Construction in Britain contracted for a second straight month in September, according to a survey of industry managers.

The Markit/CIPS construction purchasing managers' index rose to 49.5 from 49.0 in August. This was a smaller improvement than predicted and leaves the index below the 50 line that separates growth from contraction.

Economists had expected the index to rise 49.8 in September. This drastic difference indicates the index is much lower than 50.0, which translates as contraction. An index above 50.0 indicates expansion.

"The principal take out from September's PMI survey is that underlying construction weakness is likely to continue for the remainder of 2012," said Tim Moore, senior economist at Markit.


"The current stretch of falling new orders is now the longest seen for three years. A lack of new projects meant that confidence...remains close to its lowest since the UK economy nosedived into recession during 2008."

The government has been working to boost the sector with 10bn pounds of loan guarantees to build rented housing announced last month.

This was an addition to the 40bn already offered in infrastructure guarantees and a Bank of England scheme to lower borrowing costs for households and smaller businesses.

The latest survey by Markit shows house building fell at its fastest since December 2010 last month, with commercial activity also declining: by the biggest margin since February 2010.

There was a hint of optimism afforded in the civil engineering sector, which reported solid growth and continued employment at a reasonable pace.

While third quarter data is expected to show Britain's economy has emerged from its second recession since the financial crisis, the longer-term outlook remains uncertain.

Headwinds from a euro zone economy and a five-year austerity drive appear to be tipping the UK back into recession.

(IT/GK)