Construction output nudges upwards in December

February 13, 2017 / Isla MacFarlane
Construction output nudges upwards in December

Short-term measures of output by the construction industry in Great Britain and contracts awarded for new construction work in the UK.

In December 2016, construction output rose by 1.8% compared with November 2016, largely due to an increase in new work, according to the latest data from the ONS.

Private commercial work was one of the main drivers behind construction growth, expanding by 5.2% in December.

The underlying pattern as suggested by the three month on three month movement shows a slight expansion of 0.2% in output, revised up from 0.1% in the preliminary estimate of GDP.

Compared with December 2015, construction output increased by 0.6%, the main contribution to this growth came from new housing work.

Despite growing by 0.2% in December, in comparison to 2015, infrastructure continued its month on year decline, falling for the eleventh consecutive month.

In December 2016, construction output increased by 1.8% when compared with November 2016 and builds on a slight month-on-month increase of the upwardly revised 0.4% in November 2016. The monthly time series shows how volatile construction output can be, therefore the rolling three-month on three-month time series is also shown and provides a picture of the underlying trend within the construction industry.

The three-month on three-month rolling time series shows that construction output increased by 0.2%, contributing to overall year-on-year growth of 1.5% in 2016.

Construction output can be broken down by different types of work; these are categorised into new work, and repair and maintenance. Through to mid-2014, new work, and repair and maintenance followed a similar pattern but that since reaching a level peak in August 2014, repair and maintenance has slowly contracted.

Over the same period, new work has continued to increase, largely down to a rise in new housing work, however, the contraction in repair and maintenance provides a downwards drag to new work.

This longer-term trend for new work is again seen in December 2016, where new work increased by 2.4% compared with November 2016 and by 2.0% compared with December 2015. Repair and maintenance does follow its long-term trend on the year, decreasing by 2.1%, however, compared with November 2016, repair and maintenance increased by 0.8%.

It is worth noting that new work accounts for approximately two thirds of all work, while repair and maintenance accounts for approximately one third.

The strongest contribution comes from private commercial. The only sectors exhibiting negative growth were private industrial and public other new work.

All aspects of housing continued their growth as the push for an increase in the quality and quantity of housing continues to gather pace.

One of the most substantial downward pressures on construction output has previously come from infrastructure. Despite showing a slight month on month increase of 0.2% in December, infrastructure continued to fall month on year.

In contrast, new housing work provided the biggest boost to growth in all work. Both public and private have continued to rise at a sizeable rate, in comparison with both the previous month and previous year.

PHOTO CREDIT: Robin Webster

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