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Growth in the UK construction industry slowed in August and confidence fell as the sector was hit by economic conditions, according to new data.

The Markit/CIPS construction purchasing managers’ index (PMI) showed a reading of 52.6 last month, down from July’s 53.5, and is the lowest rate of expansion in the current eight-month sequence. A reading above 50 indicates economic growth.

The figures for August show that construction companies are winning new business but that the amount of incoming new work in the sector is the least marked since January this year.

Confidence among the sector also took a knock in August and was at its lowest level in eight months.

Sarah Bingham, economist at Markit and author of the UK Construction PMI, says that the decline in confidence was in response to cuts in government spending, which she warns may reduce the amount of investment dedicated to construction projects, and a ‘dampening of wider business sentiment’.

‘A further marked rise in input costs faced by constructors was again recorded in August, suggesting that overall operating conditions remain tough, especially as strong competition for tender opportunities remained,’ Bingham adds.

Employment levels and sub-contractor usage also fell last month, prompted by either lower workloads or the expectation of weaker market demand, respondents said.

‘Lukewarm order books have contributed to sharper declines in staffing levels,’ explains David Noble, CEO of the Chartered Institute of Purchasing & Supply (CIPS).

‘However, the proof of the pudding will be whether the reported increase in competition for new orders, plus increases in fuel and commodity prices, will subdue confidence going forward.’

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