The construction industry has seen a pick up in expected profit margins and workloads, according to a survey published by the Royal Institution of Chartered Surveyors on Friday.

Forum Response: RICS

Simon Cash, construction spokesman, said: "Signs of recovery in the economy are encouraging for the parts of the construction industry that slowed over the last year. But a recovery will be gradual and this will hamper growth in parts of the commercial and industrial building sectors where an oversupply of business premises is apparent."

Forum Response: Chartered Institute of Purchasing and Supply

A spokeswoman for CIPS told ePolitix.com: "Much in line with the RICS findings, our January Construction Purchasing Managers' Index - a seasonally adjusted index designed to measure the overall health of the construction economy - also showed a continued expansion of the construction sector with strong growth in new business driving the expansion, although it has moderated slightly compared with previous months.

"The rate of new orders was also found to have experienced the strongest growth since July 2001. Construction sector firms were strongly optimistic in December that activity levels would rise during 2004.

"Confidence was generally boosted by the anticipation of improved business conditions in the UK and planned expansions."

Forum Response: Institute of Directors

Graeme Leach, chief economist at the IoD, told ePolitix.com: "The RICS construction survey is in line with the IoD's view that business investment growth will pick-up in 2004. However, we would caution against expecting a particularly sharp acceleration in business investment."

Forum Response: Construction Products Association

Allan Wilén, economics director at the Construction Products Association, told ePolitix.com: "The Construction Products Association's 'Construction Industry Forecasts' published last week identified many of the same trends as the RICS survey.

"In particular the forecasts found that higher government spending will be crucial to sustained construction industry growth over the next three years as private sector generated work weakens.

"Although private sector growth is forecast to constrain construction activity over the next three years, government spending continues to keep the industry optimistic, with public sector output forecast to grow by 7.5 per cent in 2004, 3.1 per cent in 2005 and 2.5 per cent in 2006.

"In contrast, higher interest rates and a moderation in household spending growth are forecast to curb related construction sectors such as housing, retail and leisure premises.

"Additionally, the report forecasts that oversupply in the office market will continue to depress the flow of new office developments over the next two years, while near term industrial building work will remain at a low ebb despite the recent strengthening in the euro and an anticipated recovery in world trade.

"Overall we expect the construction industry to avoid recession thanks to higher government investment in the built environment."