The seasonally adjusted IHS Markit/CIPS UK Construction Purchasing Managers' Index (PMI) posted 51.1 last month, down from 51.9 in July and pointing to the weakest overall UK construction performance since August last year.
According to firms, a key factor for the slowdown was a lack of new orders to replace completed projects. Despite residential building being the only area to buck the overall trend in August, with housing activity rising at a robust and accelerated pace since the previous month, civil engineering activity was close to stagnation and commercial work dropped at the fastest pace since July 2016
Survey respondents suggested that concerns about the UK economic outlook had weighed on the commercial development sector, with clients opting to delay spending decisions and, in some cases, scale back planned projects.
Elsewhere, total new order volumes fell for the second month running, however the rate of contraction was only marginal and slower than seen in July. Firms continued to cite a reluctance to commit to new construction projects, linked to general economic uncertainty and less favourable market conditions.
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Job creation was also at its weakest since July last year, while firms recorded a fall in sub-contractor usage, continuing its downward trend seen since March.
Supply chain pressures also continued in August, despite stagnation in input buying. Longer delivery times were linked to ongoing stock shortages among vendors.
However, cost pressures were at their weakest since September 2016, with respondents noting exchange rate depreciation continuing to boost prices for construction materials. Yet, some firms commented on successful negotiations with suppliers against a backdrop of softer market conditions.
Duncan Brock, Director of Customer Relationships at the Chartered Institute of Procurement & Supply, said without new orders in the near-term future, the construction sector's performance "is likely to continue to be downbeat."
"The sector hit a roadblock this month as purchasing activity slowed for the third month and new business wins were hard to come by," he said.
"Reduced Government spending, economic uncertainty and Brexit-delayed decision-making among clients were largely to blame.
"The struggling commercial sector drove this disappointment, languishing under the pressure with the fastest drop in activity in over a year. Job creation was nothing to shout about and showed signs of a slowdown, as companies reined back additional spending.
"But any further drag on the construction sector overall was halted by the continuing strong performance by housebuilders, defying expectations with a good month. The sector was also offered some respite from the ongoing march of rising prices as input price inflation weakened.
"This good fortune in prices is unlikely to continue as suppliers scrabble to match the demand for an increasing number of materials in short supply and delivery times lengthened. Price rises will become inevitable if builders have to compete to get what they need."
(LM)
