CONSTRUCTION firms in the region are leading the way as a survey shows the industry is optimistic about business prospects in the next 12 months.

The Construction Confederation's latest Construction Trends Survey (CTS) shows output balance figures for the northern region are double the national average.

With 1,200 firms surveyed, the CTS finds a balance for each area by comparing the number of firms that say output has increased with those that say it has decreased.

The survey gave an average national balance of plus 22, with the North coming out as the top region with plus 44, compared with London, at the bottom of the table with minus 45. The national figure given is the average of all the regions.

Construction firms in the region have said the figures are not unexpected.

Keith Irvine, managing director of Tyneside's Metnor Construction, said: "I am certainly not surprised that the North has been recognised as a region of growth in the construction sector.

"This not only reflects the wealth of knowledge and expertise we have in this industry, but is a positive indicator of the general state of the region's economy today.

"The construction industry in the North of England is particularly buoyant at the moment."

He said that Metnor was looking at some exciting potential developments in 2003/2004 and predicting that its turnover would be higher than originally anticipated.

The confederation said predictions that interest rates would stay unchanged, or even drop further, have strengthened expectations that eight years of steady and sustained growth for the industry would be maintained.

Stephen Racliffe, chief executive of the confederation, said: "While the UK construction industry expanded modestly in the second quarter of 2002, our survey shows the workload in the North of England actually increased strongly - in fact the North was the strongest individual region.

"Following a slight dip at the beginning of the year, it is heartening to see the North once again enjoying higher than average growth and, along with London and Scotland, demonstrating a healthy and sustained increase in output over the past 12 months."

Other findings in the survey included a rise in tendering, with the level of work in hand above normal and the growth of new inquiries accelerating.

In the second quarter, 56 per cent of building firms and 47 per cent of civil engineering contractors were working at or near full capacity.