UK construction activity grew in July for the sixth month in a row, says the latest report by the Chartered Institute of Purchasing and Supply.

The total construction activity index dropped slightly to 62.9 from 63.7 in June, but stayed well above the 50 no-change level. The survey said the rise was driven by housing and commercial activity.

The figures suggest that the industry is beginning to heat up, with companies reporting skills shortages as they expand capacity to meet greater workloads.

The report said: “While demand for subcontractors continued to pick up, the availability of subcontractors declined again, resulting in further upwards pressures on rates charged.”

Optimism for the year ahead remained buoyant, with more than 50% of firms expecting workloads to rise over the next 12 months.

However, another piece of research contradicts this claim, forecasting that total UK construction output will fall slightly this year, compared with 1998. Cambridge Econometrics predicts that output will dip 0.2% in 1999.

The forecast’s regional breakdowns for growth this year are: Greater London 0.2%; rest of the South-east 2.9%; East Anglia 2.1%; South-west 1.3%; West Midlands -0.3%; East Midlands -4.4%; Yorkshire and Humberside 2.2%; North-west 1.3%; North 1.4%; Wales -2%; Scotland 2.9%; and Northern Ireland -2.3%.