Britain’s struggling construction sector beat estimates for its latest monthly performance, as the Government-backed housing recovery helped to increase new business.

Output from the construction sector grew by 2.2pc in July against the previous month, official figures showed, driven by new business placed at firms. Growth in private housing led this, with activity up 14.7pc on a year earlier. The data raised hopes that building firms are finally “turning a corner” and helping the wider recovery to pick up speed.

“This suggests that the recovery in the housing market seen in recent months, supported by schemes such as Help to Buy and Funding for Lending, is starting to translate into a recovery in house building,” said Scott Corfe, managing economist at the Centre for Economics and Business Research. “The strong growth… may alleviate concerns in some quarters that schemes such as Help to Buy are going to merely inflate house prices while doing nothing to increase the stock of housing in the UK.”

However, he cautioned that the “tentative” signs of housing supply responding to demand were unlikely to stop property becoming even less affordable in coming years.

Building firms are bouncing back from a very low base as activity grew to a near halt during the financial crisis. Last year, output was still almost 14pc off its level in 2007.The latest headline month-on-month growth seen in July came after a 1.1pc fall in June. The improvement meant that the industry’s output was in August 2pc higher than a year ago, the strongest annual gain since 2011.

In a further positive sign, the figure for the second quarter of the year was revised from 1.4pc to 1.9pc, the Office for National Statistics said. Over that quarter, construction orders for new housing were up by 19.4pc, the biggest rise seen since autumn 2010. The data helped push sterling to a seven-month high against the dollar, hitting $1.5872 in afternoon trade.

Economists said the positive contribution from construction put the UK economy on track to beat the 0.7pc growth achieved in the second quarter of this year. While the sector’s output accounts for just under 7pc of the UK’s total gross domestic product (GDP), its volatility means it can have a large impact.

“The surge in UK business optimism is feeding through to the hard data now,” said Robert Wood, chief UK economist at Berenberg, predicting GDP growth of 0.9pc in the third quarter of this year, and 0.7pc in the fourth.

Alan Clarke at Scotiabank was still more bullish, forecasting GDP growth of 1pc for the third quarter. “So far, so good,” he said. “The key thing that we are waiting for is the monthly services output data.”