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The latest figures from the DTI, published this week, sent a warning signal to the industry that government spending on the industry could drop.

The research showed that in the first quarter of this year construction output in the non-housing public sector fell 15% to 拢1.7bn, compared with the same period last year, and was 16% lower than the previous quarter.

The industry will hope that the decline was an anomaly rather than the start of a trend, as it has relied on government spending on hospitals and schools to underpin orders while the commercial sector has been slow.

Allan Wil茅n, economics director at the Construction Products Association, said the reasons behind the drop were 鈥渁 puzzle鈥�. He said pre-election jitters could not explain the downward shift because they were more likely to affect orders and not output.

He said: 鈥淗opefully it is an aberration and work will start kicking in from new programmes like 好色先生TV Schools for the Future.鈥�

The industry can avoid recession in 2005, but it is dependent on government spending

Allan Wil茅n

Overall in the first quarter, construction output dropped 2% to just over 拢20bn. Wil茅n said that broadly speaking, the DTI鈥檚 latest research fitted in with the weakening pattern the CPA forecast at the beginning of the year. 鈥淭he industry can avoid recession in 2005, but it is dependent on the government spending side of things,鈥� he said.

The biggest increase in output occurred in public housing, which rose 14% to 拢578m in the first quarter of this year compared with the same period last year, and 35% on the previous quarter.

Despite forecasts that said infrastructure would suffer this year, output rose 13% to 拢1.5bn compared with the fourth quarter of 2004, driven by gas, communications, air, roads and harbour work on projects such as Heathrow Terminal 5.

However, Wil茅n warned that waning consumer confidence, which hit the repair and maintenance sector in the first quarter, were a threat to growth.