The bellwether S&P Global UK Construction Purchasing Managers’ Index posted 44.3 in July, down from 48.8 in June signalling the sharpest contraction in over five years.

Firms blamed site delays, lower volumes of incoming new business and weaker customer confidence while some respondents also cited lower work undertaken on public sector projects.

Work fell across all sectors with residential the hardest hit.

Joe Hayes, Principal Economist at S&P Global Market Intelligence, said: “Having trended upwards in recent months, our survey data for July signal a fresh setback for the UK construction sector, with total industry activity falling at the sharpest rate since May 2020. Dissecting the latest contraction, we can see a fresh and sharp drop in residential building, as well as an accelerated fall in work carried out on civil engineering projects.

“Forward-looking indicators from the survey imply that UK constructors are preparing for challenging times ahead. They’re buying less materials and reducing the number of workers on the payroll. Expectations also continue to underwhelm, despite a modest pick-up in confidence from June’s two-and-a-half-year low.

“Anecdotally, companies reported a lack of tender opportunities and a hesitancy from customers to commit to projects. Broader themes of uncertainty, both domestically but also internationally, will do little to reignite investment appetites.”