At the same time, firm’s projections for business for the year ahead were the least upbeat in more than two-and-a-half years. 

S&P Global Market Intelligence economics director Tim Moore says that “elevated business uncertainty and worries about broader prospects for the UK economy,” were behind the gloomy outlook companies held. 

The survey says that in total industry activity registered a mark of 45.5 in August, up from 44.3 in July, which was the lowest reading in just over five years. A mark above 50 indicates growth. 

Housing work posted a decline of 44.2, while civil engineering was the worst performing sector, at 38.1, with business activity in this area falling at the fastest pace since October 2020. 

New orders across the whole of the industry fell for the eighth month running in August, although the rate of decline eased to the least marked since January. 

“Construction companies widely commented on challenging market conditions, intense price competition and headwinds from sluggish UK economic activity,” the study says. 

The survey highlighted a renewed weakening in business optimism across the construction sector.  

Around 34% of firms predict a rise in output during the year ahead, while 22% forecast a reduction. The lowest degree of confidence since December 2022. 

Moore adds: “Construction activity has decreased throughout the year-to-date, which is the longest continuous downturn since early 2020.  

“August data signalled only a partial easing in the speed of decline after output fell at the fastest pace for over five years in July.  

“Sharply reduced levels of housing and civil engineering activity were again the main reasons for a weak overall construction sector performance.” 

Bloom Building Consultancy director Gareth Belsham says: “Things have gone from bad to worse for housebuilders, with residential construction output falling at its fastest rate since February. 

“Official data from the ONS ranked construction as the fastest-growing sector of the economy in the second quarter of 2025, but the PMI data suggests momentum is patchy at best. 

“Most worrying of all is the slowing pipeline of new work. New orders have fallen for eight months in a row, and while contractors tend to book projects months in advance, even big names are starting to see their order books thinning out. 

But Belsham adds: “There are a few glimmers of hope. Last month’s reduction in the Bank of England base rate should bring some relief to contractors grappling with high levels of debt, and make finance more affordable for developers. 

“And while Deputy Prime Minister Angela Rayner’s plan to get 1.5 million new homes built by 2029 is likely to join Whitehall’s growing list of Quixotic housebuilding targets, the stability of the commercial construction sector is welcome.”