Output from the UK construction industry was almost flat in the second quarter while the level of new work rose, a striking reversal from the plunge in activity in the first three months of the year and a sign that the government’s stimulus is taking effect.

The volume of construction output fell by 0.5 per cent in the second quarter, compared with the previous quarter’s 8 per cent drop – the sharpest contraction since 1980. Output in the year to the end of June was down 10 per cent compared with the previous year.