Construction output in Great Britain: August 2022

• Monthly construction output increased by 0.4% in volume terms in August 2022, which is the second consecutive monthly growth following the upwardly revised increase to 0.1% in July 2022; August 2022 is the second highest monthly value in level terms (£15,011 million), with May 2022 remaining at the highest level since records began in January 2010 (£15,035 million).

• The increase in monthly construction output in August 2022 came solely from an increase in new work (1.9%), as repair and maintenance saw a decrease (2.0%) on the month.

• At the sector level, the main contributors to the increase seen in August 2022 were infrastructure, private industrial and private housing new work, which increased 5.3%, 4.3% and 1.7%, respectively.

• The level of construction output in August 2022 was 3.2% (£461 million) above the February 2020 pre-coronavirus (COVID-19) level; new work was 0.7% (£69 million) below its February 2020 level, while repair and maintenance work was 10.6% (£530 million) above the February 2020 level.

• Alongside the monthly increase, construction output saw a slight increase of 0.1% in the three months to August 2022; this came solely from an increase seen in new work (1.6%) as repair and maintenance saw a decrease (2.4%), this is the tenth consecutive period of growth in the three month on three month series, however it is the slowest rate of growth since the three months to October 2021 that saw a fall of 0.7%.

• In this month's release, the earliest period open to revision is January 2011, and this is the first time the monthly path has been published that is consistent with the Quarter 2 (Apr to June) 2022 quarterly national accounts published on 30 September 2022.

Monthly construction output increased 0.4% in August 2022. This follows an upwardly revised 0.1% increase in July 2022. This is now the second consecutive increase in monthly construction output since June 2022 (0.6% fall), and is the second highest monthly value in level terms (£15,011 million) since records began in January 2010.

Anecdotal evidence received from returns for the Monthly Business Survey for Construction and Allied Trades (MBS) and the 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. Alongside the continued narrative around prices, several businesses are continuing to mention labour shortages and the difficulty recruiting new staff is still continuing to have an impact.

The warm weather experienced in July 2022 (PDF, 128KB) has continued to be mentioned within the anectodal evidence received from returns for the MBS again this month, as the warm weather continued into August 2022 after the record breaking temperatures seen in July 2022. Businesses mentioned that for the construction industry the heat caused difficult working conditions. However, it was mentioned that more work was conducted in August 2022 than in July 2022 as the temperatures started to cool off in the latter part of the month, after the warm weather seen at the start of August 2022.

Month-on-month construction output growth in August 2022

The 0.4% in construction output in August 2022 represents an increase of £60 million in monetary terms compared with July 2022, with three out of the nine sectors seeing an increase on the month.

Infrastructure, private industrial and private housing new work were the largest contributions to the monthly increase in August 2022, increasing 5.3% (£113 million), 4.3% (£28 million), and 1.7% (£60 million), respectively.

For the second consecutive month, all three sectors in repair and maintenance saw a fall on the month. The 2.0% decrease overall for total repair and maintenance is the fourth fall out of the last five months.

Anecdotal evidence gathered from businesses over the month suggested the narrative around the cost of living crisis was a major factor, as businesses and households are spending less on repair and maintenance work during this time. Many firms suggested that the high prices for construction materials meant some repair and maintenance projects were being put on hold (whether temporarily or permanently). In contrast, 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.

Three-month-on-three-month construction output growth in August 2022

Alongside the monthly increase, construction output rose slightly by 0.1% (£25 million) in the three months to August 2022. This is the tenth consecutive increase in the three-month on three-month series but is this slowest rate of growth since October 2021 (decrease of 0.7%). The increase came solely from an increase in new work (1.6%) as repair and maintenance decreased (2.4%).

Four out of the nine sectors saw an increase in the three months to August 2022, with the largest contributors being private industrial, private commercial and private housing new work. These sectors increased 11.9% (£208 million), 4.2% (£225 million) and 3.9% (£394 million), respectively.

Estimates in this release are consistent with our Gross domestic product (GDP) quarterly national accounts, UK: April to June 2022 bulletin, published on 30 September 2022. The estimates will feed into our UK National Accounts, The Blue Book: 2022 publication, due to be released on 31 October 2022.

Revisions in this release have been incorporated back to January 2011 and have resulted from a variety of different methods and data changes. For more information, see Section 6: Measuring the data.

The revisions to the annual rate of construction output growth are minimal. The largest revision was to 2020, which went from a fall of 12.9% to a fall of 12.5%.

The revisions to the monthly and quarterly rate of construction output growth are larger. This is mainly coming from updated seasonal adjustment specification and late revised survey data in the latest periods. 

Figure 4 illustrates the monthly path of construction output in this month's release compared with the path at last month's release. Despite these monthly and quarterly revisions, the profile of construction output remains similar throughout the coronavirus (COVID-19) pandemic to those previously published.

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:

• Construction output QMI

• Construction output price indices QMI

Reasons for revisions in this release

• Revisions in the nominal data; this includes revisions to both the survey data and Value Added Tax (VAT) turnover data.

• This release is also the first monthly release in which, where selected, VAT turnover data have been used for Quarter 4 (Oct to Dec) 2021 and Quarter 1 (Jan to Mar) 2022 to replace survey data.

• Revisions because of the annual seasonal adjustment review: this has an impact on the quarterly and monthly path of construction output estimates.

• Updated weights for the various components of the construction output price indices.

Sub-national and sub-sector construction output

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 our Construction output: sub-national and sub-sector dataset.

Bias adjustment

Typically, since the move to monthly gross domestic product (GDP) estimates, an adjustment to address any bias in survey responses for construction output is applied to the early construction output monthly estimates.

As the response rate for August 2022 is slightly lower (75.4% turnover response compared with a normal turnover response of approximately 79% for this month in the year, pre-coronavirus (COVID-19) pandemic), no comparable historical data are available at the time of the first estimate for a reference month, so we have not applied a bias adjustment for August 2022.

Differences with monthly GDP construction estimates

In Blue Book 2021, a new framework was introduced to improve how we produce volume estimates of 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 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. This is because the construction publication measures the volume of construction work (output), while the GDP series measures GVA (that is, output minus intermediate consumption).

For Blue Book 2022, reference year 2020 has double-deflated industry-level gross value added (GVA) estimates for the first time. Construction estimates will align, however, from January 2021 onwards on a growth basis. Because of these differences, in the monthly GDP dataset released 12 October 2022 construction is 3.9% above its February 2020 level, whereas construction output is 3.2% above in this release.

Construction Statistics Annual

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