Background Notes

Production in Building & Construction Index

Introduction of updated series with base year 2015=100

This release of the Production in Building and Construction Index for Quarter 4 2018 (Provisional) and Quarter 3 2018 (Final) has been calculated with reference to base year 2015=100 for the first time. The Irish construction industry experienced many changes between 2010 and 2015, as exhibited by the Volume index for all Building and Construction, where annual change ranged between -29% and +12% across this period.   To reflect these changes in the sector, this rebase has introduced a number of minor amendments to the calculation methodology.

The Production in Building and Construction Index provides quarterly statistics on output in the sector. The index monitors trends in the value and the volume of production in building and construction. The index is primarily intended to function as a short-term indicator. For long term analysis, the annual Building and Construction Inquiry is recommended.

The principal difference between the value and volume indices is that the value index measures changes in the value of work done while the volume index tracks the quantitative volume of production by excluding the effect of price changes using a price deflator. The Capital Goods price index for Building and Construction is used as the price deflator for this series.

This series is also available using the interactive tables in Statbank, the CSO’s Main Data Dissemination Service on www.cso.ie 

Reference Periods

The production in building and construction index is carried out on a quarterly basis (i.e. the first quarter covers January, February and March etc.).

Base Year

The set of indices, based on the Laspeyres Index, has been compiled with reference to base year 2015 = 100. The underlying structural weighting system for the output categories (Residential Building, Non-Residential Building and Civil Engineering) is based on the annual Building and Construction Inquiry, which provides Building and Civil weights, combined with the new Dwelling Completions data to generate Residential weights. The sample for the index is stratified by size class based on number of persons employed: A (0 – 4), B (5 -19), C (20-99) and D (>99).  Size class weights were produced using the Building and Construction Inquiry 2015 and the Quarterly National Household Survey Q2 2015.

Legal Basis

The Quarterly Survey of Construction (QSC) is carried out in accordance with the Statistics (Quarterly Survey of Construction) Order  2017 (S.I. No. 23 of 2017), made under the 1993 Statistics Act. The statistics are also required for EU comparisons under Council Regulation (EC) No. 1165/98 which has been amended by Regulation (EC) No. 1893/2006 with the introduction of NACE Rev. 2.

Scope and Coverage

The production in building and construction index covers, on a sample basis, the production of all firms in the private (i.e. non-State) sector whose main activity is building, construction or civil engineering i.e. firms classified to division F of the Statistical Classification of Economic Activities in the European Community (NACE Rev. 2). Approximately 2,400 firms are surveyed each quarter.

Seasonal Adjustment

Seasonal Adjustment is conducted using the direct seasonal adjustment approach. Under this approach, each individual series is independently adjusted. Each individual seasonally adjusted series is calculated based on working day adjusted data.

The seasonal adjustments are  implemented using the X-13-ARIMA methodology. This is applied using the Win X-13 software package, developed by the U.S. Census Bureau. This methodology estimates seasonal factors while also taking into consideration factors that impact on the quality of the seasonal adjustment such as outliers and level shifts in the series.

For additional information on the use of X-13-Arima see Monsell B. C., Lytras, D., and Findley, D. ‘Getting Started with X-13 ARIMA SEATS Input Files’, March 2016 available at    www.census.gov/srd/www/x13as/.

Methodology

A description of the methodology is available within the Methods area on the CSO website at: 

Production in Building and Construction Index Methodology

Comparison with other national series

There are differences (due to timing, definitions and other factors) between the quarterly and annual trends measured by this survey and by other national data sources. In particular the quarterly series from the QSC show considerable volatility. Table A, below, compares the main annual results of the survey with national employment and house building indicators. 

The series shows an increase of 12.1% in the annual volume of production in building and construction between 2017 and 2018. In the same period, employment in the sector, as measured by the Labour Force Survey, rose by 13.8%. 

For residential buildings, the QSC shows an increase of 4% in the annual volume of production between 2017 and 2018. The New Dwellings Completions series shows an increase of 25.4% in the same period.

Data on house-building commencements, a relatively new leading indicator, are also included in Table A.  This indicator shows an increase of 27.9% in residential building in 2018 when compared with 2017.

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