The RICS construction market survey for the fourth quarter of 1998 showed the number of firms expecting output to increase over the next 12 months was up 7% on the previous quarter.
RICS construction spokesman Chris Powell said workload and confidence were both on the rise.
"I think that the interest rate cuts and the low inflation rate must be significant factors behind this. We are still talking about a much slower rate of growth this year, but it's a lot better than all the doom and gloom a lot of people were expecting." It is the first time confidence has risen between quarters since early 1997.
However, the Federation of Master Builders state-of-trade survey for the final quarter of 1998 makes more depressing reading.
The FMB survey shows an overall decline in workload, with forward enquiries dropping off as well.
FMB president Derrick Ovington said: "I'm not optimistic about the situation at all. I think the first quarter of this year is going to be critical for us." The only bright spot in the FMB survey is that private household repair and maintenance is holding up.
FMB deputy director-general Brian Flint said the situation looked fragile. "There are plenty of warning signs around. If it goes pear-shaped, it will go down quickly," he said.