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Growth in the construction industry is set to outstrip that of the wider UK economy in the next three years, according to the Construction Products Association鈥檚 latest annual forecast.

The CPA has forecast 2.7% growth in construction output this year, mainly driven by the commercial industry. It is forecasting further growth of 3% and 3.5% for 2008 and 2009 respectively.

On a more negative note, the CPA said that a cooling in the housing market is forecast to stifle new build housing and limit the recovery of the home repair and maintenance sector over the next year.

Allan Wil茅n, the CPA鈥檚 economics director, said: 鈥淎fter two lean years, industry growth is expected to outpace that of the wider economy, even though growth in government funded projects is likely to be more modest than that seen earlier in the decade due to the tight Comprehensive Spending Review expected later in the year.鈥�

After two years of sharp decline, a modest recovery is expected in health-related construction output over the next three years, led by a growth in PFI projects.

Last year, growth in construction output was modest at 0.9%. There was a strong growth in commercial and industrial new work but overall the industry was held back by a decline in the repair and maintenance sector.

The CPA said that growth is projected to slow subsequently during 2010 and 2011 as public sector investment plateaus and private sector growth slows.