Bean counters defend construction output figures

Aaron Morby 12 years ago

The Office for National Statistics has taken the unusual step of holding a special press briefing to defend the quality of its construction data.

Many economists have been sceptical about the construction output figures after they showed exceptional growth at the end of last year, followed by a steep decline in construction output for the first three months of the year.

The findings largely exaggerated what many firms said they were experiencing and several independent industry surveys into construction activity reported.

But the ONS has hit back saying that its new survey methods better represent small firms, who have suffered much more than larger firms earlier this year.

“We still feel confident that the survey we have is the best we could possibly have as an input into GDP,” ONS statistician Graham Sharp said.

Analysts started to notice more volatility in the construction figures last year after the Government’s number crunchers shifted to collecting monthly rather than quarterly output data from the industry.

The shift also saw ONS collect output data from any company that pays income tax on behalf of its workers, where in the past firms were only asked to fill in a survey if they were VAT registered.

The ONS said some of the discrepancies with other more limited industry surveys stemmed from the fact that construction output by small and medium sized firms has fallen by more than larger companies.

Between Q4 2010 and Q1 2011, 39% of the smallest companies surveyed reported an increase in output, with 47% reporting a fall, the ONS said.

However, among larger companies 52% reported a rise in output, and 48% recording a decrease, it added.

Firms with fewer than 20 employees account for just over 37% of construction output in the UK. Large companies with more than 20 workers make up the remainder.

This opens the possibility to more skewed results from other industry activity surveys.

Another reason for the discrepancy between the ONS data and surveys is that firms use different measures to gauge construction output, not only the work they carried out in the period, but also invoiced work and the value of new orders they have received, the ONS said.

The agency said there was “no evidence” to support the suggestion from some quarters that the sector’s data for the first quarter of 2011 was affected by a time lag in companies’ output reports.

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