The rate of decline in the construction sector fell at its slowest rate for 16 months, according to the CIPS/Markit Construction Purchasing Managers’ Index.

The Index posted a reading of 47.0 in July, while there was a fall in new order levels recorded during July and the rate of decline in new business was the slowest in 17 months.

However, construction companies continued to cut their workforces for the 17th month running.

David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply, says: “Optimism is returning to the UK construction sector on the back of a perceived improvement in economic conditions. While the current situation still looks very bleak, an upturn looks much closer than it did just a few months ago. However, times are still tough as steep competition and difficult market conditions pushed the sector into its seventeenth month of retrenchment.”