Construction output in Great Britain: August 2019

• Construction output increased by 0.1% in the three-month on three-month all work series in August 2019; this was driven by a rise in new work of 0.5% but offset by a fall in repair and maintenance of 0.8%.

• In new work, the increase in the three-month on three-month series in August 2019 was driven by private new housing, private commercial and public new housing, with rises of 1.0%, 0.9% and 3.6% respectively.

• In repair and maintenance, the fall in the three-month on three-month series in August 2019 was largely because of the 3.5% decline in private housing repair and maintenance, with a smaller contribution from a 0.2% fall in non-housing repair and maintenance.

• Construction output increased by 0.2% in the month-on-month all work series in August 2019; this was driven by a rise of 1.1% in repair and maintenance, offset somewhat by a fall in new work of 0.2%.

• In this release of data, the earliest period open to revision is January 2010 as this dataset contains the annual updates that will be included in the Blue Book 2019 due to be published on 31 October 2019.

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.

Estimates in this release are consistent with the GDP quarterly national accounts, UK: April to June 2019 publication published on 30 September 2019 and will feed into the UK National Accounts, The Blue Book: 2019 publication, due to be released on 31 October 2019. Therefore, compared with the previous Construction output in Great Britain: July 2019 and new orders April to June 2019 publication released on 9 September 2019, this August 2019 publication contains revisions from January 2010 onwards. The revisions up to and including Quarter 2 2019 are consistent with those published in the GDP quarterly national accounts, UK: April to June 2019 publication, and in addition, further revisions have also been made to July 2019 construction output estimates.

Revisions across the whole period can also be seen as a result of:

• the impact of the improvements to construction output estimates, resulting from the new imputation methodology and bias adjustment implemented in June 2018, can now be seen for the period up to 2017 (further detail can be found in Section 6 of the impact of improvements to construction statistics article)

• 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 for Quarter 4 (Oct to Dec) 2018 and Quarter 1 (Jan to Mar) 2019 for the first time as well as potential revisions to previous VAT turnover data

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

For further information on revisions in this release please see Section 5.

Since the record high of £13,869 million recorded in the monthly all work series in February 2019, the industry has experienced a mixed profile of monthly growth, with falls in March, April and June largely offset by increases in May, July and August. The level of construction output in August 2019 is now £123 million 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 decrease in new work of 0.2% in August 2019, while repair and maintenance saw growth of 1.1%. For new work, the sector experienced a mixed profile of growth, with private commercial new work (1.0%), public new housing (3.3%) and private industrial (3.8%) experiencing increases whereas private new housing (0.9%), infrastructure (1.3%) and public other new work (3.1%) saw falls.

In repair and maintenance, the growth of 1.1% comprised growth across all the components within the sector. Non-housing, and private housing repair and maintenance saw the largest growth, increasing by 1.4% and 1.0% respectively.

Figure 3 shows the difference in the three-month on three-month levels from the different construction sectors, taken from our seasonally adjusted, chained volume measure series. Construction output increased by £25 million in the three months to August 2019, compared with the previous three months.

New work output increased by £136 million in the three months to August 2019. This increase was driven by an increase in new housing, with both private and public housing experiencing increases of £92 million and £57 million respectively. The other notable increase in new work was private commercial new work, which increased by £62 million. These increases were offset partially by a fall in private industrial new work, which fell by £71 million.

In contrast to new work, repair and maintenance output declined by £111 million. This decrease was driven predominately by the large fall in private housing repair and maintenance, which fell by £180 million along with a smaller fall of £11 million in non-housing repair and maintenance. These decreases were offset partially by an increase of £80 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 July 2019, construction output grew by £28 million in August 2019.

For new work, output decreased by £21 million in August 2019. This minimal decline comprised relatively minor increases or decreases across all types of work. Private commercial new work, public new housing and private industrial new work saw relatively small increases of £23 million, £18 million and £16 million respectively. While private new housing, public other new work and infrastructure saw relatively small decreases of £26 million, £26 million and £25 million respectively.

In contrast to new work, repair and maintenance saw an increase of £49 million in August 2019. All types of work within repair and maintenance saw an increase, with the main driver being non-housing repair and maintenance, which grew by £32 million in August.

Total all work grew to £13,746 million in August 2019 compared with July 2019, rising by 0.2% (£28 million). This was driven by a 1.1% increase in repair and maintenance, with new work offsetting this increase slightly with a fall of 0.2%.

When looking at the month-on-month growth rates, all types of work have recorded relatively minor increases or decreases in comparison with recent months. This is shown with the largest positive contributions coming from non-housing repair and maintenance, and private commercial new work, which saw growths of 1.4% (£32 million) and 1.0% (£23 million) respectively. In contrast, the largest negative contributions came from private new housing, public other new work and infrastructure, which decreased by 0.9% (£26 million), 3.1% (£26 million) and 1.3% (£25 million) respectively.

In the month-on-year all work series, there was an increase of 2.4% (£323 million) in August 2019. This top-level increase was driven by a 4.5% (£390 million) increase in new work, which was offset somewhat by a 1.4% (£67 million) fall in repair and maintenance.

Most types of work see an increase in their month-on-year series in August 2019, with the main contributors being infrastructure and private new housing, which increased by 7.8% (£137 million) and 4.0% (£118 million) respectively. The only two types of work to experience a decrease in their month-on-year series in August 2019 were private housing repair and maintenance, which saw a decline of 5.1% (£89 million) and public other new work, which saw a smaller fall of 2.7% (£22 million). It should be noted that the fall in private housing repair and maintenance was enough to see a fall overall of 1.4% in total repair and maintenance in the month-on-year series.

In the three-month on three-month total all work series in August 2019 there was a small increase of 0.1% (£25 million). In contrast to the month-on-month growth in August 2019, we see growth in new work of 0.5% (£136 million) and a decline in repair and maintenance of 0.8% (£111 million).

The notable positive contributions came from private new housing, and public housing repair and maintenance, which increased by 1.0% (£92 million) and 4.4% (£80 million) respectively. This 4.4% increase in public housing repair and maintenance is the strongest growth in the three-month on three-month series since October 2013 where growth of 4.8% was recorded. These were offset by a large fall in private housing repair and maintenance, which fell by 3.5% (£180 million) and to a lesser extent a fall of 5.4% (£71 million) in private industrial new work. This fall in growth in private industrial new work is the largest since September 2016 where a fall of 6.7% was recorded.

In the three-month on three-month a year earlier total all work series in August 2019, the growth of 1.5% (£603 million) was driven by an increase of 3.6% (£936 million) in new work, which was offset slightly by a fall of 2.3% (£333 million) in repair and maintenance.

The notable positive contributions to the three-month on three-month a year earlier growth in August 2019 were infrastructure and new housing work. Infrastructure grew by 7.2% (£380 million) and both private and public new housing saw growth, with increases of 3.5% (£304 million) and 16.7% (£234 million) respectively. There was also an increase in private commercial new work of 1.7% (£122 million), which is the first positive growth seen in the series after 19 consecutive monthly declines for this type of work. The main notable negative contribution to offset this growth was private housing repair and maintenance, which declined by 6.5% (£346 million).

While we have experienced growth in the second half of 2018, and 2019 apart from January, in the three-month on three-month a year earlier series, this rate of growth is considerably weaker in comparison with the growth rates seen across the period from 2014 to 2017 inclusive.

Estimates in this release are consistent with the GDP quarterly national accounts, UK: April to June 2019 publication on 30 September 2019 and will feed into the UK National Accounts, The Blue Book: 2019 publication, due to be released on 31 October 2019.

Revisions in this release have been incorporated back to January 2010 and have resulted from a variety of different methods and data changes. These changes include the following.

Improvements to the imputation methodology for non-response to address the upward bias in early construction output estimates. As discussed in Section 6 of the article Impact of improvements to construction statistics: June 2018 published on 29 June 2018, because of the timing of the implementation of the method change last year it was only possible to see the impact of the method change from 2017 onwards. Therefore, the improvements made to the imputation methodology are the main contributors to revisions in the period 2010 to 2016 inclusive.

Revisions because of the annual seasonal adjustment review. This impacts on the quarterly and monthly path of construction output estimates.

Revisions to the construction output price indices. These include a combination of revisions to input data, the various weights required to compile the index and the inclusion of the latest mark-up value for 2017.

This release is also the first monthly release in which Value Added Tax (VAT) turnover data have been used for Quarter 4 (Oct to Dec) 2018 and Quarter 1 (Jan to Mar) 2019. We have now used VAT data for approximately 84,000 businesses to replace 2,400 returns in the monthly construction sample. For a list of those industries where VAT turnover is used to replace survey returns in construction please see the VAT industry selection matrix.

Revisions in the nominal data. This includes revisions to both the survey data and VAT turnover data.

As can be seen in Figure 5 these revisions result in changes in the series back to January 2010. While revisions can be seen to growth rates, the level and trend of the series remain broadly similar across the period.

All years back to 2011 see a revision in annual growth. The main driver for revisions to annual growth for the period from 2011 to 2016 is the implementation of the new imputation methodology for non-response. We also see minor revisions because of the revisions in the construction output price series across this period. For 2017 and 2018, the annual revisions are a result of changes to the nominal data (both survey and VAT data).

For the quarterly path of the chained volume measure, seasonally adjusted, all work series we see revisions in varying magnitude and directionality across the series. These quarterly revisions are for the vast majority within positive or negative 1.0 percentage point, with an average revision across the period back to Quarter 1 (Jan to Mar) 2011 of negative 0.03 percentage points.

In addition to the revisions to construction output first published within the GDP quarterly national accounts, UK: April to June 2019 publication on 30 September 2019, this publication also includes revisions to the July 2019 construction estimates first published in Construction output in Great Britain: July 2019 and new orders April to June 2019 publication released on 9 September 2019, as well as a first look at the revised monthly path back to January 2010.

The monthly growth for construction output, all work, chained volume measure, seasonally adjusted series for July 2019 is revised up 1.3 percentage points from 0.5% to 1.8%. This is because of a combination of late survey returns replacing imputed values (which, in turn has impacted on those businesses who are still imputed for because of non-response) as well as revisions in the construction output price indices where last month we had forecasted average weekly earnings data that has now been replaced with actual data for July 2019.

In addition, negative revisions to the growth rates can be seen for the months preceding July 2019, with April and May both being revised down 0.2 percentage points and June being revised down 0.4 percentage points. This means that while there has been a relatively large upward revision to the monthly growth rate for July 2019, the revision to the three-month on three-month series has remained small, revising down 0.1 percentage points from 0.8% to 0.9%. Furthermore, there has been a minimal revision to the level of construction output for July 2019 compared with the previous publication (as can be seen in Figure 5).

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 18 September 2019 for July 2019, showed the seasonally adjusted production in construction (PDF, 566KB) was down at 0.7% in the Euro area (EA-19) and fell by 0.1% in the EU-28 when compared with June 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 October 2019. This includes the total dollar value of construction work done in the US.

The Construction statistics: Number 19, 2018 edition was published on 22 August 2018. This publication contains analysis on the construction sector in 2017, as well as information on sources and outputs in the industry. The next edition of this release, which will contain analysis for 2018, will be published on 18 October 2019.

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 article

• 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:

• 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)