Activity in Britain’s construction sector slowed last month for the first time since the end of 2001, with overall activity levels dropping as the housing market and commercial property downturns deepened, new figures showed today.

A fourth month in a row of declining activity in the housebuilding sector was the key factor behind the construction industry’s plight, according to the latest CIPS purchasing manager’s survey of conditions.

The CIPS headline index of construction activity tumbled to 47.2 for last month, down from a February reading of 52.4 to its lowest level since November 2001. Any figure under 50 indicates decline.

Economists sounded warnings that the figures signalled the construction sector probably now faces a prolonged slump, as homebuilders and developers confront much tougher times in the latest blow to a worsening economic outlook.

“With the commercial property sector in dire straits and the housing market cooling markedly, there is a very real danger that the construction sector could be in for an extended hard time. This adds to the downward pressures facing the UK economy,” Howard Archer, of Global Insight said.

He noted, however, that in constrast with the United States, where the construction industry is a significant sector of the economy, and its downturn has helped undercut growth prospects, in Britain construction sector accounts for some 6 per cent of GDP.

The plight of the UK’s construction industries was emphasised by the detail of today’s CIPS survey.

In commercial construction, the CIPS gauge of outstanding workloads fell from 52 to 45, the lowest in the survey’s 11 year history and the first time that workloads have declined since December 1998.

Within the sub-sectors tracked by CIPS, only civil engineering showed continued expansion in activity.

There data also added to the Bank of England’s headache over rising inflationary pressures, showing that construction group’s costs for materials rose at the fastest pace for 40 months during March

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