The seasonally adjusted IHS Markit/CIPS UK Construction Purchasing Managers' Index® (PMI) recorded 48.1 in September, down from 51.1 in August.
Respondents stated lower volumes of work in both commercial and civil engineering activity during September contributed towards the decline, while a civil engineering work witnessed its steepest reduction for almost four-and-a-half years. Some firms linked this to a lack of new infrastructure projects to replace completed contracts.
Elsewhere, work on commercial developments also decined, with the latest fall only the second-sharpest since February 2013 (however exceeded only by the post-EU referendum dip seen last July). Survey respondents widely commented on a headwind from political and economic uncertainty, alongside extended lead times for budget approvals among clients.
New business volumes also dropped for the third consecutive month, suggesting a continued shortage of work to replace completed construction projects. Despite the downturn seen around the EU referendum last year, the current period of decline is the longest recorded since early- 2013. This in turn led to falls in sub-contractor usage and a relatively weak rate of job creation among construction firms during September.
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Input buying decreased for the first time in six months, largely in response to reduced workloads across the sector, while lower demand for materials helped to alleviate some strain on supply chains, as delivery times from vendors lengthened to the lowest extent since November 2016. However, companies ocntineu to face challenges from rising input costs, with higher prices for imported materials helping to drive up inflationary pressures to a seven-month high.
Despite various falls, housebuilding was the only area to register an expansion in September. However, growth momentum eased to a six-month low amid reports citing worries about less favourable market conditions ahead.
Looking to the future, business optimism has eased to its second-lowest since April 2013, with a number of firms citiing concerns about UK business investment prospects, linked to uncertainty around the path to Brexit.
Duncan Brock, Director of Customer Relationships at the Chartered Institute of Procurement & Supply, said: "A dismal picture of construction emerged this month as the sector showed signs of worsening business conditions across the board. With the biggest contraction in overall activity since July 2016, and a drop in new orders, optimism was in short supply.
"Respondents pointed to obstructive economic conditions and the Brexit blight of uncertainty, freezing clients into indecision over new projects. Even housing, the stalwart of the construction sector stuttered with a dwindling performance, but civil engineering was the biggest victim falling to its weakest level for four and a half years.
"The contagion continued all along the supply chain as material shortages placed a strain on delivery times and increased commodity prices were affected by the weak pound. Despite a marginal increase in employment figures, this wasn't enough to dispel the descending autumnal gloom where it is unclear where any major shift in momentum for the sector will come in the next few months."
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