A FRESH surge in construction activity has fuelled concerns over a skills shortage as firms keep pace with industry expansion.

The Markit/CIPS purchasing managers' index says construction showed a larger-than-expected rise in August to 64.

The figure was up from the 62.4 recorded in July and one of the sharpest rises in output for seven years.

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A reading above 50 separates growth from contraction.

It came as housebuilder Redrow revealed revenues rose by 43 per cent to a new high of £864.5m in the year to June 30, and York-based Persimmon saw underlying pre-tax profits increase 57 per cent to £212.9m in the first half.

However, despite the positive results, David Noble, CIPS chief executive, raised worries over a major skills shortage.

He said August saw the quality of sub-contracted work deteriorate at the quickest rate since the survey began in 1997, alongside a record reduction in the availability of sub-contractors, and a record rise in the rates charged.

Across the supply chain, delivery times also saw the sharpest rise since the survey began, with input prices growing at the fastest rate since July 2011.

Mr Noble said: "The sector is struggling to find enough skilled tradesmen to keep pace with new work and the labour market will continue to put pressure on costs until the next wave of apprentices begin to enter the jobs market.

"The resurgence in construction has entrenched itself after a summer of blistering growth.

"However, builders should prepare for growing pains this autumn as the sector labours to recover lost capacity."

The report added residential construction posted the fastest rise in activity in August, despite the pace of expansion moderating slightly to a three-month low.

Civil engineering activity also increased at the strongest pace since March, while growth in commercial construction was again near to its fastest since the summer of 2007.

The construction update comes after a Markit/CIPS revealed the UK's manufacturing sector had endured its worst performance in 14 months in August.

It gave a weaker-than-expected reading of 52.5, down from 54.8 in July, and said the UK was feeling the effects of the impact of the conflict between Ukraine and Russia.