Association chief executive Michael Ankers said: 'An increase in public sector building work helped sustain industry growth during the third quarter, offsetting a weakening in private sector activity, especially in consumer and housing market-related areas.
But contractors' leaders sounded the alarm about rising prices.
Stephen Ratcliffe, chief executive of the Construction Confederation, said: 'Contractors are experiencing increased pressure on margins from rising material and labour costs and a deceleration in tender price inflation.
'As margins are still pretty lean in comparison with other industries, the ability to absorb these cost increases is thin and it is inevitable that they will be passed down to the client.
'Building contractors remain concerned about the recruitment of skilled site labour.'