Construction Output Price Indices (OPIs), UK: July to September 2019

• The Construction Output Price Index (OPI) for all construction rose 3.0% in the year to September 2019, down from 3.4% in August 2019.

• The OPI for all new work increased by 3.7% in the year to September 2019, down from 4.1% in August 2019; housing provided the largest contribution to the annual rate.

• The OPI for all repair and maintenance increased by 1.5% in the year to September 2019, down from 1.7% in August 2019; the housing repair and maintenance sector increased by 1.4% over the 12-month period, providing the largest contribution to the annual rate.

The Construction Output Price Index is designated as a National Statistic, in accordance with the Statistics and Registration Service Act 2007 and signifying compliance with the Code of Practice for Statistics.

Since taking responsibility for the Construction Price and Cost Indices (CPCIs) on 1 April 2015, we have developed the Construction Output Price Indices (OPIs). The indices use our existing data sources, all of which are National Statistics, so that users can be assured of the quality of the source data.

Improvements to the OPIs that have been implemented in the Quarter 3 2017 release were made in September 2017 and have been published in the article Construction development: impact of improvements to construction statistics (published 27 September 2019).

Prior to the Quarter 3 (July to Sept) 2017 release, the OPIs were calculated on a base year of 2010 (2010 equals 100). As of the Quarter 3 2017 release, the base year has been updated to 2015 (2015 equals 100).

The revision policy allows routine revisions to the component series for a period of five months, in line with the Producer Price Index (PPI), its main component.

The OPI will also be revised on an annual basis to account for the profit mark-up margin update, introduced as part of the methodological improvements in the July to September 2017 release. It would be expected that these changes would take effect in the April to June publication each year, although this may depend on the availability of the data. Alternative sources for profit mark-up data are currently being investigated as a future possibility to improve the timeframe and provide data continuity.

Due to the improvements made to the Construction Output Price Indices publication in Quarter 3 2017, this publication is now a statistical bulletin. Previous releases prior to this were published as articles.

Overall, prices in the construction industry, as estimated by the Construction Output Price Index (OPI), rose 11.8% between January 2015 and September 2019 (Figure 1). Peaks and troughs seen within the new work index between January 2015 and September 2019 are mostly because of movements within the earnings component of the OPI, which is sourced from the Average Weekly Earnings (AWE) index for construction.

The annual rate of inflation for all construction was 3.0% in September 2019 (Table 1), down from 3.4% in August 2019. Annual growth for new work was 3.7% in September 2019, while annual growth for repair and maintenance was 1.5% in September 2019. Annual growth rates for the three main construction OPIs have remained positive since September 2015 (Figure 2).

The Construction Output Price Index (OPI) for new construction work rose 3.7% on the year despite displaying negative growth of 0.3% on the month to September 2019 (Table 2). The annual rate of inflation for new work fell 0.4 percentage points from 4.1% in August 2019. Infrastructure showed the largest annual growth at 4.5% in September 2019, although this slowed from a peak of 6.5% in August 2019.

Infrastructure OPI also had the largest negative monthly growth within new work at 1.3% in September 2019.

Housing provided the largest upward contribution to the 12-month rate in September 2019 at 1.27 percentage points. The largest downward contribution to the monthly rate for new work came from infrastructure at 0.26 percentage points (Figure 3).

The Construction Output Price Index (OPI) for all repair and maintenance rose 1.5% in the year to September 2019 (Table 3), slowing from 1.7% in August 2019. Non-housing repair and maintenance showed the largest annual increase of 1.6% in September 2019.

On the month repair and maintenance displayed negative growth of 0.1%. This is the first negative growth in this sector on the month since June 2015.

Housing repair and maintenance provided the largest upward contribution to the repair and maintenance annual rate at 0.77 percentage points. The downward contribution to the monthly rate came from non-housing repair and maintenance at negative 0.09 percentage points.

The Construction Output Price Indices (OPIs) Quality and Methodology Information report contains important information on:

• the strengths and limitations of the data and how they compare 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

Information on the impact of further improvements implemented in the Quarter 3 (July to Sept) 2017 release, including the impact of rebasing and the addition of annual updates to weights, are highlighted in Section 7 of the Quarter 3 2017 bulletin.

Information on the impact of further improvements implemented in the Quarter 3 (July to Sept) 2017 release, including the impact of rebasing and the addition of annual updates to weights, are highlighted in Section 7 of the Quarter 3 2017 bulletin.

Further guidance on using indices in indexation clauses (PDF, 197KB) is also available.