Construction output in Scotland

Stephen Curtis,

Office for National Statistics

Structure of the talk

• The register and the sample

• What information do we get?

• What do we produce for the UK?

• How do we use our information to produce data for Scotland?

• How reliable are the figures?

Coverage

Our surveys cover:

• Great Britain• Construction, as in the Standard Industrial

Classification, except SIC 41.1 (development of building projects)

The register

• To December 2009 was the Builders Address File (BAF)

• From January 2010, has been the Interdepartmental Business Register (IDBR)

Employment2009 (BAF) 2010 (IDBR)

0-3 136,007 172,808

4-114 57,209 49,828

115 and over 809 774

Total 194,025 223,410*

Numbers of businesses

*of which, Scotland 15,732 (=7.0%)

Sample sizes

Sample of 7,800 construction businesses:

• Target for each set of results is for at least 70% of forms to be back; 80% by value of register turnover. Achieved.

Register employment

Population count (Q4 2011)

Proportions of turnover

Sample size Sampling fraction

0-4 184,005 21.1% 3,311 1.8%

5-19 32,965 17.5% 2,134 6.5%

20-99 5,613 17.7% 1,506 26.8%

100 and more 831 43.7% 831 100.0%

223,414 100.0% 7,782 3.5%*

*= 50.2% by turnover

What information do we get?

• Up to December 2009, BIS obtained figures of output (quarterly) and new orders (monthly). For new work output there was only one question. For repair and maintenance there were 4 categories

• From January 2010, ONS has obtained figures of output (monthly) and new orders (quarterly). New work output is now split into 6 categories; repair and maintenance into 5 (infrastructure added)

What the output survey measures

• Output, not turnover (excludes sub-contractors)

• Output of the construction industry, not construction output.Will exclude: De minimis output

Businesses not classified to construction

Most direct labour departmentsDevelopment of building projects

The output questionnaire

The new orders questionnaire

UK data

• From these questionnaires we can (and do) measure directly:

• The value of output.• The value of new orders obtained, in total, by

region, and by type of activity.

Both sets of figures are then deflated and seasonally adjusted. (Output is only seasonally adjusted quarterly).

Regional data

• For new work, we have no direct information on regional output

• For new orders of £100,000 or more: we do have information about location of the work

• For new orders under £100,000: we assume they are located in the region of the firm’s address

• We can make assumptions about how long these orders take to fulfil

• Those assumptions are based on surveys from 2005-2007

Location of construction work

Q4 2011

Region of registration EAST MIDLANDS

EAST OF ENGLAND

LONDONNORTH

EASTNORTH

WESTSCOTLAND

SOUTH EAST

SOUTH WEST

WALESWEST

MIDLANDS

YORKSHIRE & THE

HUMBERTOTALS

EAST MIDLANDS 376 34 59 2 42 5 32 7 1 69 22 649EAST OF ENGLAND 69 534 370 11 54 32 308 73 4 63 17 1,534

LONDON 7 33 1,102 4 7 71 96 23 2 13 11 1,369NORTH EAST 0 3 8 82 14 6 2 0 1 0 5 121

NORTH WEST 7 2 2 273 538 41 3 4 6 67 22 967SCOTLAND 10 44 179 17 34 540 8 4 9 5 18 867

SOUTH EAST 56 72 1,283 48 170 23 1,027 135 18 89 61 2,981SOUTH WEST 20 14 88 4 0 1 72 499 14 81 4 798

WALES 7 5 0 0 25 0 19 18 184 9 5 273WEST MIDLANDS 43 23 109 16 94 29 120 91 51 331 80 987

YORKSHIRE & THE HUMBER 28 71 51 44 78 11 38 3 8 36 309 676TOTALS 623 834 3,250 501 1,055 761 1,726 857 298 763 554 11,221

Region where work is to take place

New orders, Q4 2011, £ million

Fulfilling new orders

N N+1 N+2 N+3 N+4 N+5 N+6 N+7 N+8 N+9 N+10

Public housing

0.07 0.14 0.18 0.20 0.17 0.13 0.08 0.04

Private housing

0.07 0.13 0.17 0.19 0.17 0.13 0.09 0.06

Infrastructure 0.07 0.11 0.13 0.13 0.13 0.12 0.10 0.08 0.06 0.04 0.02

Public non-housing

0.08 0.16 0.20 0.20 0.17 0.12 0.07 0.03

Private industrial

0.16 0.28 0.27 0.17 0.09 0.05

Private commercial

0.12 0.20 0.21 0.19 0.14 0.09 0.05

“N” is the quarter that the new order arrives; N+4 would be four quarters (one year) later, and so on

Proportions of all the work on the order

New orders, Scotland

Q4 2011

Q3 2011

Q2 2011

Q1 2011

Q4 2010

Q3 2010

Q2 2010

Q1 2010

Q4 2009

Q3 2009

Q2 2009

Public housing

13 103 64 155 113 91 130 171

Private housing

319 253 146 317 186 226 226 132

Infrastructure 128 185 59 240 434 110 132 202 305 96 89

Public non-housing

130 210 243 204 283 326 445 285

Private industrial

32 50 140 75 31 43

Private commercial

139 165 239 302 182 257 250

£ million

Contributions to output, Q4 2011, Scotland

Q4 2011

Q3 2011

Q2 2011

Q1 2011

Q4 2010

Q3 2010

Q2 2010

Q1 2010

Q4 2009

Q3 2009

Q2 2009

Public housing

0.9 14.4 11.5 31.0 19.2 11.8 10.4 6.8

Private housing

22.3 32.9 24.8 60.2 31.6 29.4 20.3 7.9

Infrastructure 9.0 20.4 7.7 31.2 56.4 13.2 13.2 16.2 18.3 3.8 1.8

Public non-housing

10.4 33.6 48.6 40.8 48.1 39.1 31.2 8.6

Private industrial

5.1 14.0 37.8 12.8 2.8 2.2

Private commercial

16.7 33.0 50.2 57.4 25.5 23.1 12.5

£ million

Output, Q4 2011, Scotland

Q4 2011

Public housing 106

Private housing 229

Infrastructure 191

Public non-housing 260

Private industrial 75

Private commercial 218

£ million

Total = £ 1,080 million

Note: because the new orders source largely uses the location of the building work, this mainly represents some form of output in Scotland, not necessarily output by Scottish businesses.

Other regions

We then undertake the same calculation for each of the other regions of Great Britain

We compare the aggregate for all regions taken together with total output directly from the construction survey

The total output figures first published for Q4 2011 were:

Published output, Q4 2011- new work only

Q4 2011

Public housing 1,153

Private housing 4,089

Infrastructure 4,029

Public non-housing 3,176

Private industrial 872

Private commercial 6,438

£ million

Total new work = £ 19,757 million

Repair and maintenance

Value of new work, Q4 2011 = £19,757m

Repair and maintenance = £11,185m

Total, Q4 2011 = £30,942m

So, new work = 64% of the total; repair and maintenance = 36%

Repair and maintenance by region

• Repair and maintenance data are collected in the output survey

• Assumed that repair and maintenance occurs in the region where the firm is based

• So, for example, all repair and maintenance in Scotland is assumed to be undertaken by firms with Scottish addresses

• No system of lagging new orders is needed

Deflation

• We often want to know not only the current value of building work, but whether the output of the construction industry is growing or shrinking in “real terms”

• To do that, we divide the current price amounts by an indicator of how prices have moved in the period (a “deflator”)

• We only deflate data for GB as a whole

Construction industry deflators

• Are obtained from the Building Cost Information Service (BCIS)

• Are of two types: output deflators and tender price deflators

• Are used for Great Britain and for every region (by type of work)

Output and tender price deflators

Type of deflator

Public housing Tender price

Private housing Output price

Infrastructure Tender price

Public non-housing Tender price

Private industrial Tender price

Private commercial Tender price

Repair and maintenance Output price

Output price deflators

Figures for Q4 2011 (2005=100)

Public housing 111.9

Private housing 119.0

Infrastructure 119.4

Public non-housing 109.0

Private industrial 108.1

Private commercial 100.9

Repair and maintenance 125.3*

* Derived from: public housing R&M = 124.0; private housing R&M =143.7; other categories of R&M = 114.7

Seasonal adjustment

• We use the standard ONS method for seasonal adjustment, X-12 ARIMA

• Seasonal adjustment is applied individually to each type of work (public housing, private housing etc)

• Seasonal adjustment of total GB output is the sum of the component series

• Regional figures are not seasonally adjusted

Reliability of new orders as a leading indicator

0

5,000

10,000

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20,000

25,000

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£ m

illio

n

Construction output - total new work

Output as published (Dec ref) Output as modelled from new orders

GB data

The structure of Scottish construction

GB figures vs Scotland: new work

GB figures vs Scotland: R&M

GB figures vs Scotland: all work

Any questions?