UK construction contracts at faster pace, says survey

Construction has been the main drag on the UK economy
Image caption The fall in construction activity has been a significant drag on the UK economy

UK construction activity unexpectedly fell last month as new orders slumped at the fastest rate since the height of the 2008 financial crisis.

The Markit/CIPS construction Purchasing Managers Index dropped to 49.0 in August from 50.9 in July.

A figure below 50 indicates the sector is no longer expanding.

The decline is worse than many economists had expected, and will fuel doubts over the economic recovery.

A poll of City economists by Reuters showed on average analysts were expecting a smaller decline, to about 50.

The construction sector, which shrank nearly 10% in the first half of 2012, has been significant drag on the UK economy, which fell back into recession at the end of last year.

Tim Moore, senior economist at survey compiler at Markit, said the data confirmed the industry was suffering a "prolonged downturn".

"There is little evidence to suggest an imminent rebound in output levels," he added.

The drop in new orders was the fastest since the height of the financial crisis in 2008, Mr Moore said.

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