Construction output price indices (OPIs), UK: July to September 2016

Contains a summary of the construction output price indices (OPIs) for Quarter 3 (July to September) 2016, produced using an interim solution whilst we continue to develop appropriate methodologies for the long-term. Data in this release are Experimental Statistics.

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Contact:
James Wells

Release date:
28 November 2016

Next release:
27 February 2017

Table of contents

  1. Introduction
  2. Headline results
  3. All construction
  4. New work
  5. Repair and maintenance
  6. Background notes

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1. Introduction

Since taking responsibility for the Construction Price and Cost Indices (CPCIs) on 1 April 2015, we have developed an interim construction output price index (OPI). This index was put together in a short time frame and uses our existing data sources, the majority of which are National Statistics, so that users can be assured of the quality of the source data.

The results for the interim construction price index were published for the first time on 12 June 2015. This article provides a quarterly update to these results and includes data to September 2016.

Information about the methods used to compile the interim construction OPIs, as well as the results of our user survey and plans for the future development of price indices for construction, were published on 28 September 2015.

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2. Headline results

The interim construction OPI for all construction rose 1.7% in the year to September 2016, which is unchanged from the year to August 2016.

Prices continued to rise in the year to September 2016 for all work types, with the exception of infrastructure prices, which fell 0.6% on the year.

The interim construction OPI for all new work increased 1.9% in the year to September 2016, down from an increase of 2.0% in the year to August 2016. Private industrial showed the largest movement, with an increase of 3.7% in the year to September 2016.

The interim OPI for all repair and maintenance increased by 1.3% in the year to September 2016, up from a 1.0% increase in the year to August 2016. The housing repair and maintenance sector showed the largest increase of 1.6% in the year to September 2016.

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3. All construction

Overall, prices in the construction industry, as estimated by the interim construction OPI, rose between April 2014 and September 2016. There is an upward trend evident across all new work, and repair and maintenance sectors from May 2014 up to September 2016 (Figure 1). The peaks and troughs seen in the all new work index between April 2014 and September 2016 were driven by the earnings component of the OPI, which is sourced from the Average Weekly Earnings (AWE) index for construction.

Figure 1: Interim construction output price indices (2005=100), UK

April 2014 to September 2016

Source: Office for National Statistics

Download this chart Figure 1: Interim construction output price indices (2005=100), UK

Image .csv .xls

With the exception of April 2014, annual growth rates for the interim construction OPI were positive throughout the period to September 2016 (Figure 2). The fall occurred in the new work index where the 0.3% drop was driven by the earnings component of the OPI, which is sourced from the AWE index for construction. Repair and maintenance work shows positive year-on-year growth in all periods.

Figure 2: Construction output price annual percentage change, UK

April 2014 to September 2016

Source: Office for National Statistics

Download this chart Figure 2: Construction output price annual percentage change, UK

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4. New work

The interim OPI for all new construction work increased 1.9% in the year to September 2016. This increase was as a result of annual increases in output prices in all sectors, except infrastructure, which fell 0.6% on the year (Table 1). Private industrial showed the largest movement, where prices increased by 3.7% in the year to September 2016.

Table 1: New work output price indices, September 2016 (percentage change)

UK  
SectorPercentage change
 annualmonthly
Housing (public and private)2.9-0.4
Infrastructure-0.60.1
Public Non-housing2.1-0.2
Private Industrial3.70.2
Private Commercial2.1-0.2
All New Work1.9-0.2
Source: Office for National Statistics

Download this table Table 1: New work output price indices, September 2016 (percentage change)

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5. Repair and maintenance

The interim OPI for all repair and maintenance increased 1.3% in the year to September 2016, with the housing repair and maintenance sector showing the largest annual increase of 1.6% (Table 2).

Table 2: Repair and maintenance construction output price indices, September 2016 (percentage change)

UK
SectorPercentage change
 annualmonthly
Housing R and M1.60.6
Non-housing R and M0.90.0
All Repair and Maintenance1.30.3
Source: Office for National Statistics

Download this table Table 2: Repair and maintenance construction output price indices, September 2016 (percentage change)

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.Background notes

  1. Use within ONS

    These interim construction OPIs were used to deflate Output in the Construction Industry for the first time in the April 2015 release, published on 12 June 2015. Further details on the impact of using these indices have been published in a separate article.

  2. Linking to previous series

    The Construction Price and Cost Indices (CPCIs) were previously published by the Department for Business, Innovation and Skills (BIS) (now the Department for Business, Energy and Industrial Strategy) and were published for the last time in September 2014, with the release suspended in December 2014. Responsibility for these statistics transferred to us on 1 April 2015, as previously announced.

    Users wishing to link the BIS CPCIs (prior to 2014) and our new construction OPIs (from 2014 onwards) to create longer-running time series, have many options. One approach would be to use a linking factor (based on a common time period) similar to the process suggested to link the Producer Price Index series (PPI) on different price bases, as described on page 2 of this question and answer paper.

    Further guidance on using indices in indexation clauses is also available.

  3. De-designation as National Statistics

    The Construction Price and Cost Indices were de-designated as National Statistics in December 2014, after their suspension, as detailed in a letter from Ed Humpherson, Director General for Regulation.

  4. Experimental Statistics

    These statistics have been published on an experimental basis to involve users in their development. As a result, improvements to methods may result in revisions to the series. Full details of any revisions will be released alongside the revised data.

  5. Revisions policy

    The interim construction OPIs are dependent on the revisions policies associated with their component series. For routine revisions, such as inclusion of late respondent data and monthly re-estimation of seasonal adjustment factors, the interim construction OPIs will be open to revisions for a period of 5 months, in line with PPI, its main component.

    Non-routine revisions may also occur, for example, as a result of reviews and updates of methodologies of component series. When historic changes to component series arise, their impact on the construction OPI series will be assessed and any changes highlighted to users.

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Contact details for this Article

James Wells
construction@ons.gov.uk
Telephone: +44 (0)1633 455582