The latest Lloyds Business Barometer published today showed overall confidence in the sector jumped 10 points to 56%, well above the 12-month average of 47%.

More than two thirds of industry firms now expect business activity to increase over the next year, with 65% planning to take on more staff, up from 55% in June.

Confidence in firms’ own trading prospects remained strong at 68%, while optimism about the wider economy climbed to 53%.

More than half of construction firms said stronger customer demand was the main driver behind their improved outlook, while 38% pointed to easing interest rates and better financial conditions.

Lloyds director and head of construction Max Jones said: “The latest rise in confidence suggests construction firms are becoming more willing to plan beyond the next project.

“After a period of uncertainty, it’s encouraging to see that firms are beginning to invest in people and the capacity they’ll need to support future demand, signalling a sector that’s looking ahead rather than reacting to today’s market conditions.”

Across all UK sectors, overall business confidence rose five points to 49%, a four month high, helped by lower global energy prices, steady interest rates and improving geopolitical conditions during the survey period.

The Lloyds survey was carried out between 1 and 16 July. Net balances are calculated by deducting the percentage of negative responses from the percentage of positive responses.