Construction output in Great Britain: September 2021, new orders and Construction Output Price Indices, July to September 2021

• Monthly construction output grew 1.3% in volume terms in September 2021; new work and repair and maintenance both grew on the month, increasing by 1.3% and 1.2% respectively.

• The level of construction output in September 2021 was 1.0% (£141 million) below the level of February 2020, before the coronavirus (COVID-19) pandemic; new work was 3.5% (£334 million) below the February 2020 level, while repair and maintenance work was 3.9% (£194 million) above the February 2020 level.

• In contrast to the monthly growth, quarterly construction output fell 1.5% in Quarter 3 (July to Sep) 2021, compared with Quarter 2 (Apr to Jun) 2021; both new work (0.3%) and repair and maintenance saw decreases (3.6%).

• Total construction new orders fell 9.2% (£1,221 million) in Quarter 3 2021, compared with Quarter 2 2021.

• The annual rate of construction output price growth was 5.1% in September 2021; this was the strongest annual rate of construction output price growth since records began in 2014.

• At the type of work level, the annual rate of price growth in the 12 months to September 2021 was at its strongest in new housing (7.5%) and private industrial new work (6.3%).

Monthly construction output grew 1.3% in volume terms in September 2021, compared with August 2021. This is the first monthly increase since June 2021 and the largest since March 2021, when output increased by 4.8%.

Despite the monthly growth, declines in both July 2021 (1.2%) and August 2021 (0.7%), saw quarterly construction growth fall 1.5% in Quarter 3 (July to Sept) 2021, compared with Quarter 2 (Apr to June) 2021. This is the first quarterly fall since Quarter 2 2020, after four successive increases in quarterly growth.

Across Quarter 3 2021, anecdotal evidence received from survey returns to the Monthly Business Survey for Construction and allied trades suggested that the rising prices of raw materials such as steel, concrete, timber and glass, along with the difficulty in sourcing these materials for jobs contributed to the overall fall in the quarter.

Anecdotal evidence also suggested supply chain issues were a factor with many contributors, stating that while order books were healthy, the availability of certain construction products was affecting projects currently underway.

Detailed growth rates

Month-on-month change in construction output in September 2021

Construction output grew 1.3% (£178 million) in September 2021, compared with August 2021.

Non-housing repair and maintenance was the largest contributor to the monthly increase, growing 2.6% (£67 million). Public other new work and infrastructure new work also saw large increases in September 2021, of 7.2% (£50 million) and 1.5% (£40 million) respectively.

Public new housing and public housing repair and maintenance offset some of the monthly growth, seeing a monthly fall in September 2021 of 6.5% (£27 million) and 2.7% (£17 million), respectively. Anecdotal evidence gathered over the month suggests the slowdown in public new housing was coming from the sharp increase in prices.

Quarter-on-quarter change in construction output in Quarter 3 2021

Construction output fell 1.5% (£660 million) in Quarter 3 2021 compared with Quarter 2 2021.

New work fell 0.3% (£93 million) in Quarter 3 2021 with large falls seen for private new housing and public other new work, which fell 3.5% (£329 million) and 12.8% (£317 million) respectively.

In contrast, infrastructure saw strong growth up 10.0% (£739 million) in the three months to September 2021. Anecdotal evidence suggests the infrastructure increase is from projects such as High Speed 2, motorway improvements, and green energy developments.

Repair and maintenance fell 3.6% (£568 million). The largest contributor, with a fall of 5.9% (£482 million), was non-housing repair and maintenance.

Evidence from the Business Insights and Conditions Survey (BICS) for October 2021 shows that 25% of the construction businesses that have not permanently stopped trading reported that they were able to get the materials, goods or services, but had to change suppliers or find alternative solutions. The survey also shows that 10% were unable to source materials, goods or services needed from within the UK in the last month. The construction sector was the highest of any sector in reporting supplier issues. This suggests businesses in the construction industry continue to be affected by the shortage of goods, services and materials. This supports evidence for the downward construction output growth for Quarter 3 2021 and the strong increase in construction output prices since May 2021 (Section 4).

Total new orders in the construction industry fell 9.2% (£1,221 million) in Quarter 3 (July to Sept) 2021 compared with Quarter 2 (Apr to June) 2021.

All other work fell 15.2% (£1,430 million) in Quarter 3 2021 because of falls in both infrastructure and private commercial new orders. These falls were 25.5% (£571 million) and 22.1% (£938 million) respectively.

Looking at private commercial more specifically, entertainment orders was the main contributor for the fall in Quarter 3 2021, which has dropped back to normal levels after large quarters in Quarter 1 (Jan to Mar) and Quarter 2 2021. Offices also saw a fall in Quarter 3 2021; however the Quarter 2 2021 value was the largest values for office new orders since Quarter 1 2008.

The decline in infrastructure new orders was led by orders for both roads and rail projects. New orders in roads saw its lowest value since Quarter 2 2020. New housing orders grew 5.3% (£209 million) in Quarter 3 2021, driven by increases in both public new housing (by 59.6%, £157 million) and private new housing (by 1.4%, £51 million).

Prices in the construction industry, as estimated by the Construction output price indices (OPI), increased to 5.1% in the 12 months to September 2021. This was the strongest annual rate of construction output price growth since records began in 2014.

This supports the anecdotal evidence received from survey returns to the Monthly Business Survey - Construction and allied trades suggesting that the rising prices of raw materials such as steel, concrete, timber and glass have contributed to the overall rise in costs throughout Quarter 3 (July to Sept) 2021.

Further detailed information on recent price movements in the construction industry is available in price movements in construction materials and plant hire.

The monthly rate of prices for all construction is 0.4% in September 2021 but this has slowed from 0.8% in August 2021, with all new work sectors slowing. Non-housing repair and maintenance is the only sector where output prices have picked up this month; from 0.5% in August 2021 to 0.6% in September 2021.

New work

The Construction OPI for new construction work grew 5.5% in the year to September 2021.

The annual rate of price growth increased for all new work sectors, the largest of which was new housing which rose 7.5%. This is the strongest rate of growth for new work prices since records began in January 2014.

Repair and maintenance

The Construction OPI for all repair and maintenance grew 4.2% in the year to September 2021.

The annual rate of price growth increased for all repair and maintenance sectors, the largest of which was non-housing repair & maintenance at 4.4%. This is the strongest rate of growth for repair and maintenance prices since records began in January 2014.

Evidence for the rate of growth in construction OPIs is also shown using data from the Business Insights and Conditions Survey (BICS) in Figure 8.

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.

Quality and methodology

• Construction output QMI
• New orders in construction QMI
• Construction output price indices QMI

Revisions to construction output data

Revisions in this 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
• revisions to the input series for the Construction Output Price Indices

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.

Sub-sector and sub-national construction output estimates

Construction output figures at the lower sub-sector and sub-national level are seen in Tables 1 and 2 of Construction output: sub-national and sub-sector.

In our May 2021 dataset we publish an article describing recent improvements to these data. These improvements, alongside aligning to Blue Book 2021 revisions, explains the sub-sector and sub-national revisions seen in today’s release.

Consultation on the Code of Practice for Statistics – proposed change to 9.30am release practice

On behalf of the UK Statistics Authority, the Office for Statistics Regulation (OSR) is conducting a consultation on the Code of Practice for Statistics, proposing changes to the 9.30am release practice.

Please send comments by 21 December 2021 to: regulation@statistics.gov.uk.

Accessibility of construction output datasets

We have reviewed new accessibility of datasets legislation and have updated the following datasets in this release:

• Output in the construction industry: index categories and their percentage weights
• Output in the construction industry: sub-national and sub-sector

Our intention is to produce all datasets on this basis in future releases but if anyone has any feedback on the new layout please feel free to email us at construction.statistics@ons.gov.uk.

Blue Book 2021

In Blue Book 2021, a new framework was introduced to improve how we produce volume estimates of gross domestic product (GDP) for balanced years as part of the supply use process. This framework included the implementation of double-deflated industry-level gross value added (GVA) for the first time. This improvement was reflected in the September quarterly national accounts and October monthly GDP estimates for the first time.

As a result, volume estimates in the monthly GDP and construction outputs releases will differ for the period 1997 to 2019 because the construction publication measures the volume of construction work (output), while the GDP series measures GVA (that is, output minus intermediate consumption). Construction estimates will align, however, from January 2020 onwards on a growth basis.

Articles on the impact of double deflation and Blue Book changes provide information and indicative effects of this change to industry-level GVA volume.

Next release

The next Construction output in Great Britain release on 10 December 2021 will be a headline only release. This bulletin will consist only of the main points section however all datasets will be published as normal.