UK construction activity soared in the fourth quarter of last year to its strongest position in two years, says the Royal Institution of Chartered Surveyors. But with output and employment rising, skill shortages loom, raising the prospect of increased wage costs and increased prices overall.

Construction growth in the commercial sector has been fuelled in part by strong economic performance in the services industries. Public sector activity has increased, too, as more Government money has flowed into repairs and maintenance, especially for education and health buildings.

The majority of surveyors questioned also expect a rise in their workloads over the next twelve months, an indication that many of their clients have plans for more new construction.

The RICS says that most UK regions share in the improved confidence for the coming year. In some areas of the Southeast, a slight deterioration in prospects was actually recorded, but optimism in the region overall was already very high.

"The next hurdle we face," says RICS spokesman Neil Pountney, "is whether the industry has enough quality resources to manage potential workload."

Elliott Chase