Construction output rose firmly in the first quarter of 2000 reaching a six-year high, thanks to dynamic commercial and housing sectors, reveals a building sector survey published yesterday by the Royal Institution of Chartered Surveyors (RICS). Surveyors are confident that output will rise further, though a north-south divide exists over the prospects for profit margins.

The RICS Construction Market Survey looks at the workload of chartered surveyors working in the building industry. They are among the first to detect new trends in construction because of their early involvement in proposed projects.

The near term outlook for construction activity is viewed very positively by surveyors, with expectations for the next three month period their strongest in two and half years. However, longer term prospects have began to level out, with surveyors slightly less confident about future workload than in the last quarter of 1999.

Profit margins are rising at a faster pace than envisaged in the last quarter of 1999, continuing a trend of rising confidence experienced through last year. Confidence in profit margins is strongest in the South East and Wales, reflecting a buoyant trading outlook and contrasts with the Midlands and the North where confidence in profit margins is still very low.

RICS construction industry spokesman, Trevor Mole, said: "Unquestionably activity has increased over recent months throughout the UK and there is a great deal more short term optimism. However the industry is still cautious about its long-term future. The rising workload and profitability particularly in the South East and isolated areas elsewhere is driving up employment demand. The survey results are generally encouraging but long term security and optimism is still very much needed."

The Construction Market Survey is published quarterly, collating the responses of over 100 firms of chartered surveyors operating within the UK.

Anna Lagerkvist