Construction activity in the UK fell at a record rate last month as demand for new houses and commercial property continued to wane amid the global financial turmoil, according to a key industry survey.

The CIPS/Construction Purchasing Managers' Index measured construction activity at 35.1 in October — the eighth consecutive monthly fall this year.

Demand for new housing again showed the greatest decline, while commercial property also performed poorly, with activity levels declining at a series-record pace. In contrast, civil engineering continued to fare the best, although output contracted.

The seasonally adjusted new orders index stood at a record low of 36.8, down from 41.2. Construction companies responding to the survey reported fewer enquires from potential clients and more competition for tenders.

Job losses at construction companies increased at a record pace for the survey, with the seasonally adjusted employment index falling to 40.9.

Sub-contractors suffered from falling demand for their services and are being forced to charge less to obtain work.

Buying activity also declined at the fastest rate since the survey’s inception in April 1997 as companies cut back on non-essential expenditure

On the bright side, delivery times improved at the quickest rate in the survey history as supply companies had fewer orders to fill.

Roy Ayliffe, director of professional practice at the Chartered Institute of Purchasing and Supply, said: “There was no let-up in October for struggling constructors as the global economic and financial malaise continued to unnerve the sector.

"Concerned purchasing managers reported a new survey low in activity levels under the relentless onslaught of tightening credit conditions, plummeting confidence and high inflation.”

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