The Office for National Statistics said construction output contracted 3.9% in the three months to the end of June, a smaller decline than the 5.2% it had estimated when it made its preliminary report on Q2 GDP.

The first reading of Q2’s GDP showed the economy contacted 0.7% between April and June, much worse than forecasts from analysts who had predicted a 0.2% correction.

However, as a result of the improved construction data, the ONS said the GDP figure would be revised upwards by 0.1%.

It said: “The estimated impact on quarter two 2012 GDP from this release of construction output data is an upwards revision of 0.1 percentage points.”

The improvement is expected to show up in the second reading of Q2 GDP later this month, and should provide some relief to the embattled Chancellor George Osborne.

Osborne has come under fire for introducing austerity measures too quickly, and has been accused by some organisations of stifling growth with the cutbacks.