Construction rally grows with homes and shops demand

The recovery in the construction sector accelerated last month after two years of recession.

A survey today showed building activity increased in April at the fastest pace since September 2007.

It was the second month of growth in a row and was driven by demand for new homes, shops and offices.

Howard Archer, chief UK economist at IHS Global Insight, said: "It raises hopes that the sector is now on the mend. Nevertheless, it still faces a very challenging environment and is likely to be hit by the next government's need to rein in spending for an extended period.

"This is bound to hit expenditure on infrastructure and public buildings."

The Chartered Institute of Purchasing and Supply said its index of construction activity, where above 50 represents growth, rose from 53.1 in March to 58.2 in April.

However, the industry shed jobs for a 23rd month in a row.

CIPS chief executive David Noble said: "Though the industry is moving in the right direction, we mustn't be lulled into complacency as growth is coming from a very low base and operating conditions are still very difficult.

"It's a worry considering what impact post-election spending cuts might have on the sustainability of the sector's recovery."