Industry expects swift revision to latest government construction stats
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Construction industry analysts have expressed doubts over the accuracy of the latest findings from the government’s Office for National Statistics (ONS), saying that they contradict other surveys.

The expectation is that the numbers will once again be revised upward after further analysis.The ONS is already investigating why its figures vary so much from other industry surveys (link opens in new tab).

“Apologies ONS, but I just don’t believe today’s output figures,” said Richard Threllfall, partner and head of infrastructure building and construction at KPMG. “They don’t ring true with what the industry is experiencing on the ground, with strong demand across all segments and growing order books. Yes, the housing sector had a weaker than expected start, but is warming up nicely in the spring sunshine, and the civils market remains very strong thanks to pipelines of activity in road and rail. Sweepstake, anyone, on how long before we see an upward revision of the numbers?”

The latest ONS quarterly figures – for the period from period from January to March this year – estimate a 1.1% decrease in construction output compared with quarter 4 of 2015. Between quarter 1 2016 and quarter 1 2015, output was estimated to have decreased by 1.9%.

In March 2016, output in the construction industry was estimated to have decreased by 3.6% compared with February 2016.

The findings are contrary to industry surveys, says Professor Noble Francis, economics director at the Construction Products Association. “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.”

He added: “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.

Reasons for significant revisions to ONS’s construction output can include data returns, revisions to output price deflators and seasonal adjustment, he added. “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.”

Martin Bennett, a regional director of the Vinden Partnership also expressed doubts about the findings.“Recent surveys have shown that the construction industry has experienced growth in 2016 even if it has been subdued due the uncertainty surrounding the EU referendum. These latest results from the Office of National Statistics therefore come as a bit of a surprise,” he said. “I am encouraged by the reported figures on new housing. The strength of this sector will be a key driver in future construction industry growth and make a huge difference to those people looking to get on the property ladder.”