According to the latest pan-industry trade survey for the third quarter building contractors also reported the first rise in tender prices for four years.

As new orders reached their highest level since 2007, some signs of specialist labour shortages are also emerging.

One third of building firms said they have had difficulties recruiting bricklayers and plasters, the highest figure since pre-recession 2008, although the majority reported few difficulties in recruiting on site trades, overall.

After bumping along for several quarters civil engineering contractors said they have just experienced the first broad-based spike in workloads, across England and Scotland.

The third quarter uplift was also felt by product manufacturers, which saw sales volumes of both heavy and light side products bounce back.

Stephen Ratcliffe, Director UKCG, said:  “These results are more encouraging signs of a turn round in the construction.

“Housing, as the leading indicator, is still the main growth driver and general construction still has some catching up to do.  Nevertheless, the mood music amongst UKCG members is more positive than it has been for some time.”

Julia Evans, Chief Executive of the National Federation of Builders added:  “Confidence is returning to the industry and we are seeing measurable signs of growth and a healthy number of orders.  However, the cost of doing business continues to rise as materials and labour cost increases far outpace revenues.

“Repair and maintenance continues to fall behind all other areas in construction and this could be taken as further evidence that the Green Deal is not yet taking hold.

Noble Francis, Economics Director at the Construction Products Association, said:  “It was encouraging to see that the recovery, which started in Q2, has continued into Q3.

A balance of 43% of contractors reported rises in activity, the second highest level since pre-recession 2007.

“Although private housing is clearly driving industry growth, all construction sectors enjoyed increases in output.  With rises in new orders and enquiries, the industry clearly expects that the recovery in output will continue over the next 12 months.

“Construction tender prices in Q3 also increased with 4% of firms, on balance, reporting a rise.  However, higher costs, most recently due to increasing labour costs, offset this.  As a result, 11% of firms, on balance, reported that profit margins in the industry declined in Q3.”

The trade survey is compiled by the Construction Products Association and brings together the results surveying members of the Civil Engineering Contractors Association, Construction Products Association, Federation of Master Builders, National Federation of Builders, National Specialist Contractors Council and the UK Contractors Group.