Construction took a further knock this month as the Chartered Institute of Purchasing Supply (CIPS)/Markit Purchasing Managers' Index (PMI) showed more declines, but at the slowest rate for 18 months.

The headline figure of 47.7 was posted in August, up slightly from last month's 47. A posting below the 50 neutral mark shows contraction, above 50 is growth. Purchasing activity declined even though purchasing managers reported a drop in input costs and there was an expectation that more orders would come in.

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David Noble, Chief Executive Officer at the CIPS, 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 eighteen month period of contraction.

"Civil engineering – which had so far proven less volatile than the other two sub-sectors – performed the worst in August, reflective of 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."

(CD/BMcC)