The Construction Products Association has questioned the latest Office of National Statistics construction output figures, suggesting they may be subject to upward revision at a later date

ONS report says construction industry growth experiences biggest fall in three years

March saw output in the construction industry fall by 3.6% compared to February according to the latest figures from the Office of National Statistics.

When compared with March 2015 construction output decreased by 4.5%; the largest year-on-year decrease in three years.

The first quarter of 2016 (January to March) saw a 1.1% decrease in comparison with the final quarter of 2015.

When compared with the first quarter of 2015, output fell by 1.9%.

Playing a role in March’s fall in construction output was a drop in new work (0.6%) and repair and maintenance work, which decreased by 1.9%.

The report did contain some some positive news, however, in terms of new house building with the ONS reporting an increase of 4.8% in comparison with the fourth quarter of last year.

There were increases seen in both public and private new housing of 4.2% and 4.9% respectively.

Total housing was up 3.4% compared to the same period in 2015.

The ONS figures, however, would appear to contradict other recent reports on construction activity in 2016 and the CPA has suggested that the data may need to be revisited, as has happened in previous years.

Professor Noble Francis, Economics Director at the Construction Products Association, commented:  “Contrary to today’s report, all other surveys of activity across the entire construction industry supply chain, from the largest contractors to the smallest SMEs, have reported an increase in activity during the first quarter of the year compared to the previous quarter and the previous year, albeit at a slower rate than previously.

“It is disappointing to see that the ONS construction output data do not currently reflect this, but we anticipate that ONS data will be revised upward, as has happened previously.  At this time last year, the ONS reported that output declined 1.1% in 2015 Q1 on a quarterly basis and declined by 0.3% on an annual basis.  Following later data revisions, however, ONS reported that construction output increased 1.9% in 2015 Q1 compared with the previous quarter and rose 6.2% year-on-year.”

The timing of the Easter break may mean that March’s figures are subject to larger revisions than would otherwise normally be expected.

Professor Noble said: “Significant revisions to ONS’s construction output may occur due to late data returns, revisions to output price deflators and seasonal adjustment.  In addition, the ONS has also stated in its release today that the timing of Easter means that March’s construction output data will be subject to larger than normal data revisions.”