Even if there are problems with official figures, the real worry is how to drive recovery
Reading official construction output data has become more a dark art than a science. We know the Office of National Statistics is measuring something, the question is what - and what does it mean?
The latest figures suggest a fall of 4% in Q1 2011 following a fall of 2.7% in 2010 Q4. That’s pretty unlikely to be a fair reflection of what actually happened and is why the industry has attacked the figures.
There are problems - probably a lag in the data, questions over seasonal adjustments and deflators and the pre-recession peak is probably understated. But the official figures are the best measure we have of the volume of activity.
Let’s assume a one month lag and adjust the data by shifting January’s recorded figure to December and so on. The result is, interestingly, a pattern closer to what firms say happened: a deep decline in 2010 Q4 - consistent with the harsh weather - and a bounce back in the first quarter of this year - as you’d expect.
But it still leaves the level of work on a downward slope. Broadly speaking, public sector work is now flagging and the private sector is not expanding to fill the hole.
The official figures are the best measure we have of the volume of activity
Private sector housing remains weak. Industrial work seems to have lost its lustre. The massive private commercial sector appears to be still in decline. And cash-strapped businesses and families don’t seem to be too eager to boost their spending on repairs and maintenance
The sector that currently appears most promising is infrastructure and that is not looking quite as fit as it was.
So however much we may wish to slag off the figures, the real question is: what will drive recovery in the private sector?
Brian Green is an industry commentator