GROWTH in the building industry picked up last month, despite rising oil prices and a shortage of raw materials.

Total construction activity increased faster in June than in May following a sharp increase in orders, the Chartered Institute of Purchasing and Supply (CIPS) said.

But developers were left counting the cost of input prices rising at their fastest rate since April 1997, with steel in short supply.

The headline CIPS purchasing managers' index registered 56.6 in June, compared with 56.3 in May. Any figure above 50 indicates growth.

The industry has now expanded for more than five consecutive years, the CIPS said.

Recent rises in interest rates were having little effect on demand for new houses as the commercial activity index accelerated to 58.8 in June from 56.5 a month earlier.

Rising confidence in the UK economy helped to drive an increase in orders during the past month.

The new orders index stood at 59.4, which the CIPS said was faster than the rate of activity and signalled delays in the completion of existing contracts and the start of new projects.

Companies in the sector took on extra workers to meet rising workloads. The employment index stood at 53.7 last month, up from 53.4.