Construction output in Great Britain: March 2023, new orders and Construction Output Price Indices, January to March 2023

• Monthly construction output is estimated to have increased 0.2% in volume terms in March 2023; this came from an increase in new work (0.7%), partially offset by a decrease in repair and maintenance (0.6% fall) on the month. 

• At the sector level, four out of the nine sectors saw a rise in March 2023, with the main contributors to the monthly increase seen in infrastructure new work and public other new work, which increased 2.2% (£51 million) and 6.5% (£48 million), respectively.

• Quarterly construction output increased 0.7% in Quarter 1 (Jan to Mar) 2023 compared with Quarter 4 (Oct to Dec) 2022; the increase came solely from a rise in repair and maintenance (4.9%), as new work saw a decrease of 1.9%.

• Total construction new orders decreased 12.4% (£1,571 million) in Quarter 1 2023 compared with Quarter 4 2022; this quarterly fall came mainly from private commercial and private housing new orders, which fell 22.3% (£773 million) and 18.4% (£607 million), respectively.

• The annual rate of construction output price growth was 8.5% in the 12 months to March 2023; this has slowed slightly from the record annual price growth found in May and June 2022 (10.4%).

Monthly construction output increased 0.2% in March 2023. This follows an upwardly revised 2.6% increase in February 2023. This is the highest level of construction output (£15,616 million) since records began in January 2010.

Anecdotal evidence received from returns for our Monthly Business Survey for Construction and Allied Trades (MBS) suggested an easing of inflation and material costs. Despite this, some businesses still noted customers hesitating to request work because of economic worries.

Detailed growth rates

Month-on-month construction output growth in March 2023

The 0.2% rise in construction output in March 2023 represents an increase of £24 million in monetary terms compared with February 2023, with four out of the nine sectors seeing an increase on the month.

Infrastructure new work and public other new work were the largest contributors to the monthly increase in March 2023, increasing 2.2% (£51 million) and 6.5% (£48 million), respectively.

The largest negative contributors were non-housing repair and maintenance, which decreased 1.8% (£56 million) and was the main contributor to the fall in repair and maintenance, and private new housing, which decreased 1.4% (£45 million), partially offsetting the increase in total new work. The private housing sector has seen a slowdown since the end of 2022 with five monthly falls out of the last seven.

Quarter-on-quarter construction output growth in Quarter 1 (Jan to Mar) 2023

Alongside the monthly increase, construction output rose by 0.7% (£330 million) in Quarter 1 2023. This is the sixth quarter of consecutive growth in the quarterly series since Quarter 3 (Jul to Sept) 2021 (1.6% fall), however, the quarterly growth has slowed in comparison with the first half of 2022. Construction output across the months within Quarter 1 2023 was volatile, with a fall of 1.6% in January 2023, followed by two months of growth in February and March 2023, 2.6% and 0.2%, respectively.

The quarterly growth came from an increase in repair and maintenance (4.9%), partially offset by a decrease in new work (1.9% fall).

Of the nine sectors, seven saw increases in Quarter 1 2023, with the largest contributors being private housing repair and maintenance, and non-housing repair and maintenance. These sectors increased 5.7% (£411 million) and 3.9% (£341 million) respectively. There has been continued strength within the repair and maintenance sectors across 2022 and early 2023, with all repair and maintenance sectors increasing on the quarter.

Anecdotal evidence highlighted the effect of weather, in January 2023 in particular, with firms noting that adverse weather conditions increased the need for repair work. Improved weather in February 2023 allowed for more work to be done in general.

The largest negative contributor was private new housing, which fell 5.3% (£543 million). Anecdotal evidence suggests a general slowdown in housing across recent quarters, particularly referencing economic uncertainty causing delays and customers hesitating to request work.

In Quarter 1 2023, total construction new orders decreased by 12.4% (£1,571 million) compared with Quarter 4 (Oct to Dec) 2022. This is the lowest level of total construction new orders (£11,151 million) since Quarter 4 2020 (£9,811 million), which contains data that may have been affected by the coronavirus (COVID-19) pandemic. More information can be found in our New orders in the construction industry dataset.

The fall in total construction new orders was widespread, with decreases in six out of the seven sectors. Other new work new orders (that is, non-housing) was the largest contributor to the decrease in Quarter 1 2023, as it fell by 9.7% (£874 million). This mainly came from private commercial new orders, which decreased by 22.3% (£773 million) and was driven by falls in offices and entertainment projects. Infrastructure also fell, decreasing 8.2% (£183 million). Public new work saw the only increase, a rise of 11.1% (£177 million) in Quarter 1 2023.

Housing new orders saw a decrease of 18.5%. This mainly came from private housing, which saw a fallback from Quarter 4 2022, it decreased by 18.4% (£607 million). Public housing new orders also contributed to the overall decrease, falling 19.7% (£89 million).

Prices in the construction industry, as estimated by our Construction Output Price Index (OPI), decreased to 8.5% in the 12-month period to March 2023. Although the rate of annual price growth has slowed slightly from the record increases seen in both May and June 2022 (10.4%), prices still remain above historic price levels.

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 (QMI) is available in our:

• Construction output QMI

• Construction output price indices (OPIs) QMI

• New orders in construction QMI

Reasons for revisions to construction output in this release

This release contains revisions to construction output estimates from January 2023 onwards, and is consistent with the National Accounts Revisions Policy.

Revisions in this release are a result of:

• nominal data revisions; this includes revisions to the survey data

• seasonal adjustment factors revisions, which are re-estimated every month and reviewed annually

• revisions to the input series for the Construction Output Price Indices (OPIs)

For further information on the revisions profile, see our Output in the construction industry -- revisions triangle (one-month growth) dataset and our Output in the construction industry -- revisions triangle (three-month growth) dataset.

Sub-national and sub-sector construction output

Data on new orders supplied by Barbour ABI, as shown in our Quality assurance of administrative data used in construction statistics methodology, are used to model the breakdown of the overall output figures for Great Britain into the lower level and regional data, as shown in Tables 1 and 2 of our Output in the construction industry: sub-national and sub-sector dataset.

In addition to revisions in the output data from January 2023 onwards, the sub-national and sub-sector data will also take on revisions to output that were first published in our GDP quarterly national accounts, UK: October to December 2022 bulletin.

Bias adjustment

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. This was our Improvements to construction statistics: Addressing the bias in early estimates of construction output, June 2018 article.

Response rates for March 2023 continued to be at pre-coronavirus (COVID-19) pandemic levels. As such, we have not applied a bias adjustment for March 2023 while we review this approach going forward.

Differences with Monthly GDP construction estimates

In Blue Book 2021, we introduced a new framework to improve how we produce volume estimates of GDP for balanced years as part of the supply use process. This was explained in our Producing an alternative approach to GDP using experimental double deflation estimates article. This framework included the implementation of double-deflated industry-level gross value added (GVA) for the first time. This improvement was reflected in our GDP quarterly national accounts, UK: April to June 2021 and GDP monthly estimate, UK: August 2021 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). Construction estimates will align, however, from January 2021 onwards on a growth basis.

Information and indicative effects of this change to industry-level GVA volume can be found in our Indicative impact of a new framework including double deflation on industry volume estimates of GDP: Blue Book 2021 article and our Impact of Blue Book 2021 changes on quarterly volume estimates of gross domestic product by industry article.

Publishing content review

This release is a full bulletin, following a number of previous headline-only releases. We are currently reviewing the content we publish and are trialling a system of a full bulletin release on quarter months, with headline-only releases on the other two months of each quarter. There will be no change to the accompanying data and we will continue to publish all our usual set of data tables every month. We will announce a decision in a future release and welcome any feedback at construction.statistics@ons.gov.uk.