According to latest survey figures for the second quarter of 2011, the gap between those reporting falls against rises in work has closed, said the Civil Engineering Contractors Association.

While the trend is still down, sharp falls in workloads have eased raising hope among some firms that the worst is over.

But firms warn that sharp rises in materials costs are eating away at the industry’s margins.

The new survey showed that on balance civils contractors experienced a 9% decline in workload in the three months to June against the same time a year ago.

This is a striking improvement on the start of the year when 27% more firms saw a fall in workload than those reporting a rise.

The improvement was recorded across almost all categories of contractors, with rates of decline slowing across most sectors of work, most sizes of firms, and most areas of the country.

But the squeeze between rising costs and falling tender prices continued to put pressure on contractors’ margins, with an overwhelming 78% of respondents noting that costs were higher than last year.

CECA director of external affairs Alasdair Reisner said: “Optimism has been in short supply in construction for some time now, and justifiably so.

“But these latest figures do offer some grounds for hope that a return to growth may be on the cards in the next quarter, potentially ending 13 straight quarters of decline.

He added: “We must remember that the survey still shows industry activity falling, but the rate of the decline is now at its lowest since workload began falling in the second quarter of 2008.

“CECA is increasingly optimistic about prospects for contractors to find work in the growing energy, rail and water sectors, and we’re helping to offer our members guidance to enable them to win work in these growth areas.

“But any gains could still be wiped out if cuts to public investment in infrastructure have the impact many fear is imminent. For that reason any suggestion of a recovery in the infrastructure sector is premature.

“Nonetheless we hope that positive figures in the second half of the year may start to build confidence that the industry is getting back on its feet.”