Despite the gloom and doom leading up to the Comprehensive Spending Review, it has not been as bad for the industry as expected, with public sector spending being cut by 30% rather than the 35% anticipated. The Construction Products Association described it as providing "some relief for the construction industry".

Transport will see significant investment, the government will meet its commitment to rebuild or refurbish over 600 schools and has stated it will deliver 150,000 new affordable homes over the next 4 years as well as continuing the Decent Homes programme.

Capital spending on Health will fall by 13.7%, the prisons programme will slow and some PFI waste projects have been stopped.

So while the construction industry continues to wonder at the strong second quarter performance in output reported by the National Statistics Office the latest construction output figures for August suggest the trend is continuing and we may even avoid the often threatened double dip in construction activity.

Month on month new work was 4% up in August with Public Non-residential and Private Industrial showing most growth. Repair and Maintenance was up by 1% despite falls in Residential RMI thanks to a strong performance in Public Non-residential.

If this trend continues into October then we can expect a strong third quarter for construction output.

The latest Construction Activity Barometer from Ernst and Young and the Construction Products Association also reported strong performance compared to last year, sales of construction products continued to rise during the third quarter of 2010. Commenting on the results, Noble Francis, Economics Director for the Construction Products Association said; "Sales of both heavy side products, typically used in the early stages of the construction process, and light side products, such as paints, heating and lighting products, were strong relative to 2009 Q3. Respondents, however, did warn that recovery is unlikely to be sustained beyond 2010 and expressed concern about the pending Comprehensive Spending Review on 20 October."

The CPA's latest forecast expects that, despite a slight rise in construction output this year, the contraction in capital expenditure to be announced in the Comprehensive Spending Review will send the industry back into recession in 2011 with a fall of not quite 1%. Total new build activity is expected to be very slightly up with growth in Infrastructure and Industrial activity countering the significant fall in Non-residential Public Sector activity. A fall in Repair and Maintenance of almost 3% is expected to cause the overall decline.