Construction Products Association fears first annual decline since 1994.

The construction industry could be heading for a recession, the Construction Products Association warned today.

Figures released today by the department of trade and industry show overall construction output dropped 1% in the first nine months of the year compared with the previous year. This is a drop of £537m using seasonally adjusted 2000 prices.

The number of new infrastructure projects finished dropped by 15% or £619m from January to September compared with the same time last year. However infrastructure output rose by 8% - £99m - in the third quarter of 2005 compared with the previous quarter.

Private housebuilding output rose 5% from in the year to September compared with the same period in 2004 but output of social housing fell 7%.

The number of employees in the construction industry rose by 3% in July 2005 compared with the same month in 2004.

Allan Wilen, economics director of the Construction Products Association, said: "The industry now appears certain to endure its first annual decline in output since 1994." He said that government was falling behind on investment in school building, health facilities, social housing and transport infrastructure projects which are key sources of construction work.