Despite a slow start to the year in housing, a sharp downturn in manufacturing, and a fall in business investment, other indicators justify a degree of optimism about prospects for Britain’s slowly recovering economy.

The weakness of the housing market is reflected in figures from the Bank of England which show the number of loans for home purchases approved in February were only a little higher than in the previous month. Mortgage lending improved by 6%, after a sharp fall in January, but is still below the level of February 2009.

House prices fell 1% in February, the first decline since April 2009, according to Nationwide Building Society, while Halifax recorded a 1.5% drop.

Construction activity declined further in February, albeit at a slower pace. The CIPS/Markit survey of purchasing managers shows that housebuilding was the only construction sector to achieve an increase in activity.

Overall, the industry has now been in recession for two years, according to the survey, and new opportunities to tender remain limited.

But housebuilder Taylor Wimpey reports a continued improvement in visitor levels and sales in the first two months of 2010, and Barratt Developments says it has 27% more orders than a year ago. But builders merchant Travis Perkins announced a sales drop of 8% last year, and warns that “activity levels remain fragile”, with the home improvement market expected to contract further in 2010.

Business investment was down almost 25% on a year earlier in the fourth quarter of 2009. Bank lending to businesses fell by 9.3% in January, to the lowest level for more than 10 years.

The March CBI survey of manufacturing reveals improved export demand, offset by subdued domestic orders. Official estimates of manufacturing output suggest that it contracted by a larger than expected 0.8% in January as the harsh weather took its toll.

Pollster Gfk NOP’s February consumer confidence index rose by three points, to a level 21 points higher than a year ago. Its major-purchases metric was unchanged, eight points above last year’s level.

Official figures suggest the overall size of the UK’s economically active workforce – those most likely to spend on furniture and other household goods – has shrunk to a record low of nearly 8.2 million.

Nonetheless, the CBI found in its latest survey that in the high street consumers defied expectations in February and produced the largest growth in overall sales volumes since May 2007.

Furniture retailers were among the beneficiaries, with 69% reporting an increase in business – the strongest figure in the last 12 months – as sales bounced back from the snow-driven downturn in January. Although builders merchants reported no change in sales volumes in February, this contrasts with 63% reporting a downturn in January.

Looking ahead, new forecasts for wood and wood product output, compiled by Oxford Economics, point to an increase of 0.7% this year, after a fall of 15.6% in 2009, to be followed by average yearly growth of 4.2% over the three years 2011-2013. Construction output is expected to increase by 0.9% in 2010, and by an annual average of 2.1% during the following three years.

On the wider economy, the European Commission revised down its forecast for UK growth this year to just 0.6%, but a survey of forecasters by the Treasury finds a consensus prediction of 1.3% growth.