Construction output in Great Britain: September 2022, new orders and Construction Output Price Indices, July to September 2022

• Monthly construction output increased 0.4% in volume terms in September 2022, which is the third consecutive monthly growth following small upward revisions, to 0.6% in August 2022 and 0.2% in July; September 2022 shows the highest level of construction output (£15,125 million) since records began in January 2010.

• The increase in monthly construction output in September 2022 came from increases seen in both new work (0.6%) and repair and maintenance (0.2%) on the month.

• At the sector level, 5 out of the 9 sectors saw a rise in September 2022, with the main contributors to the monthly increase seen in public housing repair and maintenance and infrastructure new work, which increased 11.3% and 2.8%, respectively.

• The level of construction output in September 2022 was 4.0% (£575 million) above the February 2020 pre-coronavirus (COVID-19) pandemic level. New work was 0.3% (£29 million) below its February 2020 level, while repair and maintenance work was 12.0% (£604 million) above the February 2020 level.

• Alongside the monthly increase, construction output saw an increase of 0.6% in Quarter 3 (July to Sept) 2022, although this is the weakest quarterly growth since Quarter 3 2021 (1.1% fall); the increase came solely from growth in new work (2.4%) as repair and maintenance saw a decrease (2.2% fall).

• Total construction new orders increased 6.4% (£774 million) in Quarter 3 2022 compared with Quarter 2 (Apr to Jun) 2022; this quarterly growth came mainly from private commercial new orders, which rose 27.7% (£832 million).

• The annual rate of construction output price growth was 10.1% in the 12 months to September 2022; this has slowed slightly from the record annual price growth in May 2022 (11.5%).

Monthly construction output increased 0.4% in September 2022. This is now the third consecutive increase in monthly construction output since June 2022 (0.6% fall), and is the highest level of construction output (£15,125 million) since records began in January 2010.

Prices are still historically high, however the annual rate of growth for building materials has slowed from its May 2022 high point in the series (Figure 5), and previous availability issues around sourcing products have eased. Also order books remained strong for businesses, as illustrated with new orders in the construction industry increasing 6.4% in Quarter 3 (July to Sept) 2022, and now being 11.5% above its pre-coronavirus (COVID-19) pandemic level in comparison with Quarter 4 (Oct to Dec) 2019 (Figure 6).

Anecdotal evidence received from returns for our Monthly Business Survey for Construction and Allied Trades (MBS) and our Business Insights and Conditions Survey (BICS) continues the narrative around the increased prices for certain construction products. As in previous months, increased costs of products, most notably concrete, plaster, bricks, sand, gravel and asphalt-related products are mentioned. These high prices coupled with the loss of a working day because of the Bank Holiday for the funeral of Queen Elizabeth II are likely to have lessened growth in September 2022.

Detailed growth rates

Month-on-month construction output growth in September 2022

The 0.4% rise in construction output in September 2022 represents an increase of £66 million in monetary terms compared with August 2022, with 5 out of the 9 sectors seeing an increase on the month.

Public housing repair and maintenance, and infrastructure new work were the largest contributions to the monthly increase in September 2022, increasing 11.3% (£63 million) and 2.8% (£63 million), respectively.

Anecdotal evidence gathered from businesses responding to MBS, for Construction and Allied Trades, and BICS suggested some new projects were continuing as costings were agreed prior to the recent price increases and as such the construction firms were having to absorb these. Some businesses have also mentioned they have seen an increase in work load during this time because of a rise in demand for more efficient energy usage.

Quarter-on-quarter construction output growth in Quarter 3 2022

Alongside the monthly increase, construction output rose to 0.6% (£276 million) in Quarter 3 2022. This is the weakest quarterly growth since Quarter 3 2021, which fell 1.1%.

This quarterly increase came solely from an increase seen in new work (2.4%) as repair and maintenance saw a decrease (2.2% fall).

Of the 9 sectors, 5 saw an increase in Quarter 3 2022, with the largest contributors being private commercial, and private housing new work. These sectors increased 5.0% (£269 million) and 2.4% (£242 million), respectively.

Figure 4 illustrates the slowing in the rate of overall construction output growth since the start of 2022. This is coming from repair and maintenance activity, which decreased 2.2% in September 2022. In September 2022, all 3 sectors within repair and maintenance saw decreases.

Prices in the construction industry, as estimated by our Construction Output Price Index (OPI), increased to 10.1% in the 12-month period to September 2022. Although the rate of annual price growth has slowed slightly from the record increase seen in May 2022, prices still remain above historic price levels.

Total construction new orders increased by 6.4% (£774 million) in Quarter 3 2022 compared with Quarter 2 2022. This partly reverses quarterly falls seen in the first half of 2022 (6.4% and 3.5% respectively). See our New orders in the construction industry dataset for more detail.

Other new work new orders (that is, non-housing) was the main contributor to quarterly increase in Quarter 3 2022 as it rose 11.6%. This mainly came from private commercial new orders, which increased 27.7% (£832 million). Specifically within private commerical, new orders for offices increased to above the £2 billion mark again, after a large quarterly decrease in Quarter 2 2022. Project-level data suggests that a large number of businesses are continuing to carrying out office refits and refurbishments as workers return to the office.

Total construction new orders in Quarter 3 2022 are now 11.5% above it pre-pandemic level (Quarter 4 2019) with private new housing the only sector still to recover.

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 2020) 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

More quality and methodology information is available in our:

• Construction output QMI

• New orders in construction QMI

• Construction output price indices QMI

Reasons for revisions in this release

In this release, revisions to construction output estimates are back to July 2022. Monthly growth figures from both July 2022 and August 2022 are revised upwards by 0.1 and 0.2 percentage points, respectively, to 0.2% and 0.6%.

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, see our Output in the construction industry revisions triangle (one-month growth) dataset basis and our Output in the construction industry revisions triangle (three-month growth) dataset.

Sub-national and sub-sector construction output

Data on new orders supplied by Barbour ABI, as explained in our methodology, Quality assurance of administrative data used in construction statistics, 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 our Construction output: sub-national and sub-sector dataset.

Bias adjustment

Typically, since the move to monthly GDP estimates, an adjustment, as explained in our article, Improvements to construction statistics from June 2018, to address any bias in survey responses for construction output is applied to the early construction output monthly estimates.

As the response rate for September 2022 has improved and is nearing a level of response comparable with pre-coronavirus (COVID-19) pandemic levels, we have applied a bias adjustment for September 2022.

Differences with Monthly GDP construction estimates

In Blue Book 2021, we introduced a new framework, as explained in our article, Producing an alternative approach to GDP using experimental double deflation estimates 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 our September 2021 quarterly national accounts and our October 2021 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 2020 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 2021 onwards on a growth basis.

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

Construction Statistics Annual

The 2021 edition of our construction statistics annual, which will have data for the 2021 reference year, will be released on 18 November 2022.