The latest bellwether IHS Markit/CIPS UK Construction Total Activity Index rebounded from 44.4 in December to 48.4 in January.
The latest reading was still below the 50 no-change threshold but signalled the slowest fall in overall construction output for eight months.
Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply said: “With the strongest optimism since April 2018, construction firms were more upbeat in January as the downturn in business activity slowed, the trend improved for new work and job losses steadied to August 2019 levels, all signalling a moderation in the sector’s contraction.
“Though the overall Index still registered below the no-change neutral mark, the signs are good that the sector is building up momentum for the year ahead and recovering some losses in new work which will ease concerns that the last bout of uncertainty has inflicted irreparable damage on the sector.”
Tim Moore, Economics Associate Director at IHS Markit, said: “Commercial work dropped at the slowest pace since the start of 2019 and was the main beneficiary of receding political uncertainty.
“UK construction companies also commented on signs of a turnaround in demand conditions across the residential development category during January.
“Civil engineering remained the weakest performing area of construction work as firms across the supply chain cited a lack of opportunities to replace completed contracts.”