Public sector Survey reveals that 78% of construction manufacturers expect an increase in output in Q1 2005.

High government investment in schools, health facilities and social housing is contributing to a positive outlook in the construction industry according to a new survey.

The Construction Industry Trade Surveys found that 78% of manufacturers and 41% of contractors were expecting an increase in output in the first quarter of 2005.

Outlook for the next 12 months is also rosy. On balance, 69% of surveyed contractors and 81% of manufacturers expect to increase their output over the next 12 months.

The positive outlook follows a rise in output during the fourth quarter of 2004, where on balance, 17& of contractors reported increasing output compared with the previous quarter, and 19% reported an increase compared to the fourth quarter of 2003.

In the fourth quarter public non-housing work was the fastest growing sector, while a significant balance of contractors reported increases on a year ago in new housing and housing, repair and maintenance work and commercial output.

Stephen Ratcliffe chief executive of the Construction Confederation said: “The Surveys’ results once again demonstrate the importance of sustained public sector investment.”

“It is vital that the government maintain its stated commitments to invest in public services in order to improve UK competitiveness and the quality of life of the nation as a whole.”

The surveys found that a lack of road and rail investment caused heavy side manufacturers’ sales volumes to fall in the fourth quarter compared to the previous year. Civil engineering contractors also reported a slight fall in volumes in the fourth quarter compared to 2003, despite increases in water and sewerage work.

Both building contractors and manufacturers reported an increase in building cost inflation during the fourth quarter. Manufacturers said higher raw materials and energy prices were the main reasons for higher costs.

The Construction Industry Trade Surveys was published by the Construction Confederation and the Construction Products Association.