Marginal growth registered in building activity

The figures will come as a slight relief after a similar survey on Wednesday showed manufacturing activity shrinking at its fastest pace in three years, and builders said they were more positive about the next year despite a fall in orders.

The Markit/CIPS construction PMI recovered to 50.9 in July from 48.2 in June, beating economists’ expectations of a further decline to 48.0.

New orders recorded their second-biggest drop since January 2010, but the fall was less steep than in June, and the decline did not stop confidence about the year ahead rising to a three-month high.

“Some construction firms are expecting, or at least hoping, that the sector will receive a shot in the arm during the next 12 months,” said survey author Tim Moore.

Britain’s economy entered recession at the end of last year, and a slump in construction drove a 0.7 per cent contraction in the second quarter, when one-off effects compounded problems caused by the euro zone debt crisis and government austerity.

Since then the Bank of England has expanded its gilt purchase programme by £50bn and the Government has taken steps to encourage banks to lend to businesses and homebuyers.

Business Secretary, meanwhile, Vince Cable has been arguing for specific measures to boost house-building.

However, economists may be cautious about reading directly across from the PMI data to stronger gross domestic product data, as official construction data this year has recorded much sharper falls in output than suggested by the PMI.

Mr Moore stressed that yesterday’s figures did not point to anything more than anaemic growth.

“July’s survey offered little sign of an imminent rebound in the UK construction sector, with total activity rising only marginally after well documented temporary factors had weighed on output last month,” he said.

Commercial activity was the only construction sector to show growth, with a contraction in civil engineering and broadly stable home building.

Firms also reported some disruption to deliveries in the run-up to the London Olympics.