Construction output in Great Britain: September 2019

• Construction output increased by 0.6% in Quarter 3 (July to Sept) 2019, partially reversing the decrease of 1.2% in Quarter 2 (Apr to June) 2019.

• This growth in Quarter 3 2019 was driven by a rise in new work of 1.4% but offset slightly by a fall in repair and maintenance of 0.8%.

• In new work, most sectors saw an increase with private housing (1.8%), private commercial (1.5%) and private industrial (7.2%) contributing significantly to the rise in Quarter 3 2019.

• In repair and maintenance, the fall in Quarter 3 2019 was driven by a 3.0% decline in private housing and to a lesser extent a decline of 0.3% in non-housing.

• Construction output decreased by 0.2% in the month-on-month all work series in September 2019; this was driven by a fall of 2.1% in repair and maintenance, which was partially offset by a rise in new work of 0.7%.

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.

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 Value Added Tax (VAT) and payments to subcontractors.

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). 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-making and policy-making. 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 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 1 (Jan to Mar) 2019.

Furthermore, 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: subnational and sub-sector.

Summary information can be found in the Construction output quality and methodology information report.

Compared with the previous Construction output in Great Britain: August 2019 publication released on 10 October 2019, July and August 2019 are open to revisions in today’s publication in line with the National Accounts Revisions Policy. For further information on revisions in this release please see Section 5.

Construction statistics annual for Great Britain, 2018

Construction statistics, Great Britain: 2018 was published on 18 October 2019. This publication contains analysis of a range of statistics on the construction industry, as well as information on sources, including value of output, new orders by sector, number of firms and total employment.

Feedback on construction output prices

In this publication we are releasing a short survey about the Construction Output Price Indices briefing note and the effects of revisions for users, which we would be extremely grateful for users to complete. For further information on this change please see Section 9.

Comparing the Office for National Statistics economic data with IHS Markit and CIPS Purchasing Managers' Index surveys

A comparison between official estimates of UK output and diffusion indices, looking at the level of correlation between Office for National Statistics data and IHS Markit and Chartered Institute of Procurement and Supply Purchasing Managers’ Indices was published on 21 October 2019.

Construction output increased by 0.6% in Quarter 3 (July to Sep) 2019, compared with the previous quarter, partially reversing the decrease of 1.2% in Quarter 2 (Apr to June) 2019.

Over the longer term, the industry has experienced a slightly positive trend in growth in the all work series since the start of 2017, however this is markedly slower growth in comparison with the period prior to 2017.

In the monthly series, construction output decreased by 0.2% in September 2019, reversing the 0.1% growth seen in August 2019. The industry has experienced a mixed profile of monthly growth since the record high of £13,869 million recorded in the monthly all work series in February 2019, where falls in March, April, June and September have largely been offset by increases in May, July and August. The level of construction output in September 2019 is now £238 million (1.7%) below this record high.

Figure 1 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 than the more volatile monthly series.

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. 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.

There was a month-on-month increase in new work of 0.7% in September 2019, while repair and maintenance saw a decrease of 2.1%. For new work, all sectors experienced relatively small monthly increases and decreases, apart from infrastructure, which had growth of 6.2% and private industrial new work, which experienced a decrease of 5.9%.

The decrease of 2.1% in repair and maintenance was comprised of falls in all sectors. The largest contributors to the fall in September 2019 were from private housing repair and maintenance work (2.5%) and non-housing repair and maintenance work (1.8%).

Figure 3 shows the difference in output for construction sectors for Quarter 3 (July to Sep) 2019 compared with Quarter 2 (Apr to June) 2019, taken from our seasonally adjusted, chained volume measure series. Construction output increased by £253 million in Quarter 3 2019 compared with Quarter 2 2019.

New work output increased by £367 million in Quarter 3 2019. This growth was driven by private new housing, which increased by £156 million, with private commercial and private industrial new work also growing by £108 million and £91 million respectively. Public housing new work was the only sector that fell, decreasing by £72 million.

In contrast to new work, repair and maintenance output declined by £114 million, driven by a £150 million fall in private housing repair and maintenance, which is the fifth consecutive decline in this series, with a smaller fall in non-housing repair and maintenance of £19 million. In contrast there was an increase of £54 million in public housing repair and maintenance.

Figure 4 shows the difference in month-on-month levels from the different construction sectors, taken from our seasonally adjusted, chained volume measure series. Compared with August 2019, construction output shrank by £33 million in September 2019.

For new work, output increased by £62 million in September 2019. This was driven largely by infrastructure, which increased by £114 million – the largest monthly increase since January 2017 when it increased by £200 million – with a smaller positive contribution from public housing new work, which grew by £13 million in September 2019. Elsewhere, private industrial new work, private commercial new work and private new housing saw relatively smaller decreases of £28 million, £17 million and £16 million respectively.

In contrast to new work, repair and maintenance saw a fall of £95 million in September 2019. All sectors within repair and maintenance saw a fall, with total housing repair and maintenance and non-housing repair and maintenance decreasing by £53 million and £42 million respectively.

Total all work decreased to £13,631 million in September 2019 compared with August 2019, falling by 0.2% (£33 million). This was driven by a 2.1% fall in repair and maintenance, with new work offsetting this decrease slightly with an increase of 0.7%.

In the month-on-month series in September 2019, growth rates were negative across all sectors apart from infrastructure and public new housing. Infrastructure grew by 6.2% (£114 million), which is the joint highest growth rate since December 2017 when it also grew by 6.2% (£105 million). Public new housing increased by 2.4% (£13 million) in September 2019. The largest negative contributions came from private industrial new work, which fell by 5.9% (£28 million), however this followed substantial growth of 12.9% (£54 million) in August 2019. Elsewhere, all sectors within repair and maintenance experienced a monthly fall in September 2019.

In the month-on-year all work series in September 2019, there was an increase of 0.5% (£65 million) in September 2019. This increase was driven by a 3.5% (£307 million) increase in new work, which was offset somewhat by a 5.1% (£242 million) fall in repair and maintenance. The fall in the month-on-year series for repair and maintenance is largest fall in growth since December 2012 when it fell by 6.2%. Most types of new work saw an increase in their month-on-year series in September 2019, with only public other new work falling, by 4.6% (£38 million).

The main contributors to the rise in the month-on-year series in new work for September 2019 were infrastructure and private commercial other new work, which increased by 8.7% (£158 million) and 3.0% (£68 million) respectively, and total housing, which grew 2.1% (£73 million).

The only type of work within repair and maintenance to experience a growth in the month-on-year series in September 2019 was public housing repair and maintenance, which saw a small increase of 0.5% (£3 million). The largest negative contribution came from non-housing repair and maintenance, which fell 5.6% (£134 million) – the largest decrease in this series since March 2016 when it shrank by 9.1% (£200 million).

In contrast to the decline in month-on-month growth in September 2019, in the three-month on three-month total all work series there was an increase of 0.6% (£253 million). However, it should be noted in June 2019 we saw a 2019 low month in the all work, chained volume measure, seasonally adjusted series and this now enters the comparison period Quarter 2 (Apr to June) 2019 for the three-month on three-month growth.

New work grew by 1.4% (£367 million) offset by a decline in repair and maintenance of 0.8% (£114 million). The increase in new work in this series came from growth in all sectors apart from public housing new work, which saw a fall of 4.3% (£72 million). The largest positive contribution came from private housing new work, which grew 1.8% (£156 million).

There also a notable positive contribution from private commercial new work, which increased by 1.5% (£108 million). The 0.8% decrease in repair and maintenance was driven by falls across all sectors apart from public housing repair and maintenance which grew in the three-month on three-month by 3.0% (£54 million). This was offset by a large fall in private housing repair and maintenance of 3.0% (£150 million) and with a smaller negative contribution from non-housing repair and maintenance, which fell by 0.3% (£19 million).

In the three-month on three-month a year earlier total all work series in September 2019, the growth of 1.2% (£494 million) was driven by an increase of 3.7% (£965 million) in new work. This was offset by a fall of 3.3% (£471 million) in repair and maintenance – the largest fall in this series since February 2013 when it fell 4.4%. The notable positive contributions to the three-month on three-month a year earlier growth in September 2019 were infrastructure and new housing work. Infrastructure grew by 8.3% (£439 million) and both private and public new housing saw growth, with increases of 2.3% (£206 million) and 9.4% (£136 million) respectively. Public other new work was the only sector in new work to see a decrease, falling by 3.5% (£86 million).

Public housing was the only sector within repair and maintenance to grow in the three-month on three-month a year earlier series, increasing by 1.3% (£25 million) – the best performance since September 2015 when it grew by 1.6%. This sector makes up approximately 14% of repair and maintenance in this series and there were notable decreases across all other sectors of repair and maintenance as shown in Figure 5. The 6.6% (£347 million) fall in private housing repair and maintenance was the largest fall since February 2013 when it fell 8.2%, with the 2.1% (£147 million) fall in non-housing repair and maintenance the largest fall since May 2016.

This September 2019 release contains revisions for July and August 2019 in line with National Accounts Revisions Policy. As can be seen in Table 2 there are revisions to the all work, chained volume measure, seasonally adjusted data for both months in both the month-on-month and three-month on three-month series.

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

• 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

• HM Revenue and Customs (HMRC) Value Added Tax (VAT) returns replacing Monthly Business Survey (MBS) data for small- and medium-sized businesses when VAT estimates become available each quarter (although for this release, no additional VAT data are available compared with the previous publication)

• revisions to the input series for the construction output price indices

Table 2 shows the data published on 10 October 2019 compared with data in this release. The main cause of these revisions is late and revised survey data returns, with revisions to deflators and seasonal adjustment also having an impact.

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.

Output in the construction industry follows the Eurostat Short Term 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. 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 17 October 2019 for August 2019, showed the seasonally adjusted production in construction (PDF, 566KB) was down at 0.5% in the Euro area (EA-19) and fell by 0.2% in the EU-28 when compared with July 2019.

It should be noted that an accurate comparison cannot be made, as Eurostat data are calculated on a 2015 equals 100 basis, while Great Britain data are calculated on a 2016 equals 100 basis.

Outside the EU, the US Census Bureau release Monthly Construction Spending (PDF, 290KB) for August 2019 was published on 1 November 2019. This includes the total dollar value of construction work done in the US.

Construction statistics, Great Britain: 2018 was published on 18 October 2019. This publication contains analysis on the construction sector in 2018, as well as information on sources and outputs in the industry.

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, it should be also noted that a longer time series can be obtained in the monthly gross domestic product datasets. 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.

Monthly data from the construction survey are only available from January 2010, therefore the data before this period are derived using statistical methods from the available quarterly data and should therefore be treated with some caution.

• Ministry of Housing, 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 report (updated 9 August 2019) contains important information on:

• the strengths and limitations of the data and how it compares with related data

• uses and users of the data

• how the output was created

• the quality of the output including the accuracy of the data

Value Added Tax (VAT) turnover has been used to estimate the output of small- and medium-sized businesses. In this release, VAT turnover has been used for selected industries previously covered by the Monthly Business Survey from Quarter 1 (Jan to Mar) 2016 to Quarter 1 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 Value Added Tax turnover data

As part of the ongoing Office for National Statistics (ONS) Construction Statistics Development Programme, we have worked closely with the Construction Statistics Steering Group. This group provides a forum for the ONS to engage with main users of construction statistics on the development of ONS-published construction statistics, including other government departments, industry experts and academics, to identify areas for improvement.

These improvements have led to the redesignation of Construction output, Construction Output Price Indices and New orders as National Statistics. A letter concerning the redesignation is available. Please note this National Statistics re-designation did not include the Output in the construction industry: subnational and sub-sector dataset.

We have also published a series of methodological articles to help communicate recent improvements:

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

• Construction output quality and methodology information (published 9 August 2019)

• New orders in construction quality and methodology information (published 9 August 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)

• Impact of improvements to construction statistics: June 2018 – implemented as part of Blue Book 2018 (published 29 June 2018)

• Improvements to construction statistics: Addressing the bias in early estimates of construction output, June 2018 (published 4 June 2018)

• Construction development: improvements to regional and sub-sector level estimates, June 2018 (published 4 June 2018)

• Construction development: Impact of improvements to construction statistics: September 2017 (published 29 September 2017)

In this publication we are releasing a short survey about the Construction Output Price Indices briefing note and the effects of revisions for users, which we would be extremely grateful for users to complete. The survey should take less than five minutes to complete, and answers would be invaluable. The survey will close at the end of February 2020.

As part of our commitment to Data Protection under the General Data Protection Regulations (GDPR), which came into effect from 25 May 2018, we would now like to make you aware of how the ONS uses and stores the contact details you have provided. All personal data you provide to the ONS will be stored securely, both physically and electronically, in accordance with our policies. Our servers are based in the UK and we will not share your data with any third-parties.

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