The annual turnover of the construction industry is about £1.5 billion bigger than we thought it was last month and it is growing much faster.
That really is the big story from the latest estimate of construction output made by the Office for National Statistics.
This is pretty big news. It means that the estimate for GDP will be boosted by about 0.1% as a result of the revisions to the construction output data. So we should expect to see the consensus forecast for GDP growth in 2013 rise from 1.4% to 1.5%, all other things being equal.
The chart shows output on a three-month (blue) and 12-month (red) moving average basis. There is not much impact on the annual figure, but as you can see from comparing with the previous months three-monthly data (orange) the recent growth is far stronger.
The reasons for the upward revisions, which added about £2 billion to the volume measure of work done by construction firms over the past seven quarters, are broadly down to late data, revised seasonal adjustments and, it seems, some changes to how inflation is measured.
Within the data filed late category the worst laggards seem to be civils firms. So this sector has been boosted quite a bit, although there appears to have been some reclassification from repair and maintenance to new work. There was also a fairly large upward revision to the current price data for housing repair and maintenance, private industrial and private non-residential repair and maintenance work.
To add to this uplift there were adjustments to the seasonal adjustments and there also seems to have been some changes to the indices used to adjust for inflation. The upshot is ONS now think there was more work done than they thought last month.
Looking through these revisions and at what the data might all mean, the signs seem very positive.
There’s no surprise that private housing is driving growth, with about 8.5% more work done in the first 10 months of this year than last year. But, in part due to the revisions, private commercial also now seems to be cantering along nicely and looks on track for a rise of about 4%. That represents a major turnaround since the last set of industry forecasts, when there was fear of a further fall this year.
The message ONS is sending to construction firms with this latest estimate of output is clearly seasonal:
“Have a Merry Christmas and look forward to a Happy New Year”.