Positive outlook for 06

Construction activity has hit a six-month high, according to the Chartered Institute of Purchasing Supply. It said activity in the sector accelerated for the second consecutive month in March. The CIPS Purchasing Managers' Index recorded the highest level for six months, at 54.7. This was well above the 51.9 recorded in February.

The sale of construction products meanwhile rose in the first quarter of 2006, according to a survey by the Construction Products Association. The CPA found an increase across both heavy and light material sales during the period.

CPA economic director Alan Wilen said the findings were good news. "It provides early signs that the industry is going to bounce back from a disappointing 2005." Wilen added that work was beginning to start on long delayed infrastructure projects in the water and road sectors. He said the change to Part L of the building regulations this week would also benefit sales of energy efficient products.

The CPA did raise concerns about rises in energy prices on sales, however. "Some companies have seen their energy bills rise by more than 2005 over the last year and the consequences of this on the price for products is only just beginning to feed through," he said.

The latest economic brief from the RICS highlighted further positive signs. It said new orders had picked up in the first quarter of 2006 and this "could herald faster growth" during the rest of the year.

Roy Ayliffe, director of professional practice at the CIPS, said: "The accelerated rate of growth in construction activity signals a positive outlook for the UK construction market, particularly with the increase in new orders and employment fuelling the optimism being seen by purchasing managers."

But he agreed that high oil and energy prices were a worry, as they were likely to affect input costs, despite the rate of inflation reaching a four-month low.