Building slump - small business suffers the most

Published:  22 June, 2011

LONDON: The Office for National Statistics insists its construction survey is the biggest and best following accusations that its data for the sector has skewed the picture of how the economy is faring.

Construction output shrank 3.4% in the first quarter of this year against the previous three months, according to the statistics agency. Rival surveys point to a bounce-back in the sector's activity after last year's snow came to an end.

There have been suggestions that recent ONS data could be misrepresenting what is going on in the sector - and therefore, the economy as a whole - with critics noting that the agency switched from a quarterly to monthly system of collecting to the data at the beginning of 2010.

The ONS yesterday defended its record arguing that its survey of the sector, which it defines as everything from infrastructure work to painting and decorating, covers 8,000 businesses each month, making it the largest and most comprehensive measure of the industry's output.

The agency says other surveys do not match its coverage of small construction companies, which have struggled the most since the recession. The smallest businesses, those employing up to four people, saw output fall 9.7% between the last quarter of 2010 and the first quarter of 2011.

In contrast, the biggest companies, those with 100 or more staff, saw output fall only 4.3%, suggesting they have been mopping up what work is out there.

Any data focused more on the bigger companies would, by implication, offer a rosier picture of the sector.

The ONS also said that when it presented its own data for the same types of companies and in the same way as other surveys - for example, asking whether activity rose or fell - it found correlations.

For example, more large companies than not saw output pick up in the first three months of this year, but this was enough to stop their total output, which the ONS tracks, from falling in value.

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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