30 April 2012
The estimated collapse of 3% in construction output in the first quarter could so easily have been much worse had the methodology team at ONS not spotted a quirk in the seasonal pattern.
This led to an adjustment upward from a drop of 4% to the recorded drop of 3%.
Without going into technical detail that I don’t fully understand, the connection of the old series to the new series in January 2010 created a “seasonal break”.
There’s a whole host of factors that might be responsible here, including the surveying shifting from quarterly to monthly.
Anyway the upshot is that before any adjustment was made for this quirk the data pointed to a drop of 4% in construction output in the first quarter. Had this stood it would have most likely pulled the drop in total UK GDP down to -0.3%.
But the quirk suggests that the first quarter in the new series is running about 1% lower than it probably should be.
So the first quarter figure was adjusted upward to -3% and we have what we have.
How this might feed back into the recorded construction output data is not clear. But it might just be that the rather unbelievable spike of 10.5% growth in the second quarter of 2010 ends up as a less unbelievable figure.
This may seem all rather academic and in a way it is as these figures don’t change what actually happened on the ground. But they do influence how policymakers think.