Construction output in Great Britain: October 2020

Short-term measures of output by the construction industry and contracts awarded for new construction work in Great Britain.

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Cyswllt:
Email John Allcoat

Dyddiad y datganiad:
10 December 2020

Cyhoeddiad nesaf:
15 January 2021

1. Main points

  • Construction output grew by 1.0% in the month-on-month all work series in October 2020, because of increases in both new work (0.3%) and repair and maintenance (2.3%); this is the sixth consecutive month of growth but the smallest monthly increase in that time.
  • Monthly growth in October 2020 (1.0%) was because of increases in all sectors, apart from private new housing and private commercial new work.
  • The level of construction output in October 2020 was 6.4% below February 2020, with only infrastructure having recovered above this pre-lockdown level of output.
  • Construction output grew by 24.9% in the three months to October 2020 compared with the previous three-month period, because of growth in both new work (23.8%) and repair and maintenance (26.8%).
  • 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 feedback.
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2. Construction output in October 2020

Monthly construction output increased by 1.0% in October 2020 compared with September 2020, rising to £13,066 million. The growth in October 2020 is the sixth consecutive month of growth since the record monthly decline of 41.2% in April 2020 but is the smallest monthly increase in that time.

Output in the all work construction output series in October 2020 remains 6.4% (£898 million) below the February 2020 level, before the full impact of the coronavirus (COVID-19) pandemic.

Table 1 shows the change in output for the types of construction work between February 2020 and October 2020, showing that all types of work have yet to recover to their February 2020 pre-lockdown level, except for infrastructure.

The mixed profile of the decline and recovery to date is also noteworthy. For example, housing (both new, and repair and maintenance, in both private and public) saw a large decline in March and April 2020 and has seen a strong bounce back since. Whereas other types of work, such as infrastructure and public other new work, saw a comparatively smaller fall in March and April 2020 and have registered relatively smaller growths since.

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3. Detailed growth rates

Table 2 illustrates that despite month-on-month and three-month on three-month growth, the level of output remains lower in October 2020 in the month-on-year and three-month on year measures, with the exception of infrastructure. This reflects the impact of the coronavirus (COVID-19) pandemic since February 2020.

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

There was growth in both new work, and repair and maintenance in October 2020, with stronger growth in repair and maintenance. However, both still remain below their pre-pandemic February 2020 level, with new work 8.2% below and repair and maintenance 3.1% below.

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4. Month-on-month construction output growth in October 2020

Construction output grew by 1.0% (£128 million) in October 2020 compared with September 2020 because of increases in most sectors, as shown in Figure 3.

New work grew by 0.3% (£23 million) in October 2020 compared with September 2020. This was because of increases in most new work sectors, the largest of which was public other new work, which grew by 7.5% (£54 million). In comparison, private new housing and private commercial new work were the only two sectors to decline in October 2020, falling by 1.9% (£56 million) and 1.5% (£30 million) respectively.

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 and has remained above this level since. The decline in April 2020 in this sector was relatively less sharp than other sectors, and likely to have been because of larger sites remaining partially open as social distancing measures were implemented more easily. Elsewhere, private new housing, which recovered above its February 2020 level in September 2020, returned below this level following the monthly fall of 1.9% (£56 million) in October 2020.

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

Repair and maintenance grew by 2.3% (£105 million) in October 2020 because of increases in all repair and maintenance sectors. The largest contributor was non-housing repair and maintenance, which grew by 2.3% (£53 million). Elsewhere, public housing repair and maintenance grew by 5.1% (£33 million) with private housing repair and maintenance growing by 1.2% (£20 million).

Despite this, output in every repair and maintenance sector in October 2020 remains below 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 October 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, with anecdotal information in October 2020 also suggesting the level of work available has reduced compared with prior to the coronavirus pandemic.

Figure 6 shows how the fortnightly 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 October 2020.

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

Net turnover balances of businesses currently trading against all work construction output monthly estimates, 1 February to 1 November 2020

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Notes:

  1. Construction output estimates are for Great Britain, whereas Business Impact of Coronavirus Survey (COVID-19) (BICS) estimates are for the UK.
  2. Final unweighted results, Wave 1 to Wave 6, and final weighted results, Wave 7 to Wave 15, 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 businesses who have reported a decrease in turnover from the weighted by turnover number of businesses with an increase in turnover, all divided by the total weighted number of businesses currently trading for that wave then scaled up using a scaling factor.

Download the data

Evidence from this survey also shows that construction industry respondents had a lower proportion of their workforce on partial or furlough leave than the average for all industries. BICS Wave 17 data, which relate to the period 19 October to 1 November 2020, show that construction industry respondents had 2.3% of their workforce on partial or furlough leave compared with the 9.0% average for all industries, as shown in Table 3.

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5. Three-month on three-month construction growth in October 2020

Construction output grew by 24.9% (£7,677 million) in the three months to October 2020 compared with the previous three-month period, because of increases in every sector as shown in Figure 7. This is the second consecutive period in the three-month on three-month series where every sector has seen growth, however, all sectors have slowed as the record declines in April 2020 move out from the base period.

New work grew by 23.8% (£4,775 million) in the three months to October 2020 because of increases in all new work sectors. The largest contributor to this three-month on three-month growth was private new housing, which grew by 48.0% (£2,857 million).

Repair and maintenance grew by 26.8% (£2,902 million) in the three months to October 2020, driven by growth in all repair and maintenance sectors. Private housing repair and maintenance was the largest contributor to this increase, growing by 40.0% (£1,413 million). Elsewhere, non-housing, and public housing repair and maintenance grew by 14.2% (£859 million) and 51.1% (£631 million) respectively.

Figure 8 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 to October 2020.

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6. Construction in Great Britain data

Output in the construction industry
Dataset | Released 10 December 2020
Monthly construction output for Great Britain at current price and chained volume measures, seasonally adjusted by public and private sector.

Output in the construction industry: sub-national and sub-sector
Dataset | Released 12 November 2020
Quarterly non-seasonally adjusted sub-national and sub-sector data at current prices, Great Britain (suspended – see Section 8: Measuring the data for further information).

Construction output price indices
Dataset | Released 12 November 2020
Monthly Construction Output Price Indices (OPIs) from January 2016 to September 2020, UK.

New orders in the construction industry
Dataset | Released 12 November 2020
Quarterly new orders at current price and chained volume measures, seasonally adjusted by public and private sector. Quarterly non-seasonally adjusted type of work and regional data.

Construction statistics annual tables
Dataset | Released 18 October 2019
The construction industry in Great Britain, including value of output and type of work, new orders by sector, number of firms and total employment.

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7. Glossary

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.

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8. Measuring the data

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.

Revisions to construction output data

Compared with the previous Construction output in Great Britain: September 2020 and new orders and Construction Output Price Indices, July to September 2020 publication released on 12 November 2020, today's publication contains no revisions. This is in line with the National Accounts revisions policy.

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.

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 1 (Jan to Mar) 2020.

Further information on the use of VAT turnover in construction output estimates and its impact can be found in the following articles:

Coronavirus impact on ONS construction output in October 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 via 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 4 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 October 2020, the response rates at first estimate are higher than February 2020 level, and the second highest since moving to the online questionnaire, behind only August 2020.

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 4, 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 9 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).

Since April 2020, the proportion of zero returns has continued to decline towards the stable element of approximately 7% to 10% of businesses reporting zero returns present prior to March 2020, falling to 10.5% in October 2020 – the lowest level since February 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 October 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.

Coronavirus impact on the October 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 no comparable historical data are available at the time of the first estimate for a reference month, no bias adjustment has been applied for October 2020.

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:

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

After the transition period ends on 31 December 2020, the UK statistical system will continue to collect and produce our wide range of economic and social statistics. We are committed to continued alignment with international statistical 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 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 until at least 2024.

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

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9. Strengths and limitations

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.

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Manylion cyswllt ar gyfer y Bwletin ystadegol

John Allcoat
construction.statistics@ons.gov.uk
Ffôn: +44 (0)1633 456344