industry was one of the sectors to see a large quarterly fall in vacancies at the start of the pandemic in April to June 2020 (down 71.7%), it has recovered well. It is one of only three sectors (UK SIC 2007 Section D -- electricity, gas steam and air conditioning supply and Section L -- real estate activities being the other industries) with an estimated annual increase in vacancies in September to November 2020.  This increase has meant vacancies have returned to a pre-pandemic level.

Figure 7 illustrates the sharp fall in weekly vacancies that were advertised in April and May 2020 in the construction industry. However since then the number of vacancies being advertised are growing at a faster rate compared with the overall economy and has returned to its pre-pandemic level.

Construction output grew by 12.4% (£4,544 million) in the three months to November 2020 compared with the previous three-month period because of increases in every sector, as shown in Figure 8.

This is the third consecutive period in the three-month on three-month series where every sector has seen growth, though growth has generally slowed.

New work grew by 11.9% (£2,740 million) in the three months to November 2020 because of increases in all new work sectors. The largest contributor by far to the increase in output in the three months to November 2020 was private new housing work, which grew by 21.4% (£1,587 million).

Repair and maintenance grew by 13.2% (£1,802 million) in the three months to November 2020, driven by growth in all repair and maintenance sectors. Private housing repair and maintenance was the largest contributor to this increase, growing by 13.4% (£683 million), followed by non-housing repair and maintenance, which grew by 9.0% (£637 million).

Figure 9 shows the contribution from private housing new work and private housing repair and maintenance work, compared with all other construction sectors combined. Total private housing work drove the decline and subsequent growth in all work in the three-month on three-month series, contributing to half of the growth in the three months to November 2020.

This is the first monthly release to incorporate the revisions made in the GDP quarterly national accounts, UK: July to September 2020 release, published on 22 December 2020. As a result, revisions have been made back to January 2019.

Revisions to quarterly construction output growth can be found in Table 4. The most notable revision can be seen in Quarter 2 (Apr to June) 2020, where Value Added Tax (VAT) turnover data is used to replace survey data for those industries where selected leading to a larger than usual upward revision of 3.0 percentage points.

In addition to the revisions to construction output first published within the GDP quarterly national accounts, UK: July to September 2020 release on 22 December 2020 , this publication also includes revisions to October 2020 data first published in Construction output in Great Britain: October 2020 release on 10 December 2020.

The monthly growth for construction output, all work, chained volume measure, seasonally adjusted series for October 2020 is revised up 0.5 percentage points from 1.0% to 1.5%. This is mainly because of late survey returns replacing imputed values (which, in turn has affected those businesses who are still imputed for because of non-response).

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.

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.

Feedback survey

In this publication we have a short survey about the monthly construction output bulletin to gain feedback on its content. The survey should take less than five minutes to complete and we would be grateful for any responses.

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.

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. 

Revisions to construction output data

Revisions in the 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

• HM Revenue and Customs (HMRC) Value Added Tax (VAT) returns replacing Monthly Business Survey (MBS) data for small- and medium-sized businesses for Quarter 2 (Apr to June) 2020 for the first time as well as potential revisions to previous VAT turnover data

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

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 2 (Apr to June) 2016 to Quarter 2 (Apr to June) 2020.

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 impact on ONS construction output in November 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 have 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 by 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.

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 November 2020 these response rates are slightly lower than recent comparable months and is likely to be as a result of the data collection period spanning the Christmas and New Year period where many businesses are closed.

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 5, 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 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 10 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 present, followed by a sharp increase in April 2020. Since April 2020, the proportion of zero returns has continued to decline until November 2020 where it increased to 11.4%, which was the highest since August 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 period affected by lockdown.

Coronavirus impact on the November 2020 seasonal adjustment

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, time series analysis experts are regularly asked to review the seasonal adjustment when required. This approach has been adopted for the latest months and has resulted in changes to seasonal adjustment specification files to ensure the seasonal adjustment parameters are appropriate.

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 that help describe the ONS response to the coronavirus might be seen in our estimates:

• Coronavirus and the latest indicators for the UK economy and society: 7 January 2021 (Released 7 January 2021)

• Coronavirus and housing indicators in England and Wales (Released 2 July 2020)

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

• Meeting the challenge of measuring the economy through the coronavirus pandemic (Released 6 May 2020)

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

• Communicating gross domestic product (Released 27 April 2020)\ 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.

End of EU exit transition period

The transition period ended on 31 December 2020. The UK statistical system will continue to collect and produce our wide range of economic and social statistics about the UK. We are committed to continued alignment with international standards, enabling comparability both over time and internationally and we will work with users of statistics to make sure they have the data they need to support the decisions they have to make.

Additionally, 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 EU budget contributions are finalised for the years in which we were a member, and making budget contributions during the transition period. To ensure this comparability during this period, the national accounts will continue to be produced according to European System of Accounts (ESA) 2010 definitions and standards.

As the shape of the UK's future statistical relationship with the EU becomes clearer over the coming period, the ONS is making preparations to assume responsibilities that as part of our membership of the EU, and during the transition period, were delegated to the statistical office of the EU, Eurostat. This includes responsibilities relating to international comparability of economic statistics, deciding what international statistical guidance to apply in the UK context and to provide further scrutiny of our statistics and sector classification decisions.

In applying international statistical standards and best practice to UK economic statistics, we will draw on the technical advice of experts in the UK and internationally, and our work will be underpinned by the UK's well-established and robust framework for independent official statistics, set out in the Statistics and Registration Service Act 2007. Further information on our proposals will be made available in early 2021.

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

Headline volume estimates of construction output are assessed against international guidelines such as 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. 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.