Distributed lag relationships between UK construction orders and output

The volume of construction orders obtained by construction contractors determines the pace of total work done by contractors. In essence, new orders lead to construction output spread over a period of time. The operation of the construction industry shows that the construction order at time t would continue to filter into the output of the industry in the subsequent periods. This paper estimates and analyses the construction output-order relationships for both private and public sector construction works. There is a significant difference in the initial impact of new order on output in the private (19%) and public sectors (50/;,). The new order in the public sector takes a longer period (1 1 quarters) to filter completely into the public sector construction output whereas it takes substantially less time to filter completely (eight quarters) in the private sector. The shapes of the distributed lags are quite different for each of the sectors and these are explained by the attitudes of construction contractors to each of the sectors and the peculiar nature of the sectors themselves.