Construction output in Great Britain: December 2019 and new orders October to December 2019

• Construction output increased by 0.5% in Quarter 4 (Oct to Dec) 2019 compared with Quarter 3 (July to Sept) 2019; this was driven by a 0.8% growth in new work, which offset a 0.1% fall in growth in repair and maintenance.

• The 0.8% rise in new work in Quarter 4 2019 was because of growth in all sectors apart from private new housing and public other new work, both of which fell 1.1%; the largest positive contributions came from private commercial and public new housing, which grew by 2.5% and 8.4% respectively.

• In repair and maintenance, the 0.1% fall in Quarter 4 2019 was driven by a 2.9% decrease in private housing repair and maintenance; in comparison, non-housing and public housing repair and maintenance grew 1.6% and 0.9% respectively.

• Construction output increased by 0.4% in the month-on-month all work series in December 2019; this was driven by a 0.8% growth in new work which offset a 0.4% fall in repair and maintenance.

• When compared with 2018, the level of all work in 2019 saw a 2.5% increase; this was predominately driven by a 3.4% growth in new work and, to a lesser extent, a 0.7% increase in repair and maintenance.

• New orders grew by 4.4% in Quarter 4 (Oct to Dec) 2019; this rise was driven by an 11.2% rise in all other work but offset by an 8.5% fall in new housing.

• Today’s release sees the quarterly new orders publication date brought forward by one month; for further information please see Section 9.

Quarterly construction output increased by 0.5% in Quarter 4 (Oct to Dec) 2019 compared with the previous quarter. This follows growth in Quarter 3 (July to Sept) 2019 of 1.1%, and a decline of 0.9% in Quarter 2 (Apr to June) 2019.

Monthly construction output grew by 0.4% in December 2019, meaning construction output reached an all-time high in the monthly all work chained volume measure, seasonally adjusted series at £13,949 million since monthly records began in January 2010.

There is a noticeable volatile monthly pattern of construction output in Quarter 4 2019, with October 2019 seeing a fall of 2.2% followed by a 2.4% rise in November 2019. For October 2019, we received some anecdotal information from a number of survey respondents who had been affected by adverse weather (PDF, 250.18KB), although it is difficult to quantify the exact impact on the industry.

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 rather 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. All new work accounts for approximately two-thirds of all work, while repair and maintenance accounts for approximately one-third of all work.

Total construction output increased by 2.5% in 2019 compared with 2018. While this increase follows a 0.0% growth in 2018, it is still lower than in 2014 to 2017, as seen in Figure 3. The majority of annual growth was because of growth in new work, which grew 3.4% following a 0.4% fall in 2018. In comparison, repair and maintenance growth since 2015 has continually been lower than new work (with the exception of 2018) growing by 0.7% in 2019.

As seen in Figure 4, following a decline in 2018, new work saw a recovery in 2019 with growth of 3.4%, though this is still markedly lower than in years prior to 2018. Private new housing work drove much of this growth, increasing by 4.3%, though this is the lowest year-on-year growth since 2012 when it fell 3.9%.

Infrastructure was the other large driver of growth in new work in 2019, increasing by 6.8%. The comparatively smaller public new housing series also provided a positive contribution with growth of 18.1%. In comparison, other new work, excluding infrastructure, saw a decline of 0.7% in 2019 following a 6.0% fall in 2018.

Repair and maintenance growth slowed to 0.7% in 2019 from 0.8% in 2018, and there was a mixed profile of growth within repair and maintenance sectors, as shown in Figure 5. Private housing repair and maintenance was the largest negative contributor in 2019, falling by 1.7% year-on-year. This was more than offset by a growth of 2.7% in non-housing repair and maintenance, with a smaller positive contribution from the 0.5% growth in public housing repair and maintenance.

Figure 6 shows the difference in output for the construction sectors for Quarter 4 (Oct to Dec) 2019 compared with Quarter 3 (July to Sept) 2019, taken from our seasonally adjusted, chained volume measure series. Construction output increased by 0.5% (£203 million) in Quarter 4 2019, compared with the previous quarter.

New work rose by 0.8% (£223 million) in the quarter-on-quarter series in Quarter 4 2019. The largest contributors to this increase were private commercial, which increased by 2.5% (£180 million) the largest in this series since April 2017 when it rose 5.1% (£385 million), and public new housing which increased by 8.4% (£137 million). Private new housing was the largest negative contributor in new work declining by 1.1% (£98 million) in Quarter 4 2019.

Repair and maintenance fell by 0.1% (£21 million) in the quarter-on-quarter series in Quarter 4 2019. While there were increases in non-housing and public housing repair and maintenance of 1.6% (£113 million) and 0.9% (£16 million) respectively, private housing repair and maintenance saw a fall of 2.9% (£150 million). Figure 7 shows the slowdown in private housing repair and maintenance in this series since the start of 2019, with output in December 2019 10.5% lower than in February 2019.

Figure 8 shows the difference in construction output for construction sectors in December 2019 compared with November 2019, taken from our seasonally adjusted, chained volume measure series. Construction output increased by 0.4% (£52 million) in December 2019, with the 0.8% (£72 million) growth in total new work more than offsetting the 0.4% (£20 million) fall in total repair and maintenance.

The largest contributors to month-on-month growth in new work were private commercial and infrastructure work, which increased by 1.4% (£34 million) and 1.7% (£32 million) respectively. Private commercial work has seen a recovery in 2019 following a decline across 2017 and 2018 in the monthly series as shown in Figure 9, with output in December 2019 11.5% higher than in January 2019.

The largest negative contribution in new work in this series came from private industrial, which declined by 5.1% (£24 million), the largest since June 2019 when it fell 13.6% (£62 million).

The 0.4% fall in repair and maintenance in the monthly series was driven by falls in both private and public housing of 1.5% (£25 million) and 1.7% (£11 million) respectively. In comparison, non-housing repair and maintenance rose 0.7% (£16 million).

The month-on-year series grew by 5.0% (£669 million) in December 2019 – the largest increase since December 2017 when it rose 5.4% (£705 million). This was driven by a 5.6% (£498 million) rise in new work, and 3.8% (£171 million) rise in in repair and maintenance.

In new work, new housing drove much of the growth in the month-on-year series in December 2019, with private new housing growing 5.7% (£166 million), and public new housing growing 13.7% (£72 million). For an analysis of trends seen in housing since 2010, please see our recently published article Housing in construction output statistics, Great Britain: 2010 to 2019.

Infrastructure and private commercial also saw strong growth, increasing by 7.5% (£134 million) and 5.4% (£127 million) respectively on the year. The month-on-year growth in private commercial is the largest since August 2017 where growth of 6.9% was recorded.

In repair and maintenance in the month-on-year series, non-housing repair and maintenance was the main contributor increasing by 8.9% (£195 million). This growth is the largest in this series since September 2014.

The three-month on year series in December 2019 grew 2.5% (£995 million), driven by growth of 3.1% (£829 million) in new work and 1.2% (£165 million) in repair and maintenance.

The largest positive drivers in new work in the three-month on year series in December 2019 were public new housing and private commercial work, which grew by 19.1% (£285 million) and 3.4% (£240 million) respectively. Public other new work was the only new work sector to decline in this series in December 2019, falling by 4.1% (£100 million).

The largest positive drivers in repair and maintenance in three-month on year series in December 2019 were non-housing repair and maintenance, and public housing repair and maintenance increasing by 3.7% (£254 million) and 6.1% (£112 million) respectively. The growth in public housing repair and maintenance was the largest since August 2014 where the series grew 7.4%.

This December 2019 release contains revisions back to January 2019. This is in line with National Accounts Revisions Policy. As can be seen in Table 2, there are revisions to the all work, chained volume measure, seasonally adjusted data in both the month-on-month and three-month on three-month series.

Details of why revisions can be seen across the whole period are available in the Measuring the data section.

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.

Today’s release sees the first release of new orders in the construction industry publication to an earlier publication schedule as announced in Construction output in Great Britain: October 2019 and new orders July to September 2019 on 10 December 2019. Table 4 in Section 13 has further information on the publication and revision schedule of new orders in the construction industry throughout 2020.

The benefits of this earlier publication date for new orders in the construction industry include:

• an earlier view of this forward-looking indicator by one month

• the quarterly estimates of new orders now being published at the same time as the quarterly estimates of construction output

• allowing us to bring forward the publication of the Output in the construction industry: sub-national and sub-sector dataset by one month.

Figure 10 shows the value of all new work, all other work, and all new housing. All new work increased by 4.4% (£478 million) in Quarter 4 (Oct to Dec) 2019 compared with Quarter 3 (July to Sept) 2019, when there was no growth (0.0%) in new orders. This was because of an increase in all other work, which grew by 11.2% (£797 million), more than offsetting the 8.5% (£318 million) fall in new housing.

Aside from Quarter 4 (Oct to Dec) 2017 when several high value contracts relating to High Speed 2 (HS2) were awarded, new orders have seen a general decline since Quarter 2 (Apr to June) 2016.

As shown in Table 3, total new housing orders fell 8.5% in Quarter 4 2019, which is the largest decrease since Quarter 3 2018. Public housing fell by 24.9% (£71 million), and private housing fell by 7.1% (£247 million) to reach the lowest value in private housing orders since Quarter 1 (Jan to Mar) 2016.

In the year-on-year series, all new work orders declined by 1.2% (£554 million). This was driven by decreases in both all new housing and public other new work, which were down 7.6% (£1,181 million) – the lowest since 2009 – and 5.6% (£232 million) respectively. Infrastructure has seen the largest growth in the year-on-year series, increasing by 7.9% (£644 million) in 2019.

Table 3 also shows that the only two sectors to grow across all three series were private commercial and private industrial. Private industrial grew 66.7% (£590 million) quarter-on-quarter, which is the largest since Quarter 4 2014, and grew 67.1% (£592 million) quarter-on-year which is the largest since Quarter 3 2015. In comparison, year-on-year growth was 4.3% (£176 million).

It is worth noting that these large growths in private industrial in Quarter 4 2019 are mainly because of a single large project in the “oil, steel, coal” series in the South East. As such, this has led to significantly larger growth than in previous quarters, in both the “private industrial – oil, steel, coal” series and “South East – private industrial” series since quarterly records began in Quarter 1 1985. Figure 11 shows a breakdown of private industrial work taken from Table 5 of the new orders in the construction industry dataset.

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, Easter moving between March and April) and seasonal effects (for example, increased spending in December as a result of Christmas) 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.

Construction output data collection

Our monthly Construction Output Survey measures output from the construction industry in Great Britain. The survey 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 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).

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: sub-national and sub-sector.

Construction new orders data collection

New orders data are sourced from Barbour ABI who web scrape planning application data from all local authorities in England, Scotland and Wales; this method allows identification of planning applications as soon as they are published, while projects outside the planning application process are captured via investigations from Barbour’s in-house team of researchers. These data are then validated firstly by Barbour ABI and supplied to the Office for National Statistics (ONS), who also further validate, process and quality assure the data before new orders in the construction industry estimates are published.

Quality and methodology

More quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in the Construction output QMI and New orders in construction QMI.

Revisions to construction output data

Revisions to construction output data in this release can be seen as a result of:

• 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

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

National accounts

As the UK leaves the EU, it is important that our statistics continue to be of high quality and are internationally comparable. During the transition period, those UK statistics that align with EU practice and rules will continue to do so in the same way as before 31 January 2020.

After the transition period, we will continue to produce our national accounts statistics in line with the UK Statistics Authority’s (UKSA’s) Code of Practice for Statistics and in accordance with internationally agreed statistical guidance and standards.

The Withdrawal Agreement outlines a need for UK Gross National Income (a fundamental component of the national accounts, which includes gross domestic product (GDP)) statistics to remain in line with those of other EU countries until the EU budgets are finalised for the years in which we were a member. To ensure comparability during this cycle, the national accounts will continue to be produced according to European System of Accounts (ESA) 2010 definitions and standards.

Revisions to new orders data

As a result of moving the publication date to a month earlier, we have also reviewed the revisions schedule for new orders in the construction industry. Previously, new orders data in current prices and on a non-seasonally adjusted basis were unrevised (Tables 4 to 6) after the first quarter they were published.

Because of the change to the earlier publication date, new orders data in Tables 4 to 6 will be published as a provisional estimate at the first time of release, which will then be finalised in the subsequent quarter. Revisions will still be seen in the other tables (1 to 3 and 7 to 9) because of a combination of revisions to input data for the construction output prices indices, and revisions to seasonal adjustment factors.

Table 4 looks at the publication and revision schedule for new orders in the construction industry releases in 2020.

For further information on the revisions profile, please see the new orders revisions triangles published on a quarter-on-quarter growth basis.

Value Added Tax (VAT) data

Alongside the Monthly Business Survey (MBS), 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 2 (Apr to June) 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

• VAT turnover data in National Accounts: background and methodology

• Quality assurance of administrative data (QAAD) report for VAT turnover data

Data quality

These estimates are widely used by private and public sector institutions, particularly by the Bank of England and HM Treasury, to assist in informed decision-making and policymaking. Construction output is an important economic indicator and is also therefore used in the compilation of the output measure of gross domestic product (GDP).

National Statistics status

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.

Comparability

Output in the construction industry follows the Eurostat short-term business 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.

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, a longer time series back to 1997 can be obtained in the monthly GDP datasets. Data prior to 2010 are derived using statistical methods from the available quarterly construction output data and should therefore be treated with some caution.

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.

Construction statistics recent engagement and development work

Further information on construction statistics development can be found in:

• Comparing ONS’s economic data with IHS Markit and CIPS Purchasing Managers’ Index surveys (published 21 October 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)

Further articles on other construction statistics development work and analysis are available.