The construction sector contracted at its slowest rate in 18 months, according to the CIPS/Markit Index.

The index posted a reading of 47.7 in August, while incoming new business posted a further decline in August, and at a marginally steeper rate of contraction compared to that recorded in July.

Construction jobs contracted sharply in August as constructors continued to cut capacity to accommodate reduced business, but companies indicated sustained optimism over future business activity.

David Noble, chief executive at the Chartered Institute of Purchasing & Supply, said: “Though August saw a reduction in the rate of deterioration in the construction sector, it is still the sick man of the UK economy. Far from seeing signs of a return to growth, the sector remains stuck in an unprecedented 18 month period of contraction.  

“Civil engineering – which had so far proven less volatile than the other two sub-sectors – performed the worst in August, reflecting the instability of the industry as a whole.

“Perhaps most concerning was further news of job cuts as companies tried to manage reduced levels of business.”