–Adds Detail To Version Transmitted At 1200 GMT
–NS Accepts Uncertainty Over Responses To Construction Output Surveys

LONDON (MNI) – Small and medium sized construction firms saw a much
sharper fall in output in Q1 than their larger brethren, helping explain
some of the discrepancy between the broadly based official construction
data and the private sector surveys, according to the Office for
National Statistics.

The ONS released additional figures Thursday which showed the
smallest construction firms saw output fall by 9.7% in current prices in
Q1 compared to Q4, while the next smallest band of firms saw it fall by
9.0%. The largest firms, however, saw output drop by only 4.3% over the
same period.

Small companies make up a large chunk of the UK construction
industry. The ONS’ figures out Thursday show that construction companies
employing less than 20 people account for 37.2% of its monthly
construction output survey.

The evidence suggests that the squeeze on the construction industry
has been sharper among the smaller players, with the bigger companies
seeing business hold up better.

ONS officials stressed that their survey was the most
comprehensive. Even its monthly construction series covers some 8,000
businesses, making up over 50% of total construction turnover.

The Chartered Institute of Purchasing and Supply construction
survey, the much cited CIPS Construction, has a panel size of 170,
although it does aim to get representative company size samples.

The ONS reworked its figures, using the simple up/down output
balances employed in private sector surveys. It found that by doing this
the apparent discrepancies between its own, much criticised, data which
have highlighted construction weakness and the more robust private
sector surveys were not so pronounced.

On the ONS’ figures 52% of the largest firms reported an increase
in output in Q1 from Q4 and 48% a decrease, giving a plus 4 percentage
point balance – similar to the findings of some private sector surveys.

The Q1 Royal Institute of Chartered Surveyors’ construction market
survey, for example, had a plus 6 balance for Q1.

The ONS is, however, still working on a series of technical
improvements to its construction data.

Media reports have highlighted the confused responses to ONS
questionnaires – with companies offering anything from invoice data to
works completed data in response to output questions.

The ONS said it was carrying out routine checks on how respondents
understand its questionnaires.

The statistics office, however, rejected the charge that changes to
its construction data series in January 2010 had introduced any systemic
bias.

The current price and constant price series will be equalised to
base year for the Q2 construction release, out on August 12.

The August 12 Q2 construction output data could see revisions to
previous quarters but these will not feed through into the official
growth numbners until the final estimate of Q2 GDP is published in
October.

–London bureau: 0044 20 7862 7491; email: drobinson@marketnews.com

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