New house-building starts returned to their highest level for more than two years, having risen by a third in the year to the final quarter of 1996.
Angela Knight, Economic Secretary to the Treasury, said: "Whether your home is a flat or a castle or somewhere in between, mortgage rates are low and affordability is excellent. The building industry is now sharing fully in the success of the economy."
Separately, the Engineering Employers Federation reported that pay settlements in the last quarter averaged just under 3.2 per cent, a fraction higher than the previous quarter but down from 3.6 per cent in the same period a year earlier.
However, the level of settlements jumped from 3.11 per cent in November to 3.56 per cent in December. Most December settlements fell in the 3- 4 per cent range, rather than 2-3 per cent as in the previous month. January will be a key month for pay, as it sees the largest number of deals each year.
The Confederation of British Industry and Business Strategies published its quarterly breakdown of industrial activity between regions.
In the three months to December, companies in only four regions - the South-west, Wales, West Midlands and Northern Ireland - reported significant rises in orders. Manufacturers in the South-west were the only ones to report a significant rise in export orders.
Output fell in three regions, Northern Ireland, the North-west and the North. It grew most strongly in Wales, the South-west and the East Midlands.
Yet eight out of 11 regions showed an increase in business confidence compared with the previous quarter. Not surprisingly, businesses in the South-west were the most optimistic.